WSE: GTS - Geotrans S.A.

[ContrarianValue44]

Any thoughts on Geotrans S.A.?

 

Geotrans process waste in Poland, install solar panels in what used to be landfills, convert waste to biomass fuel to sell, etc.

 

They are expecting massive revenue contracts to continue coming in, and to begin being able to process new types of waste (therefore new types of contracts)

 

There is actually a massive transformation in Poland right now where they're being required to process most of their waste and clear a lot of their landfills. More detail's can be found in the article below that discusses Mo-Bruk, a competitior of Geotrans: https://seekingalpha.com/article/4415777-mobruk-polish-esg-champion-long-secular-growth-runway-value-multiple

 

The company is expecting 27M in EBITDA in 2022, which sounds reasonable to me, and compares very favorably to today's EV of 61M (nearly a 50 percent yield). This year's EBITDA was 21M.

 

Company expects to be 6x today's size by 2026 (partly achieved through acquisitions). I don't think that they'll quite get to this ambition, but they should be able to grow revenues at over 30 percent per year for a few years and then 20 percent or more per year for another few years.

 

This company is on a time line though, the renovation efforts and sanitation measures in Poland are expected to take until about 2030.

 

Thoughts?

Edited June 16, 2021 by ContrarianValue44

[Spekulatius]

Why is the stock tanking so hard.

 

Also, for a company that want to 6x in size, they sure seem to be having  hard time lately:p - re neues were down ~25% Nd operating profit down ~75%, I guess the market doesn’t believe the companies projections.

https://geotrans.com.pl/raport/espi-16-2021-szacunkowe-wybrane-dane-finansowe-za-i-kwartal-2021-r/

 

I haven’t spent more than 20 minutes on this, but it is clear that this company has trouble executing.

[ContrarianValue44]

3 hours ago, Spekulatius said:

Why is the stock tanking so hard.

 

Also, for a company that want to 6x in size, they sure seem to be having  hard time lately:p - re neues were down ~25% Nd operating profit down ~75%, I guess the market doesn’t believe the companies projections.

https://geotrans.com.pl/raport/espi-16-2021-szacunkowe-wybrane-dane-finansowe-za-i-kwartal-2021-r/

 

I haven’t spent more than 20 minutes on this, but it is clear that this company has trouble executing.

Hey @Spekulatius thanks for your feedback and research!

 

Saying that the company had trouble executing I think may be an overreaction. The company had one bad quarter (Q1 of 2021) after having four record quarters in 2020. From my understanding this was for two very temporary reasons:

 

1. An extra long winter in Poland - it is illegal for the company to perform many of their operations when there is snow on the ground (such as cleaning up the landfills). This should no longer be an issue in Q2.

 

2. A massive uptick in COVID Cases in Poland - In Q1 of 2021 there was a massive spike in COVID cases in Poland. This disrupted the company's operations severely. However, COVID cases have come back to the lowest they've been in Poland since mid-2020. This improvement in the pandemic situation should be reflected in Q3 at the latest probably.

 

Overall @Spekulatius I absolutely agree with you that the company didn't have the best quarter. But, I think that the reaction from the market was WAY overdone and that either Q2 or Q3 will show tremendous improvement from Q1.