Renewi: Benjamin Graham analysis

Wikipedia: 

Renewi is een afvalverwerker en recyclebedrijf. Het bedrijf is in 2017 ontstaan na een fusie van Shanks Group plc met Van Gansewinkel Groep BV en staat genoteerd aan de London Stock Exchange en de Euronext Amsterdam.^[2

In september 2023 deed Australische Macquarie Asset Management een bod op alle aandelen Renewi.^[8] Macquarie bood 775 pence per aandeel wat omgerekend neerkomt op een bod van in totaal 736 miljoen euro. Het bestuur van Renewi heeft het bod afgewezen. Op 26 oktober trok Macquarie het bod in met een forse koersdaling van Renewi op de beurs tot gevolg.

Bod van Macquarie was Euro 9 per aandeel

SECTOR: [PASS]  Renewi is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Renewi's sales of €1 892 million, based on 2022 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Renewi's current ratio €386m/€717m of 0.5 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Renwei is €419 million, while the net current assets are - €331 million. Renewi fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Renewi profits have been flat and it posted a loss in 2020 and fails this test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. RELX Group's E/P of 7% (using the last 3 years Earnings) passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Renewi has a Graham number of √(15 x € 0.7 EPS x €4,6 Book Value) = €8,5 

Dividend: €0 = 0%

Conclusion and question 2023: What is happening with the profit? There does not seem to be any return of capital to shareholders and book value is not increasing. Too difficult pile.