The Foolish Face-Off: Colex Holdings Limited Versus 800 Super Holdings Ltd
There are around 700 companies listed on the stock exchange in Singapore. Of those, there are a number of them that have similar business operations. It is sometimes hard to determine which company in a particular industry is better than its peers.
In this article, we will look at some quick-and-dirty comparisons between two firms operating in the waste management industry, Colex Holdings Limited (SGX: 567) and 800 Super Holdings Ltd (SGX: 5TG), to determine which might give you more bang for the buck.
Introducing the Contenders
Colex Holdings Limited’s wholly-owned subsidiary, Colex Environmental Pte Ltd, is a licenced Public Waste Collector (PWC) appointed by Singapore’s National Environment Agency (NEA) and it manages Singapore’s Jurong sector. It has another subsidiary, Integrated Property Management Pte Ltd, which provides customised cleaning solutions for commercial and residential buildings.
800 Super Holdings Ltd is also an official PWC providing waste collection services for the Ang Mo Kio−Toa Payoh sector in Singapore. Furthermore, it provides cleaning and conservancy services, and horticultural services in our island.
The table below shows the market capitalisation and revenue for the two firms. Market capitalisation is as of the closing prices on 11 December 2017.
Do note that all figures quoted in the tables that follow are for the full year ended 31 December 2016 (FY2016) for Colex and full year ended 30 June 2017 (FY2017) for 800 Super, unless otherwise stated.Round 1: Profitability
In the first round, we will analyse the profitability of the companies in terms of net profit margin and Return on Equity (ROE). The ROE figure reveals how efficient the management is in turning every dollar of shareholders’ capital into profits.For every dollar of revenue created by Colex, only nine cents were generated as net profit, but for 800 Super, every dollar of turnover gave close to 11 cents in net profit. This shows that 800 Super is more profitable than its counterpart. Furthermore, 800 Super has a superior ROE than Colex.
Winner: 800 Super.
Round 2: Growth
In the second round, we will compare the compounded annual growth rate (CAGR) of revenue, earnings per share (EPS) and dividend of the two firms for the past five financial years. Businesses that can grow their sales and profits steadily over time should also see their share price rise.800 Super has trounced Colex in all aspects, except for EPS CAGR. Even then, its EPS CAGR of 31.4% is very commendable.
Winner: 800 Super.
Round 3: Valuation
As Foolish investors, it is essential to focus on the value of the business and not on the daily changes in the stock price.
We will now compare the price-to-earnings (PE) ratio, price-to-sales (PS) ratio and dividend yield of the two companies. The values below are as of the closing prices on 11 December 2017.Colex has lower PS and PE ratios than 800 Super. However, 800 Super offers better value in terms of dividend yield.
Winner: Colex, with its better PS and PE ratios.
The Foolish Bottom Line
Final Score: 2-1 to 800 Super, as it triumphed Colex in two out of the three rounds.
However, we have yet to look at other important aspects of the companies such as the balance sheet strength, free cash flow situation, management’s integrity, and so on. Potential investors interested in 800 Super should research more on the company before investing their money. This simple exercise would help to take some heavy-lifting off their back though.