Cleanaway’s Subdued First Quarter Fiscal 2021 Matches Our Expectations but Shares Remain Pricey

We make no change to our AUD 1.75 per share fair value estimate or earnings forecasts for Cleanaway Waste Management following its first-quarter fiscal 2021 trading update. Cleanaway asserts that trading conditions in the first three months of fiscal 2021 have been mixed with EBITDA largely flat relative to fiscal 2020’s full-year run-rate. Its Victorian waste management businesses have been most impacted given Stage 4 coronavirus lockdown settings implemented in early August 2020 remain in place. As restrictions likely ease in Victoria, and economic activity recovers more broadly within the Australian economy, Cleanaway expects moderate EBITDA growth in fiscal 2021, aligning with our unchanged fiscal 2021 EBITDA forecast of AUD 528 million. Despite recent underperformance of Cleanaway’s share price following revelations in mainstream media regarding the managerial conduct of CEO Vik Bansal, the no-moat name remains expensive.