Earnings-From-Waste Upside but Too Uncertain to Affect Our Cleanaway Valuation

No-moat Cleanaway’s investor day focused on strategic infrastructure growth, the first of three pillars to the group's BluePrint 2030 strategy. While we endorse Cleanaway’s execution plans, we make no changes to our AUD 2.10 fair value estimate. We believe Cleanaway is well placed in the current environment owing to: earnings resilience to business cycles; the group’s ability to pass-through inflation driven increases in labour and fuel costs to customers; strong ESG-attributes in the post collection business; and future earnings growth contribution from the recently-acquired Suez assets. However, we believe these positive dynamics are more than reflected in the current share price, which currently trades at a 39% premium to our fair value estimate.