British Waste Manager Gets Dumped as China Ban Hits Trade
(Bloomberg) -- Traders are dumping Biffa Plc’s stock on concern about the impact of a Chinese ban on importing recycled trash.
Shares of the British waste management firm known for its giant, red bins dropped the most since the company’s 2016 initial public offering on Wednesday after a trading update revealed that its resource recovery and treatment division is likely to feel the effects of China’s policy for some time to come.
China notified the World Trade Organization in July that it would stop accepting most recycled plastics, paper, textiles and other products from overseas as part of a campaign against “foreign garbage” it says poses a risk to public health and the country’s environment.
The cost of locating alternative destinations for recycled goods, or undertaking additional processing to allow for export to China, is likely to lower Biffa’s 2019 Ebitda by about 4 percent, JPMorgan Chase & Co. analyst Alexander Mees said in a note to clients, although he added that the stock’s current price and dividend yield mean it still offers “compelling value.”
The stock was down 12 percent as of 12:02 p.m. in London, after dropping as much as 14 percent, making it the worst performer on the FTSE All-Share Index.
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