Garbage: The Billion Dollar Gold Mine

Friday, March 20, 2020

Taiwan is one of my favorite cities in Asia. It is scenic, clean and modern. And it has unbelievably delicious food, and some of the friendliest people on the planet.

Taiwan, also known as the Republic of China, has been independent since 1949 brought an end to its civil war with China. It was then when almost one million Chiang Kai Shek supporters, who had the most to lose under communism — the merchants, doctors, business owners and well-educated professionals — fled to Taiwan.

Those entrepreneurial individuals brought their work ethic, drive, skills and business acumen with them. They transformed Taiwan from an underdeveloped agricultural island to an economic leader that stands as one of the largest tech powerhouses in the world.

Taiwan is the largest manufacturer of computer chips in the world. It also ranks as one of the top producers of LCD panels, DRAM computer memory, networking equipment, personal computers and consumer electronics.

The Missing Garbage Cans

I often travel to this wonderful country in my hunt for the next home-run tech stocks. True, I could research stocks remotely. But these research trips often result in opportunities that I never would have found unless I hopped on an airplane.

This past trip, I discovered the old adage “one man’s trash is another man’s treasure” may be a little more on the nose than I originally thought.

And I learned that there are profits in garbage.

During my last trip to Taiwan, I walked block after block looking for a garbage can to throw my empty Starbucks coffee cup in. I couldn’t find one and had to wait until I returned to my hotel to dispose of it.

What I’d inadvertently learned was the unique way in which an island of 24 million people handles its garbage.

Most Taiwanese families live in apartments and don’t have access to garbage cans. Instead, the Taipei government has implemented what it calls a “trash doesn’t touch the ground” system.

Garbage trucks appear nightly (except Wednesday and Sundays) and alert people to their arrival with a high-pitched instrumental version of Beethoven’s Für Elise.

The residents bring out their trash bags — one filled with waste and the other with recyclables — and personally dump it into the trucks.

To see the Taipei daily garbage collection process in action, click on this one-minute YouTube video. It is really interesting.

Garbage Gold

According to the Environmental Protection Agency, Americans produce 260 million tons of garbage every year. At a global level, waste production is estimated at between 2 billion and 3 billion tons a year.

Collecting, processing and disposing all that waste is big business. In the U.S., waste management spending is expected to reach $530 billion a year in 2025, a 60% increase from the $330 billion spent in 2017.
That’s a lot of garbage!

In the U.S., though, there are only two solid waste giants: Waste Management (WM) and Republic Services (RSG). But the opportunities expand in Asia.

China currently has about 50 publicly traded waste management companies, more than a dozen with market values exceeding $1 billion, such as:

  • Dynagreen Environmental Protection Group, which trades on the Hong Kong Stock Exchange (1330.HK). It collects and uses high-tech incinerators to dispose of garbage.
  • And China Recycling Energy Corporation (CREG), which provides pressure-to-energy solutions to mid- and large-size companies in China. Basically, it creates energy processing and recycling waste.

Garbage may be a dirty business. But it is also big and profitable. Companies that provide solutions to managing waste are going to make a mountain of money.

Best wishes,

Tony Sagami

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