MyEco Group (ASX: MCO) has secured a significant 3-to-5-year contract with Penrith City Council for the manufacture, supply, and distribution of compostable Food Organics and Garden Organics (FOGO) caddy bin liners and compostable dog waste bags.
This agreement is expected to generate an annual revenue of $1.36 million, with a total contract value reaching up to $6.83 million over five years, excluding CPI increases.
The contract, which commences on 15 May 2026, extends an existing 8-year supply relationship with Penrith City Council.
It is structured with an initial 3-year term, featuring options for two additional 1-year extensions, subject to mutual agreement and satisfactory performance.
The agreement covers 69,013 kerbside FOGO households and 14,977 multi-unit households within the Penrith local government area.
MyEco was selected for its compliance, safety, quality, and robust integrated supply chain controls, from resin manufacturing through to bag making and distribution.
Regulatory Tailwinds Support Growth
This contract win positions MyEco to capitalise on accelerating FOGO mandates across New South Wales.
The state’s FOGO legislation mandates broader FOGO service access and weekly collection for all households by 1 July 2030.
The legislation also introduces staged FOGO requirements for supermarkets, cafes, and restaurants, commencing from 1 July 2026.
These regulatory changes create a clear pathway for increased demand for compostable FOGO solutions, aligning directly with MyEco’s core product offering and sustainability focus.
Recent Commercial and Capital Activities
The Penrith City Council contract follows a period of notable activity for MyEco Group.
Earlier this month, the company launched three new GRS-certified 95% post-consumer recycled (PCR) bin liner products exclusively across Woolworths stores nationally, effectively doubling its product offering within the supermarket giant.
This initiative aligns with Australia’s national plastics plan and recycled content traceability framework.
To support its growth plans, MyEco recently secured firm commitments to raise $0.92 million via its Series 2 convertible note program, with a further $1.08 million remaining available.
Earlier in H1 FY26, MyEco reported that its gross margin had increased by 173 basis points to 24.7%, and a jump of 51% in Normalised EBITDA, driven by an operational restructure that reduced operating expenses by 24%.
Sales in its Council/Waste channel grew 21% in H1 FY26.
Outlook
The Penrith City Council contract provides significant medium-to-long term revenue visibility, bolstered by increasing regulatory mandates for FOGO services in New South Wales.
Coupled with recent product launches and capital raising efforts, MyEco is demonstrating progress in its growth strategy, though execution and funding remain key areas for investor focus.
However, margins could face pressure if input costs for manufacturing compostable products rise faster than any CPI-linked price adjustments allowed in the contract.
The company's growth strategy is also supported by convertible notes, which carry a potential dilution risk to existing shareholders.
MyEco’s ongoing funding needs for growth and operational cash burn are key areas for investors to monitor.
Although recent capital raises have bolstered its position, the ability to secure additional debt or equity funding as required remains important.
