China Railway Construction Corp Ltd reports 8.8% revenue growth in 2017 and almost no change in EBITDA Margin of 5.3%
29/03/2018 • About China Railway Construction Corp Ltd (
$1186) • By InTwits
China Railway Construction Corp Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 5.3% in 2017 vs. 5.3% in 2016 vs. 4.6% in 2013
- China Railway Construction Corp Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's in pair with industry average of 26.8%.
- CAPEX is quite volatile: 292 in 2017, 481 in 2016, 327 in 2015, 1,270 in 2014, 252 in 2013
- The company has potentially unprofitable business model: ROIC is at 6.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Railway Construction Corp Ltd ($1186) key annual financial indicators
mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
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P&L
|
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Revenue | 569,962 | 575,260 | 582,522 | 621,183 | 676,031 | 8.8% |
Gross Profit | 42,714 | 46,885 | 50,766 | 49,805 | 57,971 | 16.4% |
SG&A | 16,482 | 16,389 | 16,678 | 17,811 | 19,250 | 8.1% |
EBITDA | 25,961 | 29,885 | 31,751 | 33,003 | 35,748 | 8.3% |
Net Income | 10,345 | 11,735 | 12,646 | 14,000 | 16,057 | 14.7% |
Balance Sheet
|
---|
Cash | 54,344 | 89,950 | 114,249 | 120,128 | 131,306 | 9.3% |
Short Term Debt | 82,947 | 96,576 | 107,201 | 71,410 | 100,109 | 40.2% |
Long Term Debt | 75,019 | 83,763 | 79,964 | 114,821 | 95,335 | -17.0% |
Cash flow
|
---|
Capex | 17,645 | 21,838 | 27,144 | 29,816 | 30,231 | 1.4% |
Ratios
|
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Revenue growth | 21.3% | 0.9% | 1.3% | 6.6% | 8.8% | |
EBITDA growth | 8.8% | 15.1% | 6.2% | 3.9% | 8.3% | |
Gross Margin | 7.5% | 8.2% | 8.7% | 8.0% | 8.6% | 0.6% |
EBITDA Margin | 4.6% | 5.2% | 5.5% | 5.3% | 5.3% | -0.0% |
Net Income Margin | 1.8% | 2.0% | 2.2% | 2.3% | 2.4% | 0.1% |
SG&A, % of revenue | 2.9% | 2.8% | 2.9% | 2.9% | 2.8% | -0.0% |
CAPEX, % of revenue | 3.1% | 3.8% | 4.7% | 4.8% | 4.5% | -0.3% |
ROIC | 7.3% | 7.0% | 6.6% | 6.2% | 6.5% | 0.3% |
ROE | 13.5% | 13.5% | 12.4% | 11.4% | 11.3% | -0.1% |
Net Debt/EBITDA | 4.0x | 3.0x | 2.3x | 2.0x | 1.8x | -0.2x |
China Railway Construction Corp Ltd ($1186) key quoterly financial indicators
mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
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P&L
|
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Revenue | 122,306 | 165,060 | 170,753 | 217,912 | 5.8% | 12.5% | 9.1% | 7.7% |
Net Income | 2,879 | 3,644 | 4,006 | 5,528 | 11.9% | 12.1% | 21.3% | 13.4% |
Balance Sheet
|
---|
Cash | 109,908 | 101,879 | 110,749 | 131,306 | -1.0% | -5.2% | -5.6% | 9.3% |
Short Term Debt | 79,764 | 85,383 | 100,466 | 100,109 | -27.5% | -7.9% | 23.8% | 40.2% |
Long Term Debt | 123,305 | 135,379 | 131,927 | 95,335 | 35.2% | 26.7% | 14.5% | -17.0% |
Ratios
|
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Gross Margin | 8.7% | 8.1% | 8.4% | 9.1% | 0.4% | -1.0% | -0.2% | 2.4% |
Net Income Margin | 2.4% | 2.2% | 2.3% | 2.5% | 0.1% | -0.0% | 0.2% | 0.1% |
Revenue and profitability
The company's Revenue increased on 8.8%. Revenue growth showed slow down in 17Q4 - it was 7.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.0 pp from 69.9% to 75.0% in 2017.
Gross Margin increased slightly on 0.56 pp from 8.0% to 8.6% in 2017. SG&A as a % of Revenue showed almost no change in 2017.
Net Income marign showed almost no change in 2017.
Capital expenditures (CAPEX) and working capital investments
China Railway Construction Corp Ltd's CAPEX/Revenue was 4.5% in 2017. CAPEX/Revenue increased slightly on 0.68 pp from 3.8% in 2014 to 4.5% in 2017. For the last three years the average CAPEX/Revenue was 4.6%.The company maintained rich investment policy and has spent a big chunk of EBITDA (84.6%) to CAPEX.
Return on investment
The company operates at low ROIC (6.50%) and ROE (11.34%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Debt level is 1.8x Net Debt / EBITDA and 5.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 2.0x to 1.8x in 2017. Debt increased on 4.9% while cash increased on 9.3%.
Appendix 1: Peers in Engineering&Construction
Below you can find China Railway Construction Corp Ltd benchmarking vs. other companies in Engineering&Construction industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
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China National Culture Group Ltd ($745) | -76.8% | -55.8% | 592.3% | 86.7% | |
Kingbo Strike Ltd ($1421) | 19.5% | 21.3% | -47.7% | 81.8% | |
NEW Concepts Holdings Ltd ($2221) | 20.7% | 100.9% | 68.6% | 80.8% | |
Richly Field China Development Ltd ($313) | -45.0% | 464.2% | -65.7% | 77.2% | |
Glory Flame Holdings Ltd ($8059) | 30.8% | 20.2% | 1.0% | 42.9% | |
|
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Median (35 companies) | 24.8% | 20.8% | 10.3% | 6.4% | |
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Top companies by Gross margin, %
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
---|
Broad Greenstate International Co Ltd ($1253) | 28.7% | 35.8% | 36.7% | 37.4% | |
PYI Corp Ltd ($498) | 5.1% | 16.3% | 24.1% | 31.1% | |
In Construction Holdings Ltd ($1500) | 21.9% | 21.6% | 29.5% | 26.3% | |
Tysan Holdings Ltd ($687) | 11.7% | 18.4% | 17.8% | 22.8% | |
Chevalier International Holdings Ltd ($25) | 26.3% | 25.9% | 24.2% | 21.9% | |
|
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Median (27 companies) | 16.9% | 16.1% | 16.3% | 12.9% | |
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Top companies by EBITDA margin, %
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
---|
Beijing Capital International Airport Co Ltd ($694) | 52.9% | 50.3% | 51.6% | 50.9% | |
Cheung Kong Infrastructure Holdings Ltd ($1038) | 20.6% | 36.2% | 60.9% | 38.4% | |
Sino Credit Holdings Ltd ($628) | | 16.0% | -5.1% | 34.9% | |
Broad Greenstate International Co Ltd ($1253) | 24.4% | 28.8% | 31.0% | 30.9% | |
In Construction Holdings Ltd ($1500) | 20.4% | 19.1% | 25.9% | 23.3% | |
|
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Median (31 companies) | 11.2% | 9.7% | 9.0% | 5.3% | |
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Top companies by CAPEX/Revenue, %
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
---|
Louis XIII Holdings Ltd ($577) | 29.5% | 9.3% | 16.1% | 47.3% | |
Sino Credit Holdings Ltd ($628) | | 4.7% | 8.8% | 46.8% | |
Richly Field China Development Ltd ($313) | 6.7% | 1.1% | 7.6% | 30.5% | |
PYI Corp Ltd ($498) | 4.2% | 24.5% | 13.1% | 19.7% | |
Grand Ming Group Holdings Ltd ($1271) | 16.1% | 8.7% | 33.8% | 14.0% | |
|
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Median (26 companies) | 3.3% | 1.8% | 2.1% | 2.4% | |
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Top companies by ROIC, %
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
---|
In Construction Holdings Ltd ($1500) | 52.8% | 37.0% | 49.4% | 40.4% | |
NEW Concepts Holdings Ltd ($2221) | 51.0% | 78.8% | 39.0% | 23.3% | |
Chun Sing Engineering Holdings Ltd ($2277) | 98.3% | 54.9% | 43.7% | 21.6% | |
Broad Greenstate International Co Ltd ($1253) | 85.1% | 51.2% | 26.0% | 20.9% | |
Tysan Holdings Ltd ($687) | 10.6% | 14.0% | 21.0% | 20.7% | |
|
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Median (37 companies) | 6.1% | 5.4% | 5.6% | 2.5% | |
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Top companies by Net Debt / EBITDA
Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
---|
Ngai Shun Holdings Ltd ($1246) | -0.6x | -0.8x | -2.1x | 257.8x | |
Shun Cheong Holdings ($650) | 9.2x | | 7.6x | 67.0x | |
KFM Kingdom Holdings Ltd ($3816) | -0.1x | 0.5x | 0.4x | 53.8x | |
Chun Wo Development Holdings Ltd ($711) | 8.1x | 12.6x | 15.9x | 10.5x | |
Grand Ming Group Holdings Ltd ($1271) | 6.3x | 4.1x | 5.9x | 5.8x | |
|
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Median (24 companies) | 0.3x | 0.2x | 0.7x | 0.9x | |
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