Turquoise Hill Resources Ltd reports 1,063% Net Income growth while 5.8% Revenue decline
17.03.2016 • About Turquoise Hill Resources Ltd (
$TRQ) • By InTwits
Turquoise Hill Resources Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Turquoise Hill Resources Ltd doesn't have a profitable business model yet: 2015 ROIC is 1.9%
- Turquoise Hill Resources Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 was 0.0%. On average EBITDA Margin was -2.0% for the sames years0
- Turquoise Hill Resources Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 1,349.5%. At the same time it's a lot of higher than industry average of 28.7%.
- CAPEX is quite volatile: 116 in 2015, 242 in 2014, 1,072 in 2013, 2,480 in 2012, 2,628 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Turquoise Hill Resources Ltd ($TRQ) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 179 | 78 | 52 | 1,736 | 1,635 | -5.8% |
| Gross Profit | 58 | -77 | 2 | 501 | 660 | 31.8% |
| SG&A | 101 | 154 | 61 | 54 | 42 | -22.7% |
| EBITDA | -366 | -411 | -306 | 508 | 500 | -1.5% |
| Net Income | -570 | -412 | -112 | 27 | 313 | 1,063.4% |
Balance Sheet
|
|---|
| Cash | 998 | 1,115 | 56 | 863 | 1,344 | 55.8% |
| Short Term Debt | 45 | 1,799 | 2,143 | 0 | 0 | |
| Long Term Debt | 543 | 102 | 0 | 14 | 14 | -3.6% |
Cash flow
|
|---|
| Capex | 2,628 | 2,480 | 1,072 | 242 | 116 | -52.0% |
Ratios
|
|---|
| Revenue growth | 124.4% | -56.4% | -34.0% | 3,268.9% | -5.8% | |
| EBITDA growth | 19.1% | 12.3% | -25.6% | -265.9% | -1.5% | |
| Gross Margin | 32.3% | -99.1% | 4.5% | 28.8% | 40.4% | 11.5% |
| EBITDA Margin | -204.4% | -526.7% | -593.9% | 29.2% | 30.6% | 1.3% |
| Net Income Margin | -318.6% | -527.9% | -217.5% | 1.6% | 19.2% | 17.6% |
| SG&A, % of revenue | 56.3% | 197.9% | 119.0% | 3.1% | 2.6% | -0.6% |
| CAPEX, % of revenue | 1,467.8% | 3,177.6% | 2,081.0% | 14.0% | 7.1% | -6.8% |
| ROIC | -10.7% | -6.9% | -4.4% | 1.6% | 1.9% | 0.3% |
| ROE | -17.5% | -7.6% | -2.0% | 0.4% | 3.8% | 3.3% |
| Net Debt/EBITDA | | | | -1.7x | -2.7x | -1.0x |
Revenue and profitability
Turquoise Hill Resources Ltd's Revenue decreased on 5.8% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.3 pp from 29.2% to 30.6% in 2015.
Gross Margin surged on 11.5 pp from 28.8% to 40.4% in 2015. SG&A as a % of Revenue decreased slightly on 0.56 pp from 3.1% to 2.6% in 2015.
Net Income marign jumped on 17.6 pp from 1.6% to 19.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 7.1% in 2015. CAPEX/Revenue dropped on 3,170 pp from 3,178% in 2012 to 7.1% in 2015. It's average CAPEX/Revenue for the last three years was 701%.
Return on investment
The company operates at low ROIC (1.87%) and ROE (3.75%). ROIC showed almost no change in 2015. ROE increased on 3.3 pp from 0.41% to 3.8% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.7x and Debt / EBITDA is 0.0x. Net Debt / EBITDA dropped on 1.0x from -1.7x to -2.7x in 2015. Debt decreased on 3.6% in 2015 while cash surged on 55.8% in 2015.
Management team
Jeffery Tygesen "Jeff" is a the company's CEO. Jeffery Tygesen "Jeff" is a founder and has spent 3 years at the company. Turquoise Hill Resources Ltd's CFO Steeve Thibeault has spent 4 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Turquoise Hill Resources Ltd benchmarking vs. other companies in Basic Materials 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Barkerville Gold Mines Ltd ($BGM) | | 97.4% | -90.6% | -97.6% | 84,715.6% |
| Golden Minerals Co ($AUM) | | 1,320.8% | -59.1% | -97.8% | 3,334.5% |
| Jemi Fibre Corp ($JFI) | | | | -27.3% | 375.3% |
| Osisko Gold Royalties Ltd ($OR) | | | | | 164.4% |
| VMS Ventures Inc ($VMS) | | | | | 139.7% |
| |
|---|
| Median (109 companies) | 40.9% | 8.4% | -5.0% | -1.1% | 0.3% |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | | -34.0% | 3,268.9% | -5.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nevsun Resources Ltd ($NSU) | 90.3% | 89.9% | 94.8% | 95.5% | 82.3% |
| Franco-Nevada Corp ($FNV) | 84.6% | 86.1% | 85.0% | 83.5% | 30.3% |
| Labrador Iron Ore Royalty Corp ($LIF) | 80.2% | 80.2% | 80.2% | 80.2% | 80.3% |
| Lucara Diamond Corp ($LUC) | | 42.5% | 57.4% | 66.7% | 60.9% |
| Royal Gold Inc ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 30.7% | 32.0% | 21.8% | 16.8% | 15.4% |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | -99.1% | 4.5% | 28.8% | 40.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Royal Gold Inc ($RGL) | 86.1% | 88.2% | 88.6% | 84.4% | 65.0% |
| Franco-Nevada Corp ($FNV) | 38.6% | 62.1% | 44.6% | 72.3% | 60.8% |
| Silver Wheaton Corp ($SLW) | 84.8% | 82.6% | 75.3% | 69.6% | 65.8% |
| Sandstorm Gold Ltd ($SSL) | 63.8% | 74.3% | 49.9% | 62.1% | |
| Nevsun Resources Ltd ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | 38.6% |
| |
|---|
| Median (137 companies) | 22.6% | 18.6% | 11.7% | 9.7% | 6.6% |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | -526.7% | -593.9% | 29.2% | 30.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Barkerville Gold Mines Ltd ($BGM) | 123.7% | 38.5% | 49.9% | 7,166.9% | 3.2% |
| Marlin Gold Mining Ltd ($MLN) | | | | 508.8% | |
| Imperial Metals Corp ($III) | 28.2% | 69.2% | 185.7% | 280.2% | |
| Golden Minerals Co ($AUM) | 462.4% | 36.9% | 16.8% | 212.8% | 0.5% |
| Franco-Nevada Corp ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | 230.0% |
| |
|---|
| Median (139 companies) | 24.1% | 26.3% | 25.2% | 16.3% | 14.0% |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | 3,177.6% | 2,081.0% | 14.0% | 7.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lucara Diamond Corp ($LUC) | -7.1% | -2.9% | 41.3% | 54.7% | 39.6% |
| CanAf Group Inc ($CAF) | 74.9% | 37.0% | 65.2% | 37.6% | 13.8% |
| Nevsun Resources Ltd ($NSU) | 89.8% | 52.2% | 8.8% | 35.0% | 10.4% |
| Dynacor Gold Mines Inc ($DNG) | 45.6% | 62.8% | 50.9% | 31.3% | |
| Canfor Pulp Products Inc ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 6.2% | 4.9% | 0.1% | -0.1% | -3.8% |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | -6.9% | -4.4% | 1.6% | 1.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VMS Ventures Inc ($VMS) | | | | 86.7x | 4.7x |
| Ur-Energy Inc ($URE) | | | | 55.1x | 6.7x |
| Katanga Mining Ltd ($KAT) | 0.4x | 19.4x | 3.3x | 18.8x | |
| HudBay Minerals Inc ($HBM) | -2.8x | -4.8x | 2.0x | 14.0x | |
| Imperial Metals Corp ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.1x | 0.3x | 0.8x | 0.9x | 1.4x |
|---|
| Turquoise Hill Resources Ltd ($TRQ) | | | | -1.7x | -2.7x |
