Hanwei Energy Services Corp revenue dropped on 54.2% in 2016 and EBITDA Margin dropped on 103 pp from -23.0% to -126%
22.06.2016 • About Hanwei Energy Services Corp (
$HE) • By InTwits
Hanwei Energy Services Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hanwei Energy Services Corp is a company in decline: FY2016 revenue growth was -54.2%, 5 years revenue CAGR was -22.9%
- The company operates at negative EBITDA Margin: -126.3%
- Hanwei Energy Services Corp spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -14.0%0
- Hanwei Energy Services Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 22.7%. At the same time it's a lot of higher than industry average of 1.7%.
- CAPEX is quite volatile: 4.8 in FY2016, 9.1 in FY2015, 0.34 in FY2014, 0.86 in FY2013, 0.45 in FY2012
- The company has unprofitable business model: ROIC is at -31.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hanwei Energy Services Corp ($HE) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 27.652 | 29.657 | 18.008 | 18.291 | 8.369 | -54.2% |
| Gross Profit | 8.985 | 9.879 | 3.956 | 5.318 | 2.667 | -49.8% |
| SG&A | 9.616 | 7.230 | 6.515 | 10.145 | 13.057 | 28.7% |
| EBITDA | 0.507 | | | -4.198 | -10.566 | |
| Net Income | -3.966 | 2.416 | 0.735 | -6.316 | -13.617 | |
Balance Sheet
|
|---|
| Cash | 1.010 | 4.655 | 5.517 | 9.047 | 0.518 | -94.3% |
| Short Term Debt | 21.559 | 17.176 | 5.156 | 10.070 | 6.757 | -32.9% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.446 | 0.857 | 0.343 | 9.073 | 4.814 | -46.9% |
Ratios
|
|---|
| Revenue growth | -10.0% | 7.3% | -39.3% | 1.6% | -54.2% | |
| EBITDA growth | -113.3% | | | | 151.7% | |
| Gross Margin | 32.5% | 33.3% | 22.0% | 29.1% | 31.9% | 2.8% |
| EBITDA Margin | 1.8% | 0.0% | 0.0% | -23.0% | -126.3% | -103.3% |
| Net Income Margin | -14.3% | 8.1% | 4.1% | -34.5% | -162.7% | -128.2% |
| SG&A, % of revenue | 34.8% | 24.4% | 36.2% | 55.5% | 156.0% | 100.6% |
| CAPEX, % of revenue | 1.6% | 2.9% | 1.9% | 49.6% | 57.5% | 7.9% |
| ROIC | -2.9% | 4.1% | -6.4% | -16.9% | -31.0% | -14.1% |
| ROE | -17.6% | 10.3% | 2.9% | -22.4% | -54.5% | -32.0% |
| Net Debt/EBITDA | 40.5x | | | | | 0.0x |
Hanwei Energy Services Corp ($HE) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 1 | 4 | 1 | -47.6% | -62.9% | -31.2% | -78.7% |
| EBITDA | -0 | -1 | 0 | -9 | | | -41.8% | |
| Net Income | -2 | -1 | -0 | -11 | | | | |
Balance Sheet
|
|---|
| Cash | 1 | 0 | 0 | 1 | -9.6% | -90.2% | -77.6% | -94.3% |
| Short Term Debt | 7 | 7 | 8 | 7 | 42.0% | -23.8% | -11.6% | -32.9% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 47.9% | 14.1% | 47.3% | -27.5% | 23.2% | -24.5% | 17.7% | -52.3% |
| EBITDA Margin | -27.2% | -85.1% | 8.3% | -811.5% | -25.7% | -81.4% | -1.5% | -726.0% |
| Net Income Margin | -91.3% | -75.1% | -2.4% | -956.1% | -69.9% | -58.1% | 6.7% | -873.4% |
Revenue and profitability
The company's Revenue dropped on 54.2%. Revenue decline showed acceleration in FY16Q4 - it was 78.7% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 103 pp from -23.0% to -126% in FY2016.
Gross Margin increased on 2.8 pp from 29.1% to 31.9% in FY2016. SG&A as a % of Revenue surged on 101 pp from 55.5% to 156% in FY2016.
Net Income marign dropped on 128 pp from -34.5% to -163% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Hanwei Energy Services Corp had CAPEX/Revenue of 57.5%. The company's CAPEX/Revenue surged on 54.6 pp from 2.9% in FY2013 to 57.5% in FY2016. For the last three years the average CAPEX/Revenue was 36.3%.
Return on investment
The company operates at negative ROIC (-31.01%) and ROE (-54.46%). ROIC dropped on 14.1 pp from -16.9% to -31.0% in FY2016. ROE dropped on 32.0 pp from -22.4% to -54.5% in FY2016.
Leverage (Debt)
Debt level is -1.2x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2016. Debt dropped on 32.9% while cash dropped on 94.3%.
Appendix 1: Peers in Energy
Below we provide Hanwei Energy Services Corp benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | -18.4% | 141.2% |
| Seven Generations Energy Ltd ($VII) | | 115.7% | 340.2% | 39.0% | 94.4% |
| Athabasca Oil Corp ($ATH) | | 342.7% | 5.5% | -22.9% | 73.1% |
| Painted Pony Petroleum Ltd ($PPY) | | 41.3% | 56.0% | -42.5% | 60.7% |
| ONEnergy Inc ($OEG) | | | 6,002.6% | 231.5% | 57.4% |
| |
|---|
| Median (117 companies) | -29.1% | 16.2% | 17.0% | -29.5% | -19.0% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($BOE) | 77.1% | 43.3% | -34.3% | 121.1% | |
| TransAlta Renewables Inc ($RNW) | | 94.4% | 94.5% | 94.5% | 91.1% |
| Serinus Energy Inc ($SEN) | 80.5% | 76.5% | 86.8% | 88.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| |
|---|
| Median (116 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 32.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($GXO) | 59.4% | 64.5% | 70.8% | 201.9% | |
| Perpetual Energy Inc ($PMT) | 35.5% | 70.7% | 58.0% | 110.3% | |
| Petro Rio SA ($PRJ) | -4,809.7% | -6,899.7% | 28.2% | 90.7% | |
| Peyto Exploration & Development Corp ($PEY) | 86.1% | 83.2% | 86.3% | 84.6% | 80.7% |
| Innergex Renewable Energy Inc ($INE) | 111.8% | 110.0% | 82.9% | 83.4% | 83.5% |
| |
|---|
| Median (130 companies) | 25.3% | 34.1% | 28.9% | 8.1% | 28.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | 1,997.8% | 712.8% | |
| WesternZagros Resources Ltd ($WZR) | | | | 385.6% | |
| Athabasca Oil Corp ($ATH) | 2,426.4% | 596.6% | 504.7% | 315.2% | 83.7% |
| TORC Oil & Gas Ltd ($TOG) | 453.8% | 466.9% | 104.5% | 229.4% | 76.3% |
| Seven Generations Energy Ltd ($VII) | 452.8% | 513.1% | 227.4% | 191.2% | 73.5% |
| |
|---|
| Median (131 companies) | 43.8% | 39.0% | 45.0% | 27.6% | 23.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
| Whitecap Resources Inc ($WCP) | 7.1% | 8.1% | 9.6% | -10.6% | 10.1% |
| Ecopetrol SA ($ECP) | 29.3% | 24.4% | 16.5% | 3.0% | 9.6% |
| Parkland Fuel Corp ($PKI) | 22.3% | 23.3% | 9.9% | 7.8% | 8.6% |
| Inter Pipeline Ltd ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
| |
|---|
| Median (129 companies) | 3.8% | 5.4% | 5.5% | -8.5% | -1.9% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($PXX) | -0.2x | -0.1x | 0.2x | 3,726.1x | -0.2x |
| Paramount Resources Ltd ($POU) | 14.6x | 23.9x | 8.9x | 421.5x | -5.8x |
| Precision Drilling Corp ($PD) | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x |
| Trican Well Service Ltd ($TCW) | 2.5x | 3.4x | 2.9x | 31.4x | |
| Trilogy Energy Corp ($TET) | 2.6x | 1.8x | 2.3x | 25.5x | 7.3x |
| |
|---|
| Median (79 companies) | 1.6x | 1.4x | 1.4x | 2.6x | 2.7x |
|---|
