KFG Resources Ltd reports 23.7% revenue decline in FY2020 and 25.1 pp EBITDA Margin decline from -3.5% to -28.6%
09.10.2020 • About KFG Resources Ltd (
$KFG) • By InTwits
KFG Resources Ltd reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- KFG Resources Ltd is a company in decline: FY2020 revenue growth was -23.7%, 5 years revenue CAGR was -16.8%
- The company operates at negative EBITDA Margin: -28.6%
- KFG Resources Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -10.8%
- KFG Resources Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.9%. At the same time it's a lot of higher than industry average of 7.2%.
- CAPEX is quite volatile: $0m in FY2020, $0m in FY2019, $0m in FY2018, $0m in FY2017, $1m in FY2016
- The company has unprofitable business model: ROIC is -131.6%
- It operates with high leverage: Net Debt/EBITDA is 12.0x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
KFG Resources Ltd's Revenue dropped on 23.7%. Revenue decline showed acceleration in FY20Q4 - it was 46.4% YoY. During FY2016-FY2020 Revenue growth topped in FY2019 at 4.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 80.7 pp from -265% to -184% in FY2020.
SG&A as a % of Revenue increased on 4.5 pp from 15.2% to 19.7% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2018 at 14.6% and was growing since that time.
Net Income margin dropped on 32.2 pp from -10.3% to -42.5% in FY2020. During the last 5 years Net Income margin topped in FY2018 at -5.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 0.48%. KFG Resources Ltd's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 6.5%.
Return on investment
The company operates at negative ROIC (-131.6%) and ROE (-139.6%). ROIC dropped on 109 pp from -22.4% to -132% in FY2020. ROE dropped on 116 pp from -23.1% to -140% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 12.0x and Debt / EBITDA is . Debt dropped on 24.8% while cash dropped on 28.9%.
The company has no short term refinancing risk: short term debt is zero.
Financial and operational results
FY ended 30.04.2020
KFG Resources Ltd ($KFG) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1.668 | 1.376 | 1.369 | 1.430 | 1.091 | -23.7% |
| Gross Profit | 0.574 | | | | | |
| SG&A | 0.293 | 0.227 | 0.199 | 0.217 | 0.215 | -0.9% |
| EBITDA | -0.236 | -0.269 | 0.115 | -0.050 | -0.312 | |
| Net Income | -0.778 | -0.490 | -0.071 | -0.148 | -0.464 | |
Balance Sheet
|
|---|
| Cash | 0.856 | 0.594 | 0.706 | 0.592 | 0.421 | -28.9% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.018 | 0.013 | -24.8% |
Cash flow
|
|---|
| Capex | 0.580 | 0.002 | 0.086 | 0.182 | 0.005 | -97.1% |
Ratios
|
|---|
| Revenue growth | -39.2% | -17.5% | -0.5% | 4.5% | -23.7% | |
| EBITDA growth | -132.5% | 14.2% | -142.8% | -143.8% | 519.2% | |
|
|---|
| Gross Margin | 34.4% | | | | | |
| EBITDA Margin | -14.1% | -19.6% | 8.4% | -3.5% | -28.6% | -25.1% |
| SG&A, % of revenue | 17.6% | 16.5% | 14.6% | 15.2% | 19.7% | 4.5% |
| Net Income Margin | -46.6% | -35.6% | -5.2% | -10.3% | -42.5% | -32.2% |
| CAPEX, % of revenue | 34.8% | 0.1% | 6.3% | 12.7% | 0.5% | -12.3% |
|
|---|
| ROIC | -46.7% | -50.8% | -11.8% | -22.4% | -131.6% | -109.2% |
| ROE | -46.7% | -47.5% | -9.5% | -23.1% | -139.6% | -116.5% |
| Net Debt/EBITDA | | | -6.1x | | |
KFG Resources Ltd ($KFG) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 0 | 0 | 0 | 0 | | -16.2% | -28.0% | -2.1% | -46.4% |
| EBITDA | 0 | -0 | -0 | -0 | | -70.9% | -313.3% | - | - |
| Net Income | 0 | -0 | -0 | -0 | | -97.9% | -425.1% | - | - |
Balance Sheet
|
|---|
| Cash | 1 | 0 | 0 | 0 | | -32.3% | -39.6% | -43.5% | -28.9% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | -24.8% |
Ratios
|
|---|
| EBITDA Margin | 8.9% | -50.6% | -0.3% | -107.6% | | -16.7% | -67.7% | 27.7% | -107.6% |
| Net Income Margin | 0.4% | -61.6% | -9.9% | -143.5% | | -16.5% | -75.2% | 29.4% | -97.4% |
Peers in Energy
Below you can find KFG Resources Ltd benchmarking vs. other companies in Energy 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Wescan Energy Corp ($WCE) | - | 41.1% | 5.0% | 9.4% | -23.5% |
| Tamarack Valley Energy Ltd ($TVE) | - | - | 31.3% | -3.0% | -30.4% |
| Arctic Hunter Energy Inc ($AHU) | - | 564.3% | 57.9% | -37.7% | -47.8% |
| Strata-X Energy Ltd ($SXE) | - | 24.6% | -67.8% | -37.2% | -81.0% |
| |
|---|
| Median (4 companies) | -19.0% | 32.8% | 5.0% | -3.0% | -39.1% |
|---|
| KFG Resources Ltd ($KFG) | - | -17.5% | -0.5% | 4.5% | -23.7% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Tamarack Valley Energy Ltd ($TVE) | - | 68.4% | 72.6% | 72.9% | 62.5% |
| Arctic Hunter Energy Inc ($AHU) | -104.8% | 33.2% | 47.6% | 17.3% | 25.6% |
| Pennine Petroleum Corp ($PNN) | -19.9% | -12.7% | -20.0% | -2.9% | - |
| |
|---|
| Median (3 companies) | 31.4% | 33.2% | 47.6% | 17.3% | 44.0% |
|---|
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Wescan Energy Corp ($WCE) | -28.4% | 9.9% | -0.9% | -4.4% | -27.3% |
| Tamarack Valley Energy Ltd ($TVE) | - | 54.6% | 72.9% | 38.5% | -115.9% |
| Arctic Hunter Energy Inc ($AHU) | -1,288.0% | -221.2% | -180.7% | -214.6% | -354.0% |
| Strata-X Energy Ltd ($SXE) | -2,196.8% | -399.1% | -1,113.2% | -31,805.9% | -19,396.4% |
| |
|---|
| Median (4 companies) | 25.6% | -221.2% | -180.7% | -214.6% | -234.9% |
|---|
| KFG Resources Ltd ($KFG) | -14.1% | -19.6% | 8.4% | -3.5% | -28.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Strata-X Energy Ltd ($SXE) | 452.6% | 48.4% | 1,075.3% | 754.1% | 3,886.6% |
| Tamarack Valley Energy Ltd ($TVE) | - | 73.9% | 66.2% | 54.0% | 44.9% |
| Wescan Energy Corp ($WCE) | 16.2% | 2.0% | 0.0% | 0.0% | 0.3% |
| Arctic Hunter Energy Inc ($AHU) | 10.7% | 9.2% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (4 companies) | 23.0% | 48.4% | 66.2% | 0.0% | 22.6% |
|---|
| KFG Resources Ltd ($KFG) | 34.8% | 0.1% | 6.3% | 12.7% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Wescan Energy Corp ($WCE) | -39.2% | -9.3% | -12.4% | -13.2% | -28.3% |
| Tamarack Valley Energy Ltd ($TVE) | - | -0.9% | 7.1% | -3.9% | -45.7% |
| Strata-X Energy Ltd ($SXE) | -24.5% | -7.7% | -13.7% | -182.7% | -128.3% |
| Arctic Hunter Energy Inc ($AHU) | -576.3% | -119.1% | -93.7% | -92.3% | -541.5% |
| Eurogas International Inc ($EI) | - | - | - | - | - |
| |
|---|
| Median (7 companies) | -2.2% | -9.3% | -13.7% | -53.8% | -87.0% |
|---|
| KFG Resources Ltd ($KFG) | -46.7% | -50.8% | -11.8% | -22.4% | -131.6% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Tamarack Valley Energy Ltd ($TVE) | - | 1.2x | 0.6x | 1.6x | - |
| |
|---|
| Median (1 company) | 2.7x | 4.3x | 0.6x | 1.6x | - |
|---|
