Huabao International Holdings Ltd reports 2.9 pp ROIC decline from 26.2% to 23.3% in 2015 while 2.1% Revenue growth
23/06/2015 • About Huabao International Holdings Ltd (
$336) • By InTwits
Huabao International Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Huabao International Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.2%. At the same time it's a lot of higher than industry average of 12.7%.
- CAPEX is quite volatile: 154 in FY2015, 162 in FY2014, 335 in FY2013, 597 in FY2012, 44.6 in FY2011
- The company has highly profitable business model: ROIC is at 23.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Huabao International Holdings Ltd ($336) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,852 | 3,311 | 3,646 | 4,237 | 4,326 | 2.1% |
| Gross Profit | 2,120 | 2,336 | 2,519 | 2,998 | 3,025 | 0.9% |
| SG&A | 249 | 340 | 457 | 582 | 713 | 22.5% |
| EBITDA | 1,894 | 2,111 | 2,156 | 2,544 | 2,522 | -0.8% |
| Net Income | 1,604 | 1,750 | 1,716 | 1,977 | 1,987 | 0.5% |
Balance Sheet
|
|---|
| Cash | 1,676 | 2,287 | 1,886 | 2,375 | 2,674 | 12.6% |
| Short Term Debt | 740 | 928 | 465 | 530 | 750 | 41.5% |
| Long Term Debt | 4 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 45 | 597 | 335 | 162 | 154 | -4.8% |
Ratios
|
|---|
| Revenue growth | 20.5% | 16.1% | 10.1% | 16.2% | 2.1% | |
| EBITDA growth | 20.3% | 11.5% | 2.1% | 18.0% | -0.8% | |
| Gross Margin | 74.3% | 70.5% | 69.1% | 70.8% | 69.9% | -0.8% |
| EBITDA Margin | 66.4% | 63.8% | 59.1% | 60.0% | 58.3% | -1.7% |
| Net Income Margin | 56.3% | 52.9% | 47.1% | 46.7% | 45.9% | -0.7% |
| SG&A, % of revenue | 8.7% | 10.3% | 12.5% | 13.7% | 16.5% | 2.7% |
| CAPEX, % of revenue | 1.6% | 18.0% | 9.2% | 3.8% | 3.6% | -0.3% |
| ROIC | 34.6% | 28.7% | 25.2% | 26.2% | 23.3% | -2.9% |
| ROE | 36.3% | 30.8% | 25.2% | 24.8% | 22.3% | -2.5% |
| Net Debt/EBITDA | -0.5x | -0.6x | -0.7x | -0.7x | -0.8x | -0.0x |
Revenue and profitability
The company's Revenue increased on 2.1% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.8 pp from 48.5% to 31.7% in 2015.
Gross Margin decreased slightly on 0.83 pp from 70.8% to 69.9% in FY2015. SG&A as a % of Revenue increased on 2.7 pp from 13.7% to 16.5% in FY2015.
Net Income marign decreased slightly on 0.75 pp from 46.7% to 45.9% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Huabao International Holdings Ltd had CAPEX/Revenue of 3.6%. CAPEX/Revenue dropped on 14.5 pp from 18.0% in FY2012 to 3.6% in FY2015. For the last three years the average CAPEX/Revenue was 5.5%.
Return on investment
The company operates at high and attractive ROIC (23.28%) and ROE (22.25%). ROIC decreased on 2.9 pp from 26.2% to 23.3% in FY2015. ROE decreased on 2.5 pp from 24.8% to 22.3% in FY2015.
Leverage (Debt)
Debt level is -0.8x Net Debt / EBITDA and 0.3x Debt / EBITDA. Net Debt / EBITDA decreased on 0.037x from -0.7x to -0.8x in FY2015. Debt surged on 41.5% in FY2015 while cash jumped on 12.6% in FY2015.
Management team
The company's CEO Chu Lam Yiu has spent 5 years at the company.
Appendix 1: Peers in Chemicals
Below you can find Huabao International Holdings Ltd benchmarking vs. other companies in Chemicals 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 |
|---|
| Bestway International Holdings Ltd ($718) | -86.9% | -25.4% | -62.1% | 330.3% | |
| Jilin Qifeng Chemical Fiber Co Ltd ($549) | 39.7% | -33.6% | 5.5% | 29.1% | |
| China XLX Fertiliser Ltd ($1866) | 29.3% | 7.0% | 0.6% | 28.0% | |
| Century Sunshine Group Holdings Ltd ($509) | 49.2% | 68.7% | 32.0% | 26.4% | |
| Landing International Development Ltd ($582) | -50.7% | 2.1% | 15.9% | 23.3% | |
| |
|---|
| Median (31 companies) | 25.8% | 2.0% | 9.4% | 1.4% | |
|---|
| Huabao International Holdings Ltd ($336) | | 16.1% | 10.1% | 16.2% | 2.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Flavors & Fragrances Co Ltd ($3318) | 41.3% | 46.8% | 48.6% | 47.8% | |
| Smartac Group China Holdings Ltd ($395) | 17.3% | -1.8% | 11.2% | 40.4% | |
| Bracell Ltd ($1768) | 40.1% | 30.5% | 37.3% | 37.3% | |
| Yingde Gases Group Co Ltd ($2168) | 34.2% | 31.7% | 31.0% | 32.1% | |
| Century Sunshine Group Holdings Ltd ($509) | 17.9% | 26.7% | 31.0% | 31.8% | |
| |
|---|
| Median (31 companies) | 19.8% | 18.2% | 16.2% | 16.0% | |
|---|
| Huabao International Holdings Ltd ($336) | 74.3% | 70.5% | 69.1% | 70.8% | 69.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Bracell Ltd ($1768) | 30.1% | 22.3% | 30.8% | 38.2% | |
| Yingde Gases Group Co Ltd ($2168) | 32.3% | 29.4% | 29.8% | 32.3% | |
| China First Chemical Holdings Ltd ($2121) | 29.7% | 26.6% | 30.0% | 29.6% | |
| Century Sunshine Group Holdings Ltd ($509) | 15.5% | 24.2% | 28.1% | 27.6% | |
| Tiande Chemical Holdings Ltd ($609) | 21.7% | 25.5% | 27.3% | 25.1% | |
| |
|---|
| Median (31 companies) | 15.2% | 13.2% | 12.7% | 11.1% | |
|---|
| Huabao International Holdings Ltd ($336) | 66.4% | 63.8% | 59.1% | 60.0% | 58.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Landing International Development Ltd ($582) | 27.9% | 7.2% | 29.6% | 419.5% | |
| China Zenith Chemical Group Ltd ($362) | 36.8% | 147.3% | 55.7% | 67.4% | |
| Smartac Group China Holdings Ltd ($395) | 22.5% | 14.0% | 4.7% | 49.3% | |
| China Flavors & Fragrances Co Ltd ($3318) | 16.4% | 15.8% | 20.1% | 42.4% | |
| Bracell Ltd ($1768) | 24.4% | 22.3% | 64.3% | 35.4% | |
| |
|---|
| Median (31 companies) | 8.7% | 7.2% | 8.3% | 5.9% | |
|---|
| Huabao International Holdings Ltd ($336) | 1.6% | 18.0% | 9.2% | 3.8% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tiande Chemical Holdings Ltd ($609) | 24.4% | 26.2% | 29.4% | 20.7% | |
| Century Sunshine Group Holdings Ltd ($509) | 3.5% | 11.3% | 15.9% | 16.4% | |
| Fufeng Group Ltd ($546) | 13.9% | 9.6% | 10.8% | 11.6% | |
| Yingde Gases Group Co Ltd ($2168) | 14.7% | 10.6% | 11.5% | 11.5% | |
| China BlueChemical Ltd ($3983) | 21.0% | 19.1% | 16.4% | 11.4% | |
| |
|---|
| Median (31 companies) | 7.8% | 6.9% | 7.4% | 5.2% | |
|---|
| Huabao International Holdings Ltd ($336) | 34.6% | 28.7% | 25.2% | 26.2% | 23.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Sanjiang Fine Chemicals Co Ltd ($2198) | 2.4x | 2.2x | 4.6x | 18.1x | |
| China XLX Fertiliser Ltd ($1866) | 2.4x | 2.6x | 5.1x | 5.8x | |
| Ngai Hing Hong Co Ltd ($1047) | 4.8x | 11.7x | 5.3x | 5.4x | |
| Jilin Qifeng Chemical Fiber Co Ltd ($549) | 4.3x | 14.1x | 6.5x | 5.3x | |
| Sinofert Holdings Ltd ($297) | 4.3x | 2.9x | 32.4x | 5.0x | |
| |
|---|
| Median (24 companies) | 1.5x | 1.9x | 2.5x | 1.5x | |
|---|
| Huabao International Holdings Ltd ($336) | -0.5x | -0.6x | -0.7x | -0.7x | -0.8x |
