Chen Hsong Holdings reports 40.1% EBITDA decline and 2.5 pp EBITDA Margin decline from 8.5% to 6.0%
25/06/2015 • About Chen Hsong Holdings (
$57) • By InTwits
Chen Hsong Holdings reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Chen Hsong Holdings is a company in decline: FY2015 revenue growth was -15.1%, 5 years revenue CAGR was -2.8%
- EBITDA Margin is declining: 6.0% in FY2015 vs. 8.5% in FY2014 vs. 13.4% in FY2011
- Chen Hsong Holdings has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 4.6%.
- CAPEX is quite volatile: 37.6 in FY2015, 122 in FY2014, 114 in FY2013, 107 in FY2012, 83.8 in FY2011
- The company has potentially unprofitable business model: ROIC is at 0.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Chen Hsong Holdings ($57) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,424 | 1,838 | 1,794 | 1,846 | 1,568 | -15.1% |
| Gross Profit | 645 | 437 | 422 | 417 | 330 | -20.9% |
| SG&A | | | 305 | 320 | 270 | -15.4% |
| EBITDA | 325 | 200 | 158 | 158 | 94 | -40.1% |
| Net Income | 343 | 160 | 104 | 81 | 20 | -75.0% |
Balance Sheet
|
|---|
| Cash | 850 | 694 | 752 | 794 | 879 | 10.6% |
| Short Term Debt | 90 | 213 | 232 | 290 | 297 | 2.2% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 84 | 107 | 114 | 122 | 38 | -69.2% |
Ratios
|
|---|
| Revenue growth | 34.2% | -24.1% | -2.4% | 2.9% | -15.1% | |
| EBITDA growth | 53.7% | -38.5% | -21.3% | 0.0% | -40.1% | |
| Gross Margin | 26.6% | 23.8% | 23.5% | 22.6% | 21.0% | -1.6% |
| EBITDA Margin | 13.4% | 10.9% | 8.8% | 8.5% | 6.0% | -2.5% |
| Net Income Margin | 14.2% | 8.7% | 5.8% | 4.4% | 1.3% | -3.1% |
| SG&A, % of revenue | | | 17.0% | 17.3% | 17.2% | -0.1% |
| CAPEX, % of revenue | 3.5% | 5.8% | 6.3% | 6.6% | 2.4% | -4.2% |
| ROIC | 9.9% | 4.6% | 2.9% | 2.6% | 0.8% | -1.9% |
| ROE | 13.1% | 5.8% | 3.7% | 2.8% | 0.7% | -2.1% |
| Net Debt/EBITDA | -2.3x | -2.4x | -3.3x | -3.2x | -6.2x | -3.0x |
Revenue and profitability
Chen Hsong Holdings's Revenue dropped on 15.1% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.5 pp from 8.5% to 6.0% in FY2015.
Gross Margin decreased slightly on 1.6 pp from 22.6% to 21.0% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign decreased on 3.1 pp from 4.4% to 1.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Chen Hsong Holdings's CAPEX/Revenue was 2.4% in FY2015. The company showed decline in CAPEX/Revenue of 3.4 pp from 5.8% in FY2012 to 2.4% in FY2015. For the last three years the average CAPEX/Revenue was 5.1%.
Return on investment
The company operates at low ROIC (0.76%) and ROE (0.70%). ROIC decreased slightly on 1.9 pp from 2.6% to 0.76% in FY2015. ROE decreased on 2.1 pp from 2.8% to 0.70% in FY2015.
Leverage (Debt)
Debt level is -6.2x Net Debt / EBITDA and 3.1x Debt / EBITDA. Net Debt / EBITDA dropped on 3.0x from -3.2x to -6.2x in FY2015. Debt increased on 2.2% in FY2015 while cash surged on 10.6% in FY2015.
Appendix 1: Peers in Machinery-Diversified
Below you can find Chen Hsong Holdings benchmarking vs. other companies in Machinery-Diversified 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 |
|---|
| Sun East Technology Holdings Ltd ($365) | | -25.1% | -10.7% | 39.3% | 6.4% |
| Shanghai Prime Machinery Co Ltd ($2345) | 30.3% | 2.6% | -8.9% | 37.3% | |
| Sinoref Holdings Ltd ($1020) | 1.5% | -0.2% | -42.2% | 29.2% | |
| North Asia Strategic Holdings Ltd ($8080) | | -52.2% | -29.1% | 23.7% | 42.6% |
| Asia Tele-Net & Technology Corp Ltd ($679) | 3.5% | -36.9% | 23.0% | 18.6% | |
| |
|---|
| Median (21 companies) | 14.0% | -3.6% | -5.3% | -2.6% | 24.5% |
|---|
| Chen Hsong Holdings ($57) | | -24.1% | -2.4% | 2.9% | -15.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 38.3% | 49.1% | 51.7% | 54.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | |
| Haitian International Holdings Ltd ($1882) | 29.7% | 30.1% | 31.6% | 32.4% | |
| CHTC Fong's Industries Co Ltd ($641) | 26.5% | 24.4% | 30.0% | 32.3% | |
| Good Friend International Holdings Inc ($2398) | 23.3% | 20.1% | 22.9% | 26.5% | |
| |
|---|
| Median (21 companies) | 23.3% | 21.5% | 20.1% | 18.5% | 13.2% |
|---|
| Chen Hsong Holdings ($57) | 26.6% | 23.8% | 23.5% | 22.6% | 21.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 18.5% | 24.0% | 26.9% | 28.0% | |
| Haitian International Holdings Ltd ($1882) | 20.5% | 19.7% | 20.7% | 21.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 12.9% | 12.9% | 6.5% | 12.3% | |
| |
|---|
| Median (21 companies) | 9.6% | 7.8% | 8.4% | 7.7% | 2.0% |
|---|
| Chen Hsong Holdings ($57) | 13.4% | 10.9% | 8.8% | 8.5% | 6.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China High Precision Automation Group Ltd ($591) | 33.0% | 20.5% | 9.1% | 18.4% | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | |
| LK Technology Holdings Ltd ($558) | 7.6% | 9.3% | 10.2% | 9.1% | |
| First Tractor Co Ltd ($38) | 6.3% | 4.9% | 4.3% | 7.3% | |
| Greens Holdings Ltd ($1318) | 9.3% | 8.9% | 3.1% | 7.1% | |
| |
|---|
| Median (21 companies) | 6.3% | 4.2% | 3.6% | 4.2% | 0.8% |
|---|
| Chen Hsong Holdings ($57) | 3.5% | 5.8% | 6.3% | 6.6% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | |
| China CNR Corp Ltd ($6199) | 11.1% | 7.9% | 9.3% | 10.6% | |
| Shanghai Electric Group Co Ltd ($2727) | 9.8% | 10.9% | 8.6% | 8.9% | |
| |
|---|
| Median (21 companies) | 9.8% | 7.1% | 4.0% | 2.5% | 1.7% |
|---|
| Chen Hsong Holdings ($57) | 9.9% | 4.6% | 2.9% | 2.6% | 0.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | |
| Shanghai Prime Machinery Co Ltd ($2345) | -0.0x | -0.6x | 0.3x | 6.0x | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 1.9x | 3.0x | 11.4x | 5.6x | |
| Honghua Group Ltd ($196) | 0.1x | 1.2x | 3.2x | 5.2x | |
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | |
| |
|---|
| Median (17 companies) | -0.2x | -1.1x | 0.3x | 0.7x | -8.0x |
|---|
| Chen Hsong Holdings ($57) | -2.3x | -2.4x | -3.3x | -3.2x | -6.2x |
