China Water Affairs Group Ltd Net Income jumped on 31.8% in 2015 and EBITDA Margin increased on 3.1 pp from 37.1% to 40.3%
29/06/2015 • About China Water Affairs Group Ltd (
$855) • By InTwits
China Water Affairs Group Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Water Affairs Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 33.9%. At the same time it's a lot of higher than industry average of 25.5%.
- CAPEX is quite volatile: 43.9 in 2015, 5.4 in 2014, 16.9 in 2013, 1.7 in 2012, 53.6 in 2011
- The company has business model with low profitability: ROIC is at 7.2%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Water Affairs Group Ltd ($855) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,478 | 1,897 | 2,251 | 2,747 | 2,859 | 4.1% |
| Gross Profit | 631 | 835 | 970 | 1,147 | 1,352 | 17.9% |
| SG&A | | 397 | 447 | 536 | 587 | 9.6% |
| EBITDA | 574 | 724 | 859 | 1,020 | 1,151 | 12.9% |
| Net Income | 422 | 315 | 286 | 281 | 371 | 31.8% |
Balance Sheet
|
|---|
| Cash | 849 | 1,068 | 918 | 1,590 | 1,501 | -5.6% |
| Short Term Debt | 623 | 634 | 953 | 1,299 | 2,376 | 82.9% |
| Long Term Debt | 1,818 | 2,325 | 2,294 | 3,537 | 3,024 | -14.5% |
Cash flow
|
|---|
| Capex | 464 | 769 | 879 | 826 | 811 | -1.8% |
Ratios
|
|---|
| Revenue growth | 5.7% | 28.3% | 18.6% | 22.0% | 4.1% | |
| EBITDA growth | 16.1% | 26.3% | 18.5% | 18.8% | 12.9% | |
| Gross Margin | 42.7% | 44.0% | 43.1% | 41.8% | 47.3% | 5.5% |
| EBITDA Margin | 38.8% | 38.2% | 38.1% | 37.1% | 40.3% | 3.1% |
| Net Income Margin | 28.5% | 16.6% | 12.7% | 10.2% | 13.0% | 2.7% |
| SG&A, % of revenue | | 20.9% | 19.9% | 19.5% | 20.5% | 1.0% |
| CAPEX, % of revenue | 31.4% | 40.5% | 39.1% | 30.1% | 28.4% | -1.7% |
| ROIC | 5.6% | 6.3% | 6.8% | 7.0% | 7.2% | 0.1% |
| ROE | 15.6% | 10.3% | 8.6% | 8.1% | 10.0% | 1.8% |
| Net Debt/EBITDA | 2.8x | 2.6x | 2.7x | 3.2x | 3.4x | 0.2x |
Revenue and profitability
China Water Affairs Group Ltd's Revenue increased on 4.1% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.66 pp from 4.4% to 5.1% in 2015.
Gross Margin increased on 5.5 pp from 41.8% to 47.3% in FY2015. SG&A as a % of Revenue increased slightly on 1.0 pp from 19.5% to 20.5% in FY2015.
Net Income marign increased on 2.7 pp from 10.2% to 13.0% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 China Water Affairs Group Ltd had CAPEX/Revenue of 28.4%. CAPEX/Revenue dropped on 12.1 pp from 40.5% in FY2012 to 28.4% in FY2015. Average CAPEX/Revenue for the last three years was 32.5%.China Water Affairs Group Ltd invested a large share of EBITDA (70.5%) to CAPEX.
Return on investment
The company operates at low ROIC (7.17%) and ROE (9.95%). ROIC showed almost no change in FY2015. ROE increased slightly on 1.8 pp from 8.1% to 10.0% in FY2015.
Leverage (Debt)
Debt level is 3.4x Net Debt / EBITDA and 4.7x Debt / EBITDA. Net Debt / EBITDA surged on 0.2x from 3.2x to 3.4x in FY2015. Debt surged on 11.7% in FY2015 while cash decreased on 5.6% in FY2015.
Appendix 1: Peers in Environmental Control
Below you can find China Water Affairs Group Ltd benchmarking vs. other companies in Environmental Control 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 |
|---|
| China Environmental Technology Holdings Ltd ($646) | -58.7% | 138.4% | -89.9% | 509.7% | |
| Capital Environment Holdings Ltd ($3989) | -89.7% | -12.6% | 1,503.8% | 241.2% | |
| CT Environmental Group Ltd ($1363) | 21.9% | -18.7% | 23.1% | 112.9% | |
| Asia Energy Logistics Group Ltd ($351) | | | | 92.2% | |
| Green Energy Group Ltd ($979) | 57.8% | -75.7% | 92.3% | 43.5% | |
| |
|---|
| Median (18 companies) | 17.3% | -13.1% | 6.0% | 2.4% | 9.3% |
|---|
| China Water Affairs Group Ltd ($855) | | 28.3% | 18.6% | 22.0% | 4.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| EverChina International Holdings Co Ltd ($202) | 40.2% | 51.8% | 53.4% | 95.3% | 95.4% |
| China Environmental Resources Group Ltd ($1130) | 12.3% | 17.2% | 11.3% | 73.7% | |
| CT Environmental Group Ltd ($1363) | 57.7% | 65.8% | 63.1% | 56.4% | |
| China Everbright International Ltd ($257) | 41.3% | 49.4% | 44.7% | 46.7% | |
| New Universe International Group Ltd ($8068) | 51.9% | 47.9% | 47.7% | 45.0% | |
| |
|---|
| Median (17 companies) | 34.1% | 20.4% | 30.1% | 27.1% | 9.7% |
|---|
| China Water Affairs Group Ltd ($855) | 42.7% | 44.0% | 43.1% | 41.8% | 47.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 52.2% | 63.6% | 62.8% | 58.7% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 55.9% | 57.5% | 56.6% | 57.8% | |
| China Everbright International Ltd ($257) | 37.3% | 44.6% | 40.7% | 43.6% | |
| New Universe International Group Ltd ($8068) | 42.0% | 40.2% | 37.8% | 39.3% | |
| Dongjiang Environmental Co Ltd ($895) | 21.7% | 25.4% | 19.2% | 23.4% | |
| |
|---|
| Median (18 companies) | 4.9% | 2.1% | -0.6% | -7.9% | -16.2% |
|---|
| China Water Affairs Group Ltd ($855) | 38.8% | 38.2% | 38.1% | 37.1% | 40.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 31.8% | 65.0% | 27.1% | 51.4% | |
| New Universe International Group Ltd ($8068) | 103.4% | 16.4% | 16.6% | 44.9% | |
| Green Energy Group Ltd ($979) | 7.5% | 169.0% | 270.8% | 41.9% | |
| Integrated Waste Solutions Group Holdings Ltd ($923) | 25.4% | 13.2% | 10.6% | 41.7% | 88.1% |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 42.2% | 43.1% | 46.5% | 38.6% | |
| |
|---|
| Median (18 companies) | 11.2% | 14.8% | 15.8% | 12.7% | 44.5% |
|---|
| China Water Affairs Group Ltd ($855) | 31.4% | 40.5% | 39.1% | 30.1% | 28.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 34.4% | 25.9% | 20.5% | 20.8% | |
| China Everbright International Ltd ($257) | 11.1% | 10.4% | 11.2% | 10.5% | |
| Dongjiang Environmental Co Ltd ($895) | 17.0% | 14.3% | 7.4% | 9.4% | |
| New Universe International Group Ltd ($8068) | 5.8% | 6.3% | 6.8% | 8.9% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 7.4% | 7.1% | 6.8% | 7.8% | |
| |
|---|
| Median (18 companies) | 1.7% | -1.7% | -1.4% | -3.3% | -7.0% |
|---|
| China Water Affairs Group Ltd ($855) | 5.6% | 6.3% | 6.8% | 7.0% | 7.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 4.1x | 4.2x | 3.1x | 2.9x | |
| CT Environmental Group Ltd ($1363) | 1.8x | 2.4x | 0.5x | 1.9x | |
| China Everbright International Ltd ($257) | 2.8x | 2.1x | 0.5x | 1.5x | |
| Dongjiang Environmental Co Ltd ($895) | 1.0x | -1.7x | -1.5x | 0.9x | |
| New Universe International Group Ltd ($8068) | 0.8x | 0.8x | -0.2x | -0.3x | |
| |
|---|
| Median (8 companies) | 1.2x | 2.2x | -0.2x | 0.3x | |
|---|
| China Water Affairs Group Ltd ($855) | 2.8x | 2.6x | 2.7x | 3.2x | 3.4x |
