Nine Dragons Paper Holdings Ltd reports 31.5% CAPEX decline while 4.0% Revenue growth
23/09/2015 • About Nine Dragons Paper Holdings Ltd (
$2689) • By InTwits
Nine Dragons Paper Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Nine Dragons Paper Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.3%. At the same time it's a lot of higher than industry average of 11.0%.
- CAPEX is quite volatile: 1,763 in FY2015, 2,574 in FY2014, 4,445 in FY2013, 4,577 in FY2012, 8,374 in FY2011
- The company has potentially unprofitable business model: ROIC is at 5.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Nine Dragons Paper Holdings Ltd ($2689) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 24,387 | 27,170 | 28,739 | 28,929 | 30,093 | 4.0% |
| Gross Profit | 4,227 | 4,337 | 4,606 | 4,751 | 4,716 | -0.7% |
| SG&A | 1,002 | 1,126 | 1,270 | 1,143 | 1,367 | 19.6% |
| EBITDA | 4,169 | 4,463 | 4,945 | 5,369 | 5,079 | -5.4% |
| Net Income | 1,968 | 1,420 | 1,561 | 1,755 | 1,412 | -19.6% |
Balance Sheet
|
|---|
| Cash | 2,500 | 4,365 | 6,015 | 7,902 | 7,874 | -0.3% |
| Short Term Debt | 3,003 | 5,102 | 8,616 | 12,350 | 12,188 | -1.3% |
| Long Term Debt | 20,973 | 21,192 | 25,690 | 23,124 | 19,802 | -14.4% |
Cash flow
|
|---|
| Capex | 8,374 | 4,577 | 4,445 | 2,574 | 1,763 | -31.5% |
Ratios
|
|---|
| Revenue growth | 35.9% | 11.4% | 5.8% | 0.7% | 4.0% | |
| EBITDA growth | 4.5% | 7.1% | 10.8% | 8.6% | -5.4% | |
| Gross Margin | 17.3% | 16.0% | 16.0% | 16.4% | 15.7% | -0.8% |
| EBITDA Margin | 17.1% | 16.4% | 17.2% | 18.6% | 16.9% | -1.7% |
| Net Income Margin | 8.1% | 5.2% | 5.4% | 6.1% | 4.7% | -1.4% |
| SG&A, % of revenue | 4.1% | 4.1% | 4.4% | 4.0% | 4.5% | 0.6% |
| CAPEX, % of revenue | 34.3% | 16.8% | 15.5% | 8.9% | 5.9% | -3.0% |
| ROIC | 7.5% | 6.5% | 6.1% | 5.9% | 5.3% | -0.6% |
| ROE | 9.9% | 6.7% | 7.0% | 7.5% | 5.7% | -1.8% |
| Net Debt/EBITDA | 5.2x | 4.9x | 5.7x | 5.1x | 4.7x | -0.4x |
Revenue and profitability
Nine Dragons Paper Holdings Ltd's Revenue increased on 4.0% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 12.2% to 14.1% in 2015.
Gross Margin decreased slightly on 0.75 pp from 16.4% to 15.7% in FY2015. SG&A as a % of Revenue increased slightly on 0.59 pp from 4.0% to 4.5% in FY2015.
Net Income marign decreased slightly on 1.4 pp from 6.1% to 4.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 5.9%. CAPEX/Revenue dropped on 11.0 pp from 16.8% in FY2012 to 5.9% in FY2015. It's average level of CAPEX/Revenue for the last three years was 10.1%.
Return on investment
The company operates at low ROIC (5.32%) and ROE (5.73%). ROIC decreased slightly on 0.61 pp from 5.9% to 5.3% in FY2015. ROE decreased slightly on 1.8 pp from 7.5% to 5.7% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.7x and Debt / EBITDA is 6.3x. Net Debt / EBITDA dropped on 0.4x from 5.1x to 4.7x in FY2015. Debt decreased on 9.8% in FY2015 while cash showed almost no change in FY2015.
Management team
Nine Dragons Paper Holdings Ltd's CEO is Liu Ming Chung. Liu Ming Chung has 12 years tenure at the company. Zhang Yuanfu is a Nine Dragons Paper Holdings Ltd's CFO. Zhang Yuanfu has spent 10 years at the company.
Appendix 1: Peers in Forest Products&Paper
Below you can find Nine Dragons Paper Holdings Ltd benchmarking vs. other companies in Forest Products&Paper 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 |
|---|
| Merdeka Mobile Group Ltd ($8163) | 32.4% | -11.0% | 415.4% | 71.4% | |
| KuangChi Science Ltd ($439) | | | | 39.7% | |
| PNG Resources Holdings Ltd ($221) | | 323.7% | 248.6% | 8.5% | 8.7% |
| Hop Fung Group Holdings Ltd ($2320) | 0.8% | -27.0% | -2.3% | 6.9% | |
| Samson Paper Holdings Ltd ($731) | | 7.4% | -7.1% | 6.4% | 6.2% |
| |
|---|
| Median (11 companies) | 3.3% | 0.4% | 4.9% | 0.8% | 7.5% |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | | 11.4% | 5.8% | 0.7% | 4.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 29.6% | 29.8% | 32.9% | 31.3% | |
| PNG Resources Holdings Ltd ($221) | 31.9% | 19.4% | 18.6% | 24.2% | 35.3% |
| Greenheart Group Ltd ($94) | 47.3% | 37.6% | 33.7% | 21.6% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 15.5% | 15.2% | 18.0% | 19.4% | |
| China Sunshine Paper Holdings Co Ltd ($2002) | 16.8% | 16.6% | 16.5% | 19.0% | |
| |
|---|
| Median (11 companies) | 16.2% | 15.7% | 16.9% | 17.3% | 22.4% |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | 17.3% | 16.0% | 16.0% | 16.4% | 15.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 27.6% | 27.2% | 30.8% | 29.8% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 11.6% | 11.4% | 13.2% | 14.5% | |
| China Sunshine Paper Holdings Co Ltd ($2002) | 13.8% | 14.3% | 12.7% | 14.5% | |
| PNG Resources Holdings Ltd ($221) | -68.2% | -6.1% | 9.6% | 12.2% | 26.5% |
| Hop Fung Group Holdings Ltd ($2320) | 9.7% | 10.3% | 10.3% | 10.2% | |
| |
|---|
| Median (11 companies) | 1.9% | 3.4% | 10.3% | 3.8% | 15.1% |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | 17.1% | 16.4% | 17.2% | 18.6% | 16.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| PNG Resources Holdings Ltd ($221) | 294.9% | 133.1% | 35.6% | 53.0% | 44.8% |
| China Agroforestry Low-Carbon Holdings Ltd ($1069) | 0.1% | 0.2% | 11.5% | 26.7% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 28.7% | 14.4% | 18.8% | 16.3% | |
| China Sunshine Paper Holdings Co Ltd ($2002) | 10.4% | 14.8% | 9.9% | 8.7% | |
| Youyuan International Holdings Ltd ($2268) | 35.7% | 28.4% | 14.8% | 8.4% | |
| |
|---|
| Median (11 companies) | 32.6% | 14.4% | 9.9% | 8.4% | 23.6% |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | 34.3% | 16.8% | 15.5% | 8.9% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 15.6% | 12.6% | 12.9% | 10.4% | |
| PNG Resources Holdings Ltd ($221) | -3.6% | -1.2% | 5.8% | 8.3% | 19.9% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 7.5% | 6.8% | 5.1% | 5.5% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 2.4% | 1.9% | 3.3% | 3.0% | |
| Samson Paper Holdings Ltd ($731) | 3.0% | 3.2% | 1.8% | 2.9% | 2.9% |
| |
|---|
| Median (12 companies) | -0.0% | 0.2% | 2.0% | -0.5% | 11.4% |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | 7.5% | 6.5% | 6.1% | 5.9% | 5.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greenheart Group Ltd ($94) | | | 7.1x | 26.8x | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 9.0x | 10.4x | 9.0x | 10.9x | |
| Samson Paper Holdings Ltd ($731) | 11.3x | 8.3x | 13.0x | 9.3x | 8.9x |
| China Sunshine Paper Holdings Co Ltd ($2002) | 6.1x | 5.9x | 6.9x | 6.0x | |
| Youyuan International Holdings Ltd ($2268) | 1.2x | 1.5x | 2.1x | 1.5x | |
| |
|---|
| Median (7 companies) | 4.7x | 4.7x | 3.8x | 6.0x | 4.2x |
|---|
| Nine Dragons Paper Holdings Ltd ($2689) | 5.2x | 4.9x | 5.7x | 5.1x | 4.7x |
