China Zenith Chemical Group Ltd reports 61.5% revenue decline in FY2015 and 140 pp EBITDA Margin decline from -98.1% to -238%
01/10/2015 • About China Zenith Chemical Group Ltd (
$362) • By InTwits
China Zenith Chemical Group Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Zenith Chemical Group Ltd is a company in decline: FY2015 revenue growth was -61.5%, 5 years revenue CAGR was -46.1%
- The company operates at negative EBITDA Margin: -238.0%
- China Zenith Chemical Group Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2011-FY2015 was 0.0%. On average EBITDA Margin was -18.2% for the sames years0
- China Zenith Chemical Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 91.9%. At the same time it's a lot of higher than industry average of 28.8%.
- CAPEX is quite volatile: 95.7 in FY2015, 110 in FY2014, 166 in FY2013, 315 in FY2012, 522 in FY2011
- The company has unprofitable business model: ROIC is at -9.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Zenith Chemical Group Ltd ($362) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,415 | 214 | 297 | 163 | 63 | -61.5% |
| Gross Profit | 280 | 4 | -30 | -28 | 2 | -108.1% |
| SG&A | | | 124 | 129 | 118 | -8.7% |
| EBITDA | 276 | -180 | -178 | -160 | -150 | -6.6% |
| Net Income | 96 | -390 | -311 | -560 | -249 | -55.6% |
Balance Sheet
|
|---|
| Cash | 75 | 5 | 17 | 86 | 41 | -51.7% |
| Short Term Debt | 297 | 354 | 269 | 217 | 167 | -22.9% |
| Long Term Debt | 41 | 39 | 37 | 258 | 323 | 25.2% |
Cash flow
|
|---|
| Capex | 522 | 315 | 166 | 110 | 96 | -13.0% |
Ratios
|
|---|
| Revenue growth | 2.5% | -84.9% | 39.1% | -45.0% | -61.5% | |
| EBITDA growth | -27.3% | -165.1% | -1.0% | -9.9% | -6.6% | |
| Gross Margin | 19.8% | 2.1% | -10.1% | -16.9% | 3.6% | 20.4% |
| EBITDA Margin | 19.5% | -84.1% | -59.8% | -98.1% | -238.0% | -139.9% |
| Net Income Margin | 6.7% | -182.5% | -104.4% | -342.3% | -395.0% | -52.8% |
| SG&A, % of revenue | | | 41.8% | 79.1% | 187.7% | 108.6% |
| CAPEX, % of revenue | 36.8% | 147.3% | 55.7% | 67.4% | 152.2% | 84.8% |
| ROIC | 4.6% | -7.7% | -8.7% | -9.6% | -9.6% | 0.0% |
| ROE | 3.1% | -12.7% | -10.8% | -21.6% | -11.2% | 10.4% |
| Net Debt/EBITDA | 1.0x | | | | | 0.0x |
Revenue and profitability
The company's Revenue dropped on 61.5% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 140 pp from -98.1% to -238% in FY2015.
Gross Margin jumped on 20.4 pp from -16.9% to 3.6% in FY2015. SG&A as a % of Revenue surged on 109 pp from 79.1% to 188% in FY2015.
Net Income marign dropped on 52.8 pp from -342% to -395% in FY2015.
Capital expenditures (CAPEX) and working capital investments
China Zenith Chemical Group Ltd's CAPEX/Revenue was 152% in FY2015. The company's CAPEX/Revenue increased on 4.9 pp from 147% in FY2012 to 152% in FY2015. Average CAPEX/Revenue for the last three years was 91.7%.
Return on investment
The company operates at negative ROIC (-9.55%) and ROE (-11.23%). ROIC showed almost no change in FY2015. ROE surged on 10.4 pp from -21.6% to -11.2% in FY2015.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2015. Debt increased on 3.2% in FY2015 while cash dropped on 51.7% in FY2015.
Appendix 1: Peers in Chemicals
Below you can find China Zenith Chemical Group 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) | | -25.4% | -62.1% | 330.3% | 238.4% |
| 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) | 26.0% | 2.1% | 9.4% | 2.2% | 2.1% |
|---|
| China Zenith Chemical Group Ltd ($362) | | -84.9% | 39.1% | -45.0% | -61.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 74.3% | 70.5% | 69.1% | 70.8% | 69.9% |
| 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% | |
| |
|---|
| Median (31 companies) | 19.8% | 19.5% | 18.5% | 17.7% | 40.4% |
|---|
| China Zenith Chemical Group Ltd ($362) | 19.8% | 2.1% | -10.1% | -16.9% | 3.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 66.4% | 63.8% | 59.1% | 60.0% | 58.3% |
| 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% | |
| |
|---|
| Median (31 companies) | 15.2% | 15.8% | 14.5% | 13.8% | 2.7% |
|---|
| China Zenith Chemical Group Ltd ($362) | 19.5% | -84.1% | -59.8% | -98.1% | -238.0% |
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% | |
| 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% | |
| China XLX Fertiliser Ltd ($1866) | 13.0% | 30.1% | 41.1% | 32.1% | |
| |
|---|
| Median (31 companies) | 8.3% | 7.2% | 8.3% | 5.1% | 1.6% |
|---|
| China Zenith Chemical Group Ltd ($362) | 36.8% | 147.3% | 55.7% | 67.4% | 152.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 34.6% | 28.7% | 25.2% | 26.2% | 23.3% |
| 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% | |
| |
|---|
| Median (31 companies) | 8.2% | 6.9% | 8.1% | 5.9% | 3.1% |
|---|
| China Zenith Chemical Group Ltd ($362) | 4.6% | -7.7% | -8.7% | -9.6% | -9.6% |
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 | 5.3x |
| 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 (25 companies) | 1.5x | 1.6x | 2.2x | 1.4x | 2.2x |
|---|
