China Kangda Food Co Ltd reports 433% CAPEX growth while 5.8% Revenue decline
28/02/2016 • About China Kangda Food Co Ltd (
$834) • By InTwits
China Kangda Food Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 9.3% in 2015 vs. 7.4% in 2014 vs. 6.7% in 2011
- China Kangda Food Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.0%. At the same time it's in pair with industry average of 11.9%.
- CAPEX is quite volatile: 296 in 2015, 55.5 in 2014, 79.9 in 2013, 76.3 in 2012, 80.3 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.6%
- It operates with high leverage: Net Debt/EBITDA is 5.4x while industry average is -2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Kangda Food Co Ltd ($834) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,353 | 1,490 | 1,478 | 1,303 | 1,226 | -5.8% |
| Gross Profit | 119 | 111 | 111 | 110 | 123 | 12.0% |
| SG&A | | 110 | 89 | 86 | 78 | -8.7% |
| EBITDA | 91 | 77 | 100 | 96 | 114 | 18.4% |
| Net Income | 12 | 5 | 6 | -4 | -28 | 609.3% |
Balance Sheet
|
|---|
| Cash | 311 | 371 | 369 | 481 | 270 | -44.0% |
| Short Term Debt | 500 | 589 | 567 | 652 | 840 | 29.0% |
| Long Term Debt | 0 | | 58 | 50 | 40 | -20.0% |
Cash flow
|
|---|
| Capex | 80 | 76 | 80 | 56 | 296 | 433.1% |
Ratios
|
|---|
| Revenue growth | 33.1% | 10.1% | -0.8% | -11.9% | -5.8% | |
| EBITDA growth | 95.5% | -15.2% | 30.2% | -4.3% | 18.4% | |
| Gross Margin | 8.8% | 7.5% | 7.5% | 8.4% | 10.0% | 1.6% |
| EBITDA Margin | 6.7% | 5.2% | 6.8% | 7.4% | 9.3% | 1.9% |
| Net Income Margin | 0.9% | 0.3% | 0.4% | -0.3% | -2.3% | -2.0% |
| SG&A, % of revenue | | 7.4% | 6.0% | 6.6% | 6.4% | -0.2% |
| CAPEX, % of revenue | 5.9% | 5.1% | 5.4% | 4.3% | 24.1% | 19.9% |
| ROIC | 3.5% | | | 3.0% | 3.6% | 0.7% |
| ROE | 1.9% | 0.7% | 0.9% | -0.6% | -4.3% | -3.7% |
| Net Debt/EBITDA | 2.1x | 2.8x | 2.5x | 2.3x | 5.4x | 3.1x |
Revenue and profitability
The company's Revenue decreased on 5.8% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.9 pp from 7.4% to 9.3% in 2015.
Gross Margin increased slightly on 1.6 pp from 8.4% to 10.0% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased slightly on 2.0 pp from -0.30% to -2.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 24.1%. China Kangda Food Co Ltd showed fast CAPEX/Revenue growth of 19.0 pp from 5.1% in 2012 to 24.1% in 2015. It's average CAPEX/Revenue for the last three years was 11.3%.Battling declining revenue China Kangda Food Co Ltd made large investments to CAPEX (260% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low but positive ROIC (3.65%) and negative ROE (-4.26%). ROIC increased slightly on 0.67 pp from 3.0% to 3.6% in 2015. ROE decreased on 3.7 pp from -0.59% to -4.3% in 2015.
Leverage (Debt)
Debt level is 5.4x Net Debt / EBITDA and 7.7x Debt / EBITDA. Net Debt / EBITDA surged on 3.1x from 2.3x to 5.4x in 2015. Debt jumped on 25.5% in 2015 while cash dropped on 44.0% in 2015.
Appendix 1: Peers in Food
Below we provide China Kangda Food Co Ltd benchmarking against other companies in Food industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wealth Glory Holdings Ltd ($8269) | | -16.5% | -53.8% | 555.7% | -12.4% |
| Natural Dairy NZ Holdings Ltd ($462) | 12.0% | -47.2% | 19.1% | 76.6% | |
| China Modern Dairy Holdings Ltd ($1117) | 88.8% | 50.7% | 96.1% | 52.8% | |
| China Huishan Dairy Holdings Co Ltd ($6863) | | 256.3% | 91.5% | 38.3% | 11.1% |
| Asia Cassava Resources Holdings Ltd ($841) | | -3.0% | 99.6% | 32.6% | -28.4% |
| |
|---|
| Median (37 companies) | 22.5% | 9.4% | 6.4% | 2.7% | -2.1% |
|---|
| China Kangda Food Co Ltd ($834) | | 10.1% | -0.8% | -11.9% | -5.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Honworld Group Ltd ($2226) | 42.2% | 57.2% | 59.0% | 57.8% | |
| Shenguan Holdings Group Ltd ($829) | 61.9% | 58.2% | 58.5% | 54.9% | |
| Yashili International Holdings Ltd ($1230) | 52.0% | 53.7% | 53.5% | 51.2% | |
| Natural Dairy NZ Holdings Ltd ($462) | 16.3% | -13.7% | 27.5% | 48.8% | |
| Christine International Holdings Ltd ($1210) | 51.3% | 50.2% | 49.7% | 47.2% | |
| |
|---|
| Median (37 companies) | 18.1% | 16.8% | 19.7% | 20.0% | 15.8% |
|---|
| China Kangda Food Co Ltd ($834) | 8.8% | 7.5% | 7.5% | 8.4% | 10.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Shenguan Holdings Group Ltd ($829) | 57.2% | 58.7% | 59.2% | 54.5% | |
| YuanShengTai Dairy Farm Ltd ($1431) | 147.8% | 40.3% | 48.4% | 47.1% | |
| China Huishan Dairy Holdings Co Ltd ($6863) | 109.2% | 45.1% | 47.9% | 47.1% | 37.2% |
| Honworld Group Ltd ($2226) | 28.4% | 44.4% | 42.1% | 42.0% | |
| China Modern Dairy Holdings Ltd ($1117) | 33.9% | 33.5% | 27.0% | 25.3% | |
| |
|---|
| Median (37 companies) | 8.8% | 7.9% | 6.5% | 7.6% | 4.9% |
|---|
| China Kangda Food Co Ltd ($834) | 6.7% | 5.2% | 6.8% | 7.4% | 9.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 453.6% | 98.2% | 29.8% | 132.0% | 109.8% |
| Honworld Group Ltd ($2226) | 25.3% | 6.0% | 10.8% | 50.8% | |
| YuanShengTai Dairy Farm Ltd ($1431) | 182.5% | 26.1% | 18.3% | 43.4% | |
| Yashili International Holdings Ltd ($1230) | 3.6% | 8.2% | 7.1% | 20.1% | |
| Vedan International Holdings Ltd ($2317) | 2.8% | 2.5% | 2.4% | 18.8% | |
| |
|---|
| Median (37 companies) | 3.6% | 6.0% | 6.2% | 5.1% | 2.1% |
|---|
| China Kangda Food Co Ltd ($834) | 5.9% | 5.1% | 5.4% | 4.3% | 24.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Honworld Group Ltd ($2226) | 22.1% | 50.4% | 44.5% | 23.6% | |
| Want Want China Holdings Ltd ($151) | 24.9% | 27.9% | 29.4% | 22.8% | |
| Shenguan Holdings Group Ltd ($829) | 40.6% | 40.0% | 33.2% | 21.4% | |
| Huisheng International Holdings Ltd ($1340) | 63.0% | 31.9% | 23.7% | 16.3% | |
| Asia Cassava Resources Holdings Ltd ($841) | 13.8% | 4.2% | 5.9% | 13.6% | 11.6% |
| |
|---|
| Median (38 companies) | 11.6% | 7.1% | 6.0% | 5.6% | 5.9% |
|---|
| China Kangda Food Co Ltd ($834) | 3.5% | | | 3.0% | 3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Yurun Food Group Ltd ($1068) | 0.4x | 40.7x | 6.9x | 9.4x | |
| Beijing Jingkelong Co Ltd ($814) | 3.4x | 5.0x | 4.8x | 5.3x | |
| CP Lotus Corp ($121) | 2.3x | | 6.5x | 5.1x | |
| DaChan Food Asia Ltd ($3999) | -0.3x | 0.1x | 1.3x | 4.8x | |
| First Pacific Co Ltd/Hong Kong ($142) | 1.3x | 1.8x | 3.8x | 4.5x | |
| |
|---|
| Median (29 companies) | -0.1x | -0.5x | 0.6x | 0.7x | -0.6x |
|---|
| China Kangda Food Co Ltd ($834) | 2.1x | 2.8x | 2.5x | 2.3x | 5.4x |
