Lee & Man Paper Manufacturing Ltd reports 35.1% CAPEX growth and 3.0% Revenue growth
01/03/2016 • About Lee & Man Paper Manufacturing Ltd (
$2314) • By InTwits
Lee & Man Paper Manufacturing Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 21.6% in 2015 vs. 18.7% in 2014 vs. 19.3% in 2011
- Lee & Man Paper Manufacturing Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.4%. At the same time it's a lot of higher than industry average of 7.0%.
- CAPEX is quite volatile: 510 in 2015, 301 in 2014, 63.1 in 2013, 44.6 in 2012, 139 in 2011
- The company has business model with low profitability: ROIC is at 9.2%
- It operates with high leverage: Net Debt/EBITDA is 3.0x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lee & Man Paper Manufacturing Ltd ($2314) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 14,034 | 14,716 | 16,970 | 17,099 | 17,616 | 3.0% |
| Gross Profit | 2,582 | 2,063 | 2,886 | 3,072 | 3,578 | 16.5% |
| SG&A | 729 | 842 | 934 | 1,039 | 1,114 | 7.2% |
| EBITDA | 2,712 | 2,151 | 2,918 | 3,196 | 3,803 | 19.0% |
| Net Income | 1,848 | 1,351 | 1,948 | 1,904 | 2,332 | 22.4% |
Balance Sheet
|
|---|
| Cash | 1,228 | 731 | 711 | 2,033 | 2,969 | 46.1% |
| Short Term Debt | 2,704 | 2,896 | 5,661 | 6,698 | 5,250 | -21.6% |
| Long Term Debt | 5,285 | 6,664 | 5,298 | 6,163 | 9,012 | 46.2% |
Cash flow
|
|---|
| Capex | 1,901 | 2,902 | 2,322 | 2,232 | 3,016 | 35.1% |
Ratios
|
|---|
| Revenue growth | 26.4% | 4.9% | 15.3% | 0.8% | 3.0% | |
| EBITDA growth | -0.8% | -20.7% | 35.7% | 9.5% | 19.0% | |
| Gross Margin | 18.4% | 14.0% | 17.0% | 18.0% | 20.3% | 2.3% |
| EBITDA Margin | 19.3% | 14.6% | 17.2% | 18.7% | 21.6% | 2.9% |
| Net Income Margin | 13.2% | 9.2% | 11.5% | 11.1% | 13.2% | 2.1% |
| SG&A, % of revenue | 5.2% | 5.7% | 5.5% | 6.1% | 6.3% | 0.2% |
| CAPEX, % of revenue | 13.5% | 19.7% | 13.7% | 13.1% | 17.1% | 4.1% |
| ROIC | 11.3% | 7.2% | 8.7% | 8.0% | 9.2% | 1.2% |
| ROE | 16.5% | 10.5% | 13.1% | 11.3% | 13.4% | 2.2% |
| Net Debt/EBITDA | 2.5x | 4.1x | 3.5x | 3.4x | 3.0x | -0.4x |
Revenue and profitability
Lee & Man Paper Manufacturing Ltd's Revenue increased on 3.0% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.9 pp from 18.7% to 21.6% in 2015.
Gross Margin increased on 2.3 pp from 18.0% to 20.3% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased on 2.1 pp from 11.1% to 13.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 17.1%. Lee & Man Paper Manufacturing Ltd showed decline in CAPEX/Revenue of 2.6 pp from 19.7% in 2012 to 17.1% in 2015. For the last three years the average CAPEX/Revenue was 14.6%.The company maintained rich investment policy and has spent a big chunk of EBITDA (79.3%) to CAPEX.
Return on investment
The company operates at good ROE (13.43%) while ROIC is low (9.20%). ROIC increased slightly on 1.2 pp from 8.0% to 9.2% in 2015. ROE increased on 2.2 pp from 11.3% to 13.4% in 2015.
Leverage (Debt)
Debt level is 3.0x Net Debt / EBITDA and 3.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 3.4x to 3.0x in 2015. Debt jumped on 10.9% in 2015 while cash surged on 46.1% in 2015.
Management team
The company's CEO is Lee Man Bun. Lee Man Bun has 5 years tenure at the company.
Appendix 1: Peers in Packaging&Containers
Below we provide Lee & Man Paper Manufacturing Ltd benchmarking against other companies in Packaging&Containers 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 |
|---|
| China For You Group Co Ltd ($572) | 19.6% | -46.9% | -99.7% | 36,225.6% | |
| China Aluminum Cans Holdings Ltd ($6898) | 19.6% | 15.5% | -5.0% | 189.1% | |
| Zhengye International Holdings Co Ltd ($3363) | 10.5% | 6.8% | 16.4% | 18.6% | |
| Come Sure Group Holdings Ltd ($794) | | 10.7% | -0.7% | 16.8% | 2.9% |
| Huajun Holdings Ltd ($377) | | 11.2% | 3.3% | 3.4% | 10.4% |
| |
|---|
| Median (17 companies) | 19.6% | 5.2% | 5.0% | 0.9% | 10.4% |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | | 4.9% | 15.3% | 0.8% | 3.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huaxi Holdings Co Ltd ($1689) | 13.1% | 19.0% | 28.2% | 40.9% | 37.5% |
| Sheen Tai Holdings Grp Co Ltd ($1335) | 36.5% | 36.4% | 37.8% | 39.6% | |
| Jin Cai Holdings Co Ltd ($1250) | 39.6% | 36.6% | 39.1% | 37.7% | |
| China For You Group Co Ltd ($572) | 18.7% | 12.4% | | 34.6% | |
| Overseas Chinese Town Asia Holdings Ltd ($3366) | 30.2% | 34.3% | 36.5% | 32.8% | |
| |
|---|
| Median (17 companies) | 18.6% | 19.9% | 20.3% | 22.3% | 22.3% |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | 18.4% | 14.0% | 17.0% | 18.0% | 20.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sheen Tai Holdings Grp Co Ltd ($1335) | 35.5% | 31.9% | 32.2% | 32.1% | |
| Jin Cai Holdings Co Ltd ($1250) | 35.7% | 33.2% | 26.1% | 27.6% | |
| Overseas Chinese Town Asia Holdings Ltd ($3366) | 25.5% | 27.9% | 30.7% | 27.4% | |
| Huaxi Holdings Co Ltd ($1689) | 7.8% | 14.5% | 21.2% | 27.1% | 29.1% |
| Greatview Aseptic Packaging Co Ltd ($468) | 24.1% | 25.9% | 23.1% | 21.6% | |
| |
|---|
| Median (18 companies) | 10.6% | 11.1% | 13.7% | 11.1% | 7.5% |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | 19.3% | 14.6% | 17.2% | 18.7% | 21.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Aluminum Cans Holdings Ltd ($6898) | 1.3% | 6.9% | 9.5% | 20.7% | |
| Hao Tian Development Group Ltd ($474) | 88.2% | 81.6% | | 13.0% | 25.4% |
| CPMC Holdings Ltd ($906) | 13.7% | 16.7% | 19.7% | 8.6% | |
| Jin Bao Bao Holdings Ltd ($1239) | 3.8% | 5.2% | 3.3% | 8.3% | |
| Greatview Aseptic Packaging Co Ltd ($468) | 30.8% | 15.8% | 9.6% | 7.2% | |
| |
|---|
| Median (18 companies) | 5.2% | 6.1% | 4.8% | 4.1% | 4.3% |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | 13.5% | 19.7% | 13.7% | 13.1% | 17.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huaxi Holdings Co Ltd ($1689) | | 21.4% | 28.5% | 26.2% | 23.6% |
| Sheen Tai Holdings Grp Co Ltd ($1335) | 32.5% | 26.8% | 26.2% | 24.7% | |
| China Aluminum Cans Holdings Ltd ($6898) | 14.8% | 19.7% | 14.6% | 20.2% | |
| Greatview Aseptic Packaging Co Ltd ($468) | 19.6% | 20.2% | 18.9% | 15.7% | |
| Jin Cai Holdings Co Ltd ($1250) | 38.7% | 35.3% | 18.4% | 15.4% | |
| |
|---|
| Median (18 companies) | 10.0% | 7.9% | 6.3% | 5.1% | 3.0% |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | 11.3% | 7.2% | 8.7% | 8.0% | 9.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zhengye International Holdings Co Ltd ($3363) | 4.0x | 6.2x | 6.4x | 7.8x | |
| Overseas Chinese Town Asia Holdings Ltd ($3366) | 0.7x | 9.4x | 6.7x | 7.4x | |
| Sino Haijing Holdings Ltd ($1106) | 4.7x | 6.4x | 6.1x | 6.2x | |
| Come Sure Group Holdings Ltd ($794) | -1.1x | 3.6x | 4.1x | 3.8x | 3.4x |
| Kith Holdings Ltd ($1201) | 2.9x | 3.0x | 3.2x | 2.9x | |
| |
|---|
| Median (17 companies) | 0.4x | 0.9x | 0.5x | 0.3x | 1.9x |
|---|
| Lee & Man Paper Manufacturing Ltd ($2314) | 2.5x | 4.1x | 3.5x | 3.4x | 3.0x |
