Zhengzhou Coal Mining Machinery Group Co Ltd reports 82.4% EBITDA decline and 3.7 pp EBITDA Margin decline from 4.8% to 1.2%
04/03/2016 • About Zhengzhou Coal Mining Machinery Group Co Ltd (
$564) • By InTwits
Zhengzhou Coal Mining Machinery Group Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhengzhou Coal Mining Machinery Group Co Ltd is a company in decline: 2015 revenue growth was -26.3%, 5 years revenue CAGR was -6.6%
- EBITDA Margin is declining: 1.2% in 2015 vs. 4.8% in 2014 vs. 17.8% in 2011
- EBITDA Margin is quite volatile: 1.2% in 2015, 4.8% in 2014, 13.9% in 2013, 19.0% in 2012, 17.8% in 2011
- Zhengzhou Coal Mining Machinery Group Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's in pair with industry average of 3.6%.
- CAPEX is quite volatile: 60.9 in 2015, 122 in 2014, 193 in 2013, 369 in 2012, 493 in 2011
- The company has unprofitable business model: ROIC is at -1.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Zhengzhou Coal Mining Machinery Group Co Ltd ($564) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 8,060 | 10,213 | 8,055 | 6,124 | 4,511 | -26.3% |
| Gross Profit | 1,952 | 2,684 | 1,822 | 1,054 | 857 | -18.7% |
| SG&A | 479 | 658 | 591 | 496 | 519 | 4.7% |
| EBITDA | 1,436 | 1,942 | 1,122 | 296 | 52 | -82.4% |
| Net Income | 1,194 | 1,589 | 867 | 205 | 42 | -79.4% |
Balance Sheet
|
|---|
| Cash | 3,239 | 4,479 | 2,656 | 2,368 | 2,011 | -15.1% |
| Short Term Debt | 15 | 0 | 136 | 97 | 0 | -100.0% |
| Long Term Debt | 65 | 49 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 493 | 369 | 193 | 122 | 61 | -49.9% |
Ratios
|
|---|
| Revenue growth | 26.8% | 26.7% | -21.1% | -24.0% | -26.3% | |
| EBITDA growth | 29.8% | 35.2% | -42.2% | -73.6% | -82.4% | |
| Gross Margin | 24.2% | 26.3% | 22.6% | 17.2% | 19.0% | 1.8% |
| EBITDA Margin | 17.8% | 19.0% | 13.9% | 4.8% | 1.2% | -3.7% |
| Net Income Margin | 14.8% | 15.6% | 10.8% | 3.4% | 0.9% | -2.4% |
| SG&A, % of revenue | 5.9% | 6.4% | 7.3% | 8.1% | 11.5% | 3.4% |
| CAPEX, % of revenue | 6.1% | 3.6% | 2.4% | 2.0% | 1.3% | -0.6% |
| ROIC | 22.7% | 22.4% | 9.7% | 1.2% | -1.3% | -2.4% |
| ROE | 22.0% | 21.1% | 9.3% | 2.2% | 0.4% | -1.7% |
| Net Debt/EBITDA | -2.2x | -2.3x | -2.2x | -7.7x | -38.7x | -31.0x |
Revenue and profitability
Zhengzhou Coal Mining Machinery Group Co Ltd's Revenue dropped on 26.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.7 pp from 4.8% to 1.2% in 2015.
Gross Margin increased slightly on 1.8 pp from 17.2% to 19.0% in 2015. SG&A as a % of Revenue increased on 3.4 pp from 8.1% to 11.5% in 2015.
Net Income marign decreased on 2.4 pp from 3.4% to 0.94% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Zhengzhou Coal Mining Machinery Group Co Ltd had CAPEX/Revenue of 1.3%. Zhengzhou Coal Mining Machinery Group Co Ltd's CAPEX/Revenue decreased on 2.3 pp from 3.6% in 2012 to 1.3% in 2015. Average CAPEX/Revenue for the last three years was 1.9%.Zhengzhou Coal Mining Machinery Group Co Ltd has spent a lot to CAPEX (117% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-1.27%) and low but positive ROE (0.45%). ROIC decreased on 2.4 pp from 1.2% to -1.3% in 2015. ROE decreased slightly on 1.7 pp from 2.2% to 0.45% in 2015.
Leverage (Debt)
The company paid down all the debt in 2015. Cash dropped on 15.1% in 2015.
Appendix 1: Peers in Machinery-Diversified
Below we provide Zhengzhou Coal Mining Machinery Group Co Ltd benchmarking against other companies in Machinery-Diversified 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 |
|---|
| Sun East Technology Holdings Ltd ($365) | | -25.1% | -10.7% | 39.3% | 6.4% |
| Shanghai Prime Machinery Co Ltd ($2345) | 30.3% | 2.6% | -8.9% | 37.3% | |
| Sinoref Holdings Ltd ($1020) | 1.5% | -0.2% | -42.2% | 29.2% | |
| North Asia Strategic Holdings Ltd ($8080) | | -52.2% | -29.1% | 23.7% | 42.6% |
| Huazhang Technology Holding Ltd ($1673) | | 131.6% | 9.5% | 22.9% | 23.5% |
| |
|---|
| Median (22 companies) | 13.0% | -5.2% | -3.3% | 2.0% | 12.5% |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | | 26.7% | -21.1% | -24.0% | -26.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 38.3% | 49.1% | 51.7% | 54.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | |
| Haitian International Holdings Ltd ($1882) | 29.7% | 30.1% | 31.6% | 32.4% | |
| CHTC Fong's Industries Co Ltd ($641) | 26.5% | 24.4% | 30.0% | 32.3% | |
| Huazhang Technology Holding Ltd ($1673) | 29.0% | 28.0% | 28.5% | 27.9% | 24.7% |
| |
|---|
| Median (22 companies) | 23.6% | 22.7% | 20.8% | 19.4% | 17.4% |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | 24.2% | 26.3% | 22.6% | 17.2% | 19.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 18.5% | 24.0% | 26.9% | 28.0% | |
| Haitian International Holdings Ltd ($1882) | 20.5% | 19.7% | 20.7% | 21.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | |
| Huazhang Technology Holding Ltd ($1673) | 3.1% | 11.6% | 11.2% | 12.5% | 11.3% |
| |
|---|
| Median (22 companies) | 8.7% | 8.3% | 8.5% | 8.6% | 4.0% |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | 17.8% | 19.0% | 13.9% | 4.8% | 1.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China High Precision Automation Group Ltd ($591) | 33.0% | 20.5% | 9.1% | 18.4% | 0.6% |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | |
| LK Technology Holdings Ltd ($558) | 7.6% | 9.3% | 10.2% | 9.1% | 5.6% |
| First Tractor Co Ltd ($38) | 6.3% | 4.9% | 4.3% | 7.3% | |
| Greens Holdings Ltd ($1318) | 9.3% | 8.9% | 3.1% | 7.1% | |
| |
|---|
| Median (22 companies) | 5.8% | 4.2% | 3.9% | 4.4% | 1.8% |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | 6.1% | 3.6% | 2.4% | 2.0% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | |
| Huazhang Technology Holding Ltd ($1673) | | 29.6% | 16.2% | 16.3% | 16.2% |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | |
| China CNR Corp Ltd ($6199) | 11.1% | 7.9% | 9.3% | 10.6% | |
| |
|---|
| Median (22 companies) | 9.8% | 6.8% | 3.6% | 2.8% | 1.7% |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | 22.7% | 22.4% | 9.7% | 1.2% | -1.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | |
| Shanghai Prime Machinery Co Ltd ($2345) | -0.0x | -0.6x | 0.3x | 6.0x | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 1.9x | 3.0x | 11.4x | 5.6x | |
| Honghua Group Ltd ($196) | 0.1x | 1.2x | 3.2x | 5.2x | |
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x |
| |
|---|
| Median (18 companies) | -0.4x | -0.7x | -0.4x | 0.2x | -0.5x |
|---|
| Zhengzhou Coal Mining Machinery Group Co Ltd ($564) | -2.2x | -2.3x | -2.2x | -7.7x | -38.7x |
