MMG Ltd Net Debt / EBITDA surged on 10.0x from 10.2x to 20.2x in 2015 while EBITDA dropped on 38.8%
09/03/2016 • About MMG Ltd (
$1208) • By InTwits
MMG Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MMG Ltd doesn't have a profitable business model yet: 2015 ROIC is -8.7%
- MMG Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 41.5%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 1,959 in 2015, 1,038 in 2014, 558 in 2013, 642 in 2012, 380 in 2011
- The company has unprofitable business model: ROIC is at -8.7%
- It operates with high leverage: Net Debt/EBITDA is 20.2x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
MMG Ltd ($1208) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,228 | 2,499 | 2,470 | 2,480 | 1,951 | -21.3% |
| Gross Profit | 937 | 808 | 730 | 743 | 280 | -62.3% |
| SG&A | 125 | 207 | 190 | 227 | 189 | -16.8% |
| EBITDA | 1,061 | 735 | 738 | 779 | 477 | -38.8% |
| Net Income | 541 | 209 | 103 | 104 | -1,027 | -1,088.9% |
Balance Sheet
|
|---|
| Cash | 1,097 | 96 | 137 | 251 | 598 | 138.2% |
| Short Term Debt | 787 | 371 | 351 | 117 | 277 | 137.3% |
| Long Term Debt | 295 | 1,265 | 1,271 | 8,092 | 9,986 | 23.4% |
Cash flow
|
|---|
| Capex | 380 | 642 | 558 | 1,038 | 1,959 | 88.7% |
Ratios
|
|---|
| Revenue growth | 16.1% | 12.2% | -1.2% | 0.4% | -21.3% | |
| EBITDA growth | 26.7% | -30.7% | 0.5% | 5.6% | -38.8% | |
| Gross Margin | 42.0% | 32.3% | 29.6% | 29.9% | 14.3% | -15.6% |
| EBITDA Margin | 47.6% | 29.4% | 29.9% | 31.4% | 24.5% | -7.0% |
| Net Income Margin | 24.3% | 8.4% | 4.2% | 4.2% | -52.6% | -56.8% |
| SG&A, % of revenue | 5.6% | 8.3% | 7.7% | 9.1% | 9.7% | 0.5% |
| CAPEX, % of revenue | 17.1% | 25.7% | 22.6% | 41.9% | 100.4% | 58.6% |
| ROIC | 29.0% | 14.0% | 7.5% | 3.1% | -8.7% | -11.8% |
| ROE | 56.6% | 14.1% | 6.6% | 6.3% | -87.3% | -93.5% |
| Net Debt/EBITDA | -0.0x | 2.1x | 2.0x | 10.2x | 20.2x | 10.0x |
Revenue and profitability
The company's Revenue dropped on 21.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.0 pp from 31.4% to 24.5% in 2015.
Gross Margin dropped on 15.6 pp from 29.9% to 14.3% in 2015. SG&A as a % of Revenue increased slightly on 0.52 pp from 9.1% to 9.7% in 2015.
Net Income marign dropped on 56.8 pp from 4.2% to -52.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 100% in 2015. MMG Ltd showed fast CAPEX/Revenue growth of 74.7 pp from 25.7% in 2012 to 100% in 2015. It's average CAPEX/Revenue for the last three years was 55.0%.Battling declining revenue MMG Ltd made large investments to CAPEX (410% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-8.65%) and ROE (-87.25%). ROIC dropped on 11.8 pp from 3.1% to -8.7% in 2015. ROE dropped on 93.5 pp from 6.3% to -87.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 20.2x and Debt / EBITDA is 21.5x. Net Debt / EBITDA surged on 10.0x from 10.2x to 20.2x in 2015. Debt jumped on 25.0% in 2015 while cash jumped on 138% in 2015.
Appendix 1: Peers in Mining
Below we provide MMG Ltd benchmarking against other companies in Mining 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 |
|---|
| Xinjiang Xinxin Mining Industry Co Ltd ($3833) | 24.0% | 4.8% | -44.7% | 303.0% | |
| Huili Resources Group Ltd ($1303) | -47.8% | -33.6% | -91.6% | 219.4% | |
| North Mining Shares Co Ltd ($433) | 1.7% | -5.5% | -57.1% | 187.0% | |
| China Kingstone Mining Holdings Ltd ($1380) | 4,275.3% | -94.5% | -55.6% | 155.2% | |
| Ding He Mining Holdings Ltd ($705) | 31.6% | 29.9% | 43.8% | 89.8% | |
| |
|---|
| Median (47 companies) | 34.8% | 5.0% | 2.4% | -6.5% | -7.4% |
|---|
| MMG Ltd ($1208) | | 12.2% | -1.2% | 0.4% | -21.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Billion Resources Ltd ($274) | 20.3% | 71.4% | 47.2% | 73.4% | |
| Sun International Resources Ltd ($8029) | 77.6% | 83.2% | 73.1% | 64.8% | 69.4% |
| China Polymetallic Mining Ltd ($2133) | 76.9% | 81.8% | 74.2% | 51.8% | 38.9% |
| China Precious Metal Resources Holdings Co Ltd ($1194) | 64.7% | 63.9% | 54.9% | 51.2% | |
| Hengshi Mining Investments Ltd ($1370) | 54.6% | 32.4% | 55.3% | 50.1% | |
| |
|---|
| Median (47 companies) | 19.1% | 13.4% | 14.0% | 15.3% | 28.9% |
|---|
| MMG Ltd ($1208) | 42.0% | 32.3% | 29.6% | 29.9% | 14.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Precious Metal Resources Holdings Co Ltd ($1194) | 73.1% | 70.0% | 64.6% | 59.6% | |
| China Polymetallic Mining Ltd ($2133) | -322.0% | 62.8% | 58.5% | 54.1% | 2.8% |
| G-Resources Group Ltd ($1051) | | | 54.5% | 53.4% | |
| China Gold International Resources Corp Ltd ($2099) | | 41.7% | 38.3% | 47.3% | 33.7% |
| Hengshi Mining Investments Ltd ($1370) | 45.7% | 22.8% | 52.0% | 45.4% | |
| |
|---|
| Median (47 companies) | 5.9% | 4.7% | 7.5% | 4.4% | 6.9% |
|---|
| MMG Ltd ($1208) | 47.6% | 29.4% | 29.9% | 31.4% | 24.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mongolia Energy Corp Ltd ($276) | | 8,006.5% | 1,061.7% | 30,555.4% | 1,973.0% |
| Huili Resources Group Ltd ($1303) | 3.9% | 181.0% | 1,508.6% | 279.5% | |
| Kaz Minerals ($847) | 19.8% | 36.6% | 136.5% | 168.8% | 168.7% |
| China Gold International Resources Corp Ltd ($2099) | | 64.7% | 156.1% | 95.6% | 81.4% |
| IRC Ltd ($1029) | 129.7% | 102.1% | 70.6% | 82.5% | |
| |
|---|
| Median (47 companies) | 14.3% | 17.0% | 15.3% | 11.1% | 9.6% |
|---|
| MMG Ltd ($1208) | 17.1% | 25.7% | 22.6% | 41.9% | 100.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Silver Group Ltd ($815) | 48.0% | 57.6% | 31.6% | 35.8% | |
| Hengshi Mining Investments Ltd ($1370) | 153.0% | 50.1% | 60.1% | 20.7% | |
| China Hongqiao Group Ltd ($1378) | 44.6% | 24.8% | 17.0% | 14.1% | |
| China Nonferrous Mining Corp Ltd ($1258) | 10.9% | 14.7% | 10.8% | 11.8% | |
| Xingfa Aluminium Holdings Ltd ($98) | 3.8% | 7.6% | 8.8% | 11.7% | |
| |
|---|
| Median (48 companies) | 2.9% | 1.5% | 3.0% | 0.7% | 0.8% |
|---|
| MMG Ltd ($1208) | 29.0% | 14.0% | 7.5% | 3.1% | -8.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Xinjiang Xinxin Mining Industry Co Ltd ($3833) | 0.9x | 8.4x | 39.4x | 10.3x | |
| China Daye Non-Ferrous Metals Mining Ltd ($661) | 5.8x | 9.2x | 9.7x | 9.2x | |
| Midas Holdings Ltd ($1021) | 1.4x | 4.3x | 6.5x | 8.7x | 8.0x |
| Lingbao Gold Co Ltd ($3330) | 3.5x | 5.3x | | 8.3x | |
| Xingye Copper International Group Ltd ($505) | 3.8x | 5.3x | 7.5x | 6.7x | |
| |
|---|
| Median (26 companies) | 1.4x | 1.5x | 1.9x | 3.8x | 2.9x |
|---|
| MMG Ltd ($1208) | -0.0x | 2.1x | 2.0x | 10.2x | 20.2x |
