China Hongqiao Group Ltd CAPEX surged on 86.0% in 2015 and Revenue jumped on 22.2%
11/03/2016 • About China Hongqiao Group Ltd (
$1378) • By InTwits
China Hongqiao Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Hongqiao Group Ltd is a growth stock: 2015 revenue growth was 22.2%, 5 year revenue CAGR was 23.9% at 2015 ROIC 10.6%
- EBITDA Margin is declining: 30.3% in 2015 vs. 34.1% in 2014 vs. 38.7% in 2011
- China Hongqiao Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.0%. At the same time it's a lot of higher than industry average of 7.0%.
- CAPEX is quite volatile: 1,439 in 2015, 1,258 in 2014, 994 in 2013, 761 in 2012, 444 in 2011
- The company has business model with average profitability: ROIC is at 10.6%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is 1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Hongqiao Group Ltd ($1378) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 23,626 | 24,805 | 29,404 | 36,086 | 44,110 | 22.2% |
| Gross Profit | 8,176 | 8,003 | 8,143 | 9,296 | 8,951 | -3.7% |
| SG&A | 211 | 365 | 500 | 705 | 967 | 37.1% |
| EBITDA | 9,140 | 9,395 | 10,287 | 12,322 | 13,372 | 8.5% |
| Net Income | 5,875 | 5,453 | 5,593 | 5,314 | 3,649 | -31.3% |
Balance Sheet
|
|---|
| Cash | 7,485 | 9,175 | 6,362 | 7,676 | 8,489 | 10.6% |
| Short Term Debt | 3,211 | 6,659 | 13,661 | 17,121 | 25,986 | 51.8% |
| Long Term Debt | 3,982 | 9,660 | 16,830 | 22,885 | 27,877 | 21.8% |
Cash flow
|
|---|
| Capex | 8,978 | 10,840 | 14,117 | 9,368 | 17,427 | 86.0% |
Ratios
|
|---|
| Revenue growth | 56.1% | 5.0% | 18.5% | 22.7% | 22.2% | |
| EBITDA growth | 42.5% | 2.8% | 9.5% | 19.8% | 8.5% | |
| Gross Margin | 34.6% | 32.3% | 27.7% | 25.8% | 20.3% | -5.5% |
| EBITDA Margin | 38.7% | 37.9% | 35.0% | 34.1% | 30.3% | -3.8% |
| Net Income Margin | 24.9% | 22.0% | 19.0% | 14.7% | 8.3% | -6.5% |
| SG&A, % of revenue | 0.9% | 1.5% | 1.7% | 2.0% | 2.2% | 0.2% |
| CAPEX, % of revenue | 38.0% | 43.7% | 48.0% | 26.0% | 39.5% | 13.5% |
| ROIC | 44.6% | 24.8% | 17.0% | 14.1% | 10.6% | -3.5% |
| ROE | 45.7% | 26.8% | 22.8% | 18.1% | 10.8% | -7.3% |
| Net Debt/EBITDA | -0.0x | 0.8x | 2.3x | 2.6x | 3.4x | 0.8x |
Revenue and profitability
The company's Revenue jumped on 22.2% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.1 pp from 8.1% to -2.0% in 2015.
Gross Margin decreased on 5.5 pp from 25.8% to 20.3% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 6.5 pp from 14.7% to 8.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
China Hongqiao Group Ltd's CAPEX/Revenue was 39.5% in 2015. CAPEX/Revenue decreased on 4.2 pp from 43.7% in 2012 to 39.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 37.8%.The company has spent a lot to CAPEX (130% of EBITDA) to secure its growth.
Return on investment
The company operates at low ROIC (10.62%) and ROE (10.80%). ROIC decreased on 3.5 pp from 14.1% to 10.6% in 2015. ROE decreased on 7.3 pp from 18.1% to 10.8% in 2015.
Leverage (Debt)
Debt level is 3.4x Net Debt / EBITDA and 4.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.8x from 2.6x to 3.4x in 2015. Debt jumped on 34.6% in 2015 while cash jumped on 10.6% in 2015.
Management team
China Hongqiao Group Ltd's CEO is Zhang Bo. Zhang Bo has 7 years tenure at the company. Zhang Ruilian is a The company's CFO. Zhang Ruilian has spent 4 years at the company.
Appendix 1: Peers in Mining
Below we provide China Hongqiao Group 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) | 33.0% | 5.4% | 0.6% | -6.5% | -7.5% |
|---|
| China Hongqiao Group Ltd ($1378) | | 5.0% | 18.5% | 22.7% | 22.2% |
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% | 28.4% |
|---|
| China Hongqiao Group Ltd ($1378) | 34.6% | 32.3% | 27.7% | 25.8% | 20.3% |
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% | 8.7% |
|---|
| China Hongqiao Group Ltd ($1378) | 38.7% | 37.9% | 35.0% | 34.1% | 30.3% |
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% | 11.0% |
|---|
| China Hongqiao Group Ltd ($1378) | 38.0% | 43.7% | 48.0% | 26.0% | 39.5% |
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 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% | |
| CGN Mining Co Ltd ($1164) | -6.4% | 2.6% | 3.3% | 7.9% | |
| |
|---|
| Median (48 companies) | 2.9% | 1.5% | 3.0% | 0.7% | -0.1% |
|---|
| China Hongqiao Group Ltd ($1378) | 44.6% | 24.8% | 17.0% | 14.1% | 10.6% |
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 | |
| MMG Ltd ($1208) | -0.0x | 2.1x | 2.0x | 10.2x | 20.2x |
| 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 | |
| |
|---|
| Median (26 companies) | 1.4x | 2.1x | 1.9x | 4.5x | 4.5x |
|---|
| China Hongqiao Group Ltd ($1378) | -0.0x | 0.8x | 2.3x | 2.6x | 3.4x |
