West China Cement Ltd reports 42.9% CAPEX decline and 9.8% Revenue decline
14/03/2016 • About West China Cement Ltd (
$2233) • By InTwits
West China Cement Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- West China Cement Ltd doesn't have a profitable business model yet: 2015 ROIC is 1.3%
- EBITDA Margin is declining: 23.5% in 2015 vs. 25.5% in 2014 vs. 36.4% in 2011
- West China Cement Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 22.4%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: 353 in 2015, 618 in 2014, 581 in 2013, 607 in 2012, 1,747 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.3%
- It operates with high leverage: Net Debt/EBITDA is 4.2x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
West China Cement Ltd ($2233) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,190 | 3,524 | 4,168 | 3,883 | 3,501 | -9.8% |
| Gross Profit | 884 | 675 | 729 | 598 | 463 | -22.5% |
| SG&A | 215 | 235 | 279 | 294 | 314 | 6.6% |
| EBITDA | 1,161 | 1,056 | 1,189 | 989 | 822 | -16.9% |
| Net Income | 662 | 365 | 378 | 36 | -309 | -961.2% |
Balance Sheet
|
|---|
| Cash | 530 | 369 | 507 | 496 | 455 | -8.2% |
| Short Term Debt | 645 | 1,257 | 709 | 745 | 1,337 | 79.5% |
| Long Term Debt | 2,667 | 2,613 | 3,208 | 3,288 | 2,566 | -21.9% |
Cash flow
|
|---|
| Capex | 1,747 | 607 | 581 | 618 | 353 | -42.9% |
Ratios
|
|---|
| Revenue growth | 7.8% | 10.5% | 18.3% | -6.8% | -9.8% | |
| EBITDA growth | -15.3% | -9.0% | 12.5% | -16.8% | -16.9% | |
| Gross Margin | 27.7% | 19.2% | 17.5% | 15.4% | 13.2% | -2.2% |
| EBITDA Margin | 36.4% | 30.0% | 28.5% | 25.5% | 23.5% | -2.0% |
| Net Income Margin | 20.8% | 10.4% | 9.1% | 0.9% | -8.8% | -9.8% |
| SG&A, % of revenue | 6.7% | 6.7% | 6.7% | 7.6% | 9.0% | 1.4% |
| CAPEX, % of revenue | 54.8% | 17.2% | 13.9% | 15.9% | 10.1% | -5.8% |
| ROIC | 13.5% | 7.3% | 6.9% | 4.0% | 1.3% | -2.8% |
| ROE | 17.4% | 8.3% | 7.7% | 0.7% | -5.7% | -6.4% |
| Net Debt/EBITDA | 2.4x | 3.3x | 2.9x | 3.6x | 4.2x | 0.6x |
Revenue and profitability
The company's Revenue decreased on 9.8% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 2.0 pp from 25.5% to 23.5% in 2015.
Gross Margin decreased on 2.2 pp from 15.4% to 13.2% in 2015. SG&A as a % of Revenue increased slightly on 1.4 pp from 7.6% to 9.0% in 2015.
Net Income marign decreased on 9.8 pp from 0.92% to -8.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 West China Cement Ltd had CAPEX/Revenue of 10.1%. CAPEX/Revenue decreased on 7.2 pp from 17.2% in 2012 to 10.1% in 2015. It's average CAPEX/Revenue for the last three years was 13.3%.
Return on investment
The company operates at low but positive ROIC (1.26%) and negative ROE (-5.71%). ROIC decreased on 2.8 pp from 4.0% to 1.3% in 2015. ROE decreased on 6.4 pp from 0.72% to -5.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.2x and Debt / EBITDA is 4.8x. Net Debt / EBITDA jumped on 0.6x from 3.6x to 4.2x in 2015. Debt decreased on 3.2% in 2015 while cash decreased on 8.2% in 2015.
Appendix 1: Peers in Building Materials
Below you can find West China Cement Ltd benchmarking vs. other companies in Building Materials industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Summit Ascent Holdings Ltd ($102) | -18.8% | -86.4% | -19.6% | 177.1% | |
| Pacific Plywood Hldg Ltd ($767) | | -34.9% | -14.5% | 119.5% | |
| Luoyang Glass Co Ltd ($1108) | -21.4% | -40.3% | -32.3% | 76.2% | |
| Prosperity International Holdings HK Ltd ($803) | | -23.9% | -43.3% | 55.2% | -34.4% |
| China Singyes Solar Technologies Holdings Ltd ($750) | 35.0% | 28.7% | 34.0% | 20.7% | |
| |
|---|
| Median (24 companies) | 33.2% | -3.5% | 9.6% | 6.3% | -18.0% |
|---|
| West China Cement Ltd ($2233) | | 10.5% | 18.3% | -6.8% | -9.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pacific Plywood Hldg Ltd ($767) | 95.0% | 91.4% | 82.0% | 97.2% | |
| Dongpeng Holdings Co Ltd ($3386) | 28.7% | 35.6% | 37.1% | 38.5% | |
| Luks Group Vietnam Holdings Co Ltd ($366) | 37.6% | 37.2% | 36.9% | 37.0% | |
| Anhui Conch Cement Co Ltd ($914) | 39.4% | 27.3% | 32.5% | 33.2% | |
| China Resources Cement Holdings Ltd ($1313) | 31.1% | 24.1% | 28.5% | 31.3% | 24.0% |
| |
|---|
| Median (24 companies) | 26.0% | 21.8% | 22.6% | 21.2% | 24.0% |
|---|
| West China Cement Ltd ($2233) | 27.7% | 19.2% | 17.5% | 15.4% | 13.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pacific Plywood Hldg Ltd ($767) | 53.6% | 12.6% | -19.8% | 50.5% | |
| Anhui Conch Cement Co Ltd ($914) | 38.8% | 27.1% | 31.1% | 32.1% | |
| TCC International Holdings Ltd ($1136) | 26.5% | 19.2% | 26.1% | 29.0% | |
| Asia Cement China Holdings Corp ($743) | 30.3% | 20.6% | 24.9% | 27.0% | |
| China Tianrui Group Cement Co Ltd ($1252) | 32.4% | 28.5% | 23.7% | 26.7% | |
| |
|---|
| Median (24 companies) | 18.3% | 15.1% | 16.9% | 17.4% | -0.7% |
|---|
| West China Cement Ltd ($2233) | 36.4% | 30.0% | 28.5% | 25.5% | 23.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Singyes Solar Technologies Holdings Ltd ($750) | 40.4% | 11.9% | 32.1% | 23.6% | |
| China Glass Holdings Ltd ($3300) | 37.2% | 19.6% | 12.5% | 12.4% | |
| China Shanshui Cement Group Ltd ($691) | 13.5% | 18.9% | 21.1% | 12.1% | |
| China Lesso Group Holdings Ltd ($2128) | 12.0% | 13.6% | 9.1% | 11.8% | |
| Anhui Conch Cement Co Ltd ($914) | 16.1% | 14.7% | 12.3% | 11.1% | |
| |
|---|
| Median (24 companies) | 6.3% | 9.7% | 8.3% | 5.4% | 11.1% |
|---|
| West China Cement Ltd ($2233) | 54.8% | 17.2% | 13.9% | 15.9% | 10.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dongpeng Holdings Co Ltd ($3386) | 49.7% | 37.1% | 35.8% | 27.2% | |
| Anhui Conch Cement Co Ltd ($914) | 27.2% | 12.7% | 17.5% | 18.4% | |
| China Lesso Group Holdings Ltd ($2128) | 26.8% | 20.5% | 19.4% | 18.2% | |
| China Wood Optimization Holding Ltd ($8099) | | 33.5% | 27.3% | 17.7% | 17.7% |
| China Singyes Solar Technologies Holdings Ltd ($750) | 21.1% | 18.6% | 19.9% | 16.0% | |
| |
|---|
| Median (24 companies) | 12.1% | 5.0% | 6.9% | 5.7% | -2.7% |
|---|
| West China Cement Ltd ($2233) | 13.5% | 7.3% | 6.9% | 4.0% | 1.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sustainable Forest Holdings Ltd ($723) | 0.9x | | | 9.6x | |
| China National Building Material Co Ltd ($3323) | 3.9x | 6.7x | 6.8x | 6.3x | |
| BBMG Corp ($2009) | 4.4x | 4.6x | 5.0x | 6.1x | |
| China Tianrui Group Cement Co Ltd ($1252) | 3.0x | 4.2x | 5.1x | 5.2x | |
| China Shanshui Cement Group Ltd ($691) | 1.8x | 3.0x | 4.1x | 4.8x | |
| |
|---|
| Median (20 companies) | 0.9x | 2.4x | 1.1x | 1.9x | 1.6x |
|---|
| West China Cement Ltd ($2233) | 2.4x | 3.3x | 2.9x | 3.6x | 4.2x |
