Towngas China Co Ltd reports 23.4% Net Income decline and 2.1% Revenue decline
17/03/2016 • About Towngas China Co Ltd (
$1083) • By InTwits
Towngas China Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 19.2% in 2015 vs. 18.8% in 2014 vs. 19.3% in 2011
- Towngas China Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.1%. At the same time it's a lot of higher than industry average of 12.3%.
- CAPEX is quite volatile: 8,278 in FY2015, 1,005 in FY2014, 871 in FY2013, 2,606 in FY2012, 725 in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.4%
- It operates with high leverage: Net Debt/EBITDA is 4.5x while industry average is 2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Towngas China Co Ltd ($1083) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,321 | 5,183 | 6,716 | 7,882 | 7,718 | -2.1% |
| EBITDA | 833 | 1,029 | 1,268 | 1,481 | 1,484 | 0.2% |
| Net Income | 709 | 841 | 1,106 | 1,054 | 807 | -23.4% |
Balance Sheet
|
|---|
| Cash | 1,923 | 2,479 | 2,230 | 1,452 | 2,138 | 47.3% |
| Short Term Debt | 1,513 | 1,946 | 2,419 | 2,483 | 3,183 | 28.2% |
| Long Term Debt | 3,374 | 4,139 | 4,482 | 5,069 | 5,585 | 10.2% |
Cash flow
|
|---|
| Capex | 913 | 1,625 | 1,724 | 2,064 | 2,035 | -1.4% |
Ratios
|
|---|
| Revenue growth | 44.9% | 20.0% | 29.6% | 17.4% | -2.1% | |
| EBITDA growth | 57.8% | 23.5% | 23.2% | 16.8% | 0.2% | |
| EBITDA Margin | 19.3% | 19.9% | 18.9% | 18.8% | 19.2% | 0.4% |
| Net Income Margin | 16.4% | 16.2% | 16.5% | 13.4% | 10.5% | -2.9% |
| CAPEX, % of revenue | 21.1% | 31.3% | 25.7% | 26.2% | 26.4% | 0.2% |
| ROIC | 4.1% | 4.5% | 4.8% | 4.9% | 4.4% | -0.6% |
| ROE | 7.8% | 8.4% | 9.6% | 8.2% | 6.0% | -2.1% |
| Net Debt/EBITDA | 3.6x | 3.5x | 3.7x | 4.1x | 4.5x | 0.3x |
Revenue and profitability
Towngas China Co Ltd's Revenue decreased on 2.1% in 2015. EBITDA Margin showed almost no change in 2015.
Net Income marign decreased on 2.9 pp from 13.4% to 10.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 26.4% in 2015. Towngas China Co Ltd's CAPEX/Revenue decreased on 5.0 pp from 31.3% in 2012 to 26.4% in 2015. It's average CAPEX/Revenue for the last three years was 26.1%.Towngas China Co Ltd has spent a lot to CAPEX (137% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (4.39%) and ROE (6.04%). ROIC decreased slightly on 0.56 pp from 4.9% to 4.4% in 2015. ROE decreased on 2.1 pp from 8.2% to 6.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.5x and Debt / EBITDA is 5.9x. Net Debt / EBITDA jumped on 0.3x from 4.1x to 4.5x in 2015. Debt jumped on 16.1% in 2015 while cash jumped on 47.3% in 2015.
Management team
Towngas China Co Ltd's CEO is Wong Wai Yee "Peter". Wong Wai Yee "Peter" has 11 years tenure at the company.
Appendix 1: Peers in Gas
Below we provide Towngas China Co Ltd benchmarking against other companies in Gas 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 Gas Holdings Ltd ($384) | | 19.4% | -5.2% | 44.8% | 21.8% |
| China Resources Gas Group Ltd ($1193) | 52.3% | -4.1% | 63.6% | 28.8% | |
| ENN Energy Holdings Ltd ($2688) | 34.4% | 19.6% | 27.4% | 26.7% | |
| China Oil & Gas Group Ltd ($603) | 67.2% | 11.4% | 31.7% | 19.5% | |
| Binhai Investment Co Ltd ($2886) | 54.8% | 35.0% | 34.2% | 14.1% | |
| |
|---|
| Median (8 companies) | 43.3% | 11.4% | 27.4% | 16.8% | -8.1% |
|---|
| Towngas China Co Ltd ($1083) | | 20.0% | 29.6% | 17.4% | -2.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Resources Gas Group Ltd ($1193) | 29.3% | 31.2% | 34.2% | 30.3% | |
| ENN Energy Holdings Ltd ($2688) | 25.9% | 26.9% | 23.8% | 20.9% | |
| China Gas Holdings Ltd ($384) | 18.3% | 19.0% | 21.0% | 20.3% | 20.4% |
| Binhai Investment Co Ltd ($2886) | 13.6% | 20.1% | 20.6% | 18.3% | |
| Beijing Enterprises Holdings Ltd ($392) | 22.1% | 20.7% | 19.7% | 17.9% | |
| |
|---|
| Median (7 companies) | 21.2% | 20.7% | 21.0% | 18.3% | 20.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 31.1% | 30.0% | 29.6% | 29.2% | |
| ENN Energy Holdings Ltd ($2688) | 18.4% | 20.4% | 15.1% | 18.2% | |
| China Resources Gas Group Ltd ($1193) | 18.2% | 16.2% | 17.4% | 17.7% | |
| China Gas Holdings Ltd ($384) | 14.2% | 15.2% | 16.5% | 16.6% | 16.8% |
| China Oil & Gas Group Ltd ($603) | 17.6% | 21.5% | 21.2% | 16.0% | |
| |
|---|
| Median (8 companies) | 17.6% | 16.2% | 17.0% | 16.3% | 7.2% |
|---|
| Towngas China Co Ltd ($1083) | 19.3% | 19.9% | 18.9% | 18.8% | 19.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 20.7% | 23.7% | 18.7% | 20.1% | |
| Binhai Investment Co Ltd ($2886) | 23.6% | 26.9% | 18.0% | 15.5% | |
| China Oil & Gas Group Ltd ($603) | 17.1% | 15.0% | 18.3% | 15.4% | |
| China Resources Gas Group Ltd ($1193) | 14.3% | 20.6% | 18.5% | 12.4% | |
| China Gas Holdings Ltd ($384) | 12.2% | 9.4% | 13.7% | 12.3% | 12.3% |
| |
|---|
| Median (8 companies) | 14.3% | 16.0% | 15.1% | 12.4% | 5.6% |
|---|
| Towngas China Co Ltd ($1083) | 21.1% | 31.3% | 25.7% | 26.2% | 26.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ENN Energy Holdings Ltd ($2688) | 13.1% | 14.3% | 11.7% | 16.4% | |
| China Resources Gas Group Ltd ($1193) | 11.9% | 6.9% | 10.4% | 11.4% | |
| Binhai Investment Co Ltd ($2886) | 7.6% | 12.2% | 12.2% | 10.9% | |
| China Gas Holdings Ltd ($384) | 6.8% | 8.4% | 8.6% | 10.6% | 10.6% |
| China Oil & Gas Group Ltd ($603) | 14.0% | 13.7% | 13.2% | 7.6% | |
| |
|---|
| Median (9 companies) | 8.0% | 7.6% | 10.4% | 7.6% | 5.9% |
|---|
| Towngas China Co Ltd ($1083) | 4.1% | 4.5% | 4.8% | 4.9% | 4.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Beijing Enterprises Holdings Ltd ($392) | 1.6x | 3.1x | 2.6x | 4.7x | |
| Binhai Investment Co Ltd ($2886) | -0.4x | 3.4x | 2.8x | 3.5x | |
| China Gas Holdings Ltd ($384) | 4.4x | 3.7x | 3.7x | 3.1x | 2.9x |
| China Oil & Gas Group Ltd ($603) | -0.8x | -0.0x | 1.0x | 2.8x | |
| Hong Kong & China Gas Co Ltd ($3) | 2.2x | 2.6x | 2.8x | 2.1x | |
| |
|---|
| Median (7 companies) | 1.3x | 2.6x | 1.6x | 2.8x | 1.2x |
|---|
| Towngas China Co Ltd ($1083) | 3.6x | 3.5x | 3.7x | 4.1x | 4.5x |
