Kunlun Energy Co Ltd reports 97.6% Net Income decline and 4.0 pp EBITDA Margin decline from 34.9% to 30.9%
18/03/2016 • About Kunlun Energy Co Ltd (
$135) • By InTwits
Kunlun Energy Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 30.9% in 2015 vs. 34.9% in 2014 vs. 46.8% in 2011
- Kunlun Energy Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 33.7%. At the same time it's a lot of higher than industry average of 13.0%.
- CAPEX is quite volatile: 5,917 in 2015, 9,553 in 2014, 15,405 in 2013, 15,391 in 2012, 13,507 in 2011
- The company has business model with low profitability: ROIC is at 7.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kunlun Energy Co Ltd ($135) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 25,915 | 32,953 | 43,430 | 48,044 | 41,641 | -13.3% |
| SG&A | 1,607 | 2,165 | 2,878 | 2,777 | 2,545 | -8.4% |
| EBITDA | 12,132 | 15,492 | 17,169 | 16,768 | 12,859 | -23.3% |
| Net Income | 5,621 | 6,518 | 6,851 | 5,610 | 137 | -97.6% |
Balance Sheet
|
|---|
| Cash | 11,718 | 19,592 | 14,897 | 10,729 | 11,771 | 9.7% |
| Short Term Debt | 2,611 | 5,111 | 13,551 | 8,659 | 7,929 | -8.4% |
| Long Term Debt | 24,964 | 26,562 | 17,799 | 16,873 | 15,984 | -5.3% |
Cash flow
|
|---|
| Capex | 13,507 | 15,391 | 15,405 | 9,553 | 5,917 | -38.1% |
Ratios
|
|---|
| Revenue growth | 49.5% | 27.2% | 31.8% | 10.6% | -13.3% | |
| EBITDA growth | 33.5% | 27.7% | 10.8% | -2.3% | -23.3% | |
| EBITDA Margin | 46.8% | 47.0% | 39.5% | 34.9% | 30.9% | -4.0% |
| Net Income Margin | 21.7% | 19.8% | 15.8% | 11.7% | 0.3% | -11.3% |
| SG&A, % of revenue | 6.2% | 6.6% | 6.6% | 5.8% | 6.1% | 0.3% |
| CAPEX, % of revenue | 52.1% | 46.7% | 35.5% | 19.9% | 14.2% | -5.7% |
| ROIC | 12.3% | 13.0% | 12.6% | 11.0% | 7.7% | -3.3% |
| ROE | 19.6% | 17.4% | 14.4% | 10.9% | 0.3% | -10.6% |
| Net Debt/EBITDA | 1.3x | 0.8x | 1.0x | 0.9x | 0.9x | 0.1x |
Revenue and profitability
The company's Revenue dropped on 13.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.88 pp from 4.0% to 4.9% in 2015.
SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 11.3 pp from 11.7% to 0.33% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Kunlun Energy Co Ltd had CAPEX/Revenue of 14.2%. CAPEX/Revenue dropped on 32.5 pp from 46.7% in 2012 to 14.2% in 2015. Average CAPEX/Revenue for the last three years was 23.2%.
Return on investment
The company operates at low ROIC (7.70%) and ROE (0.27%). ROIC decreased on 3.3 pp from 11.0% to 7.7% in 2015. ROE dropped on 10.6 pp from 10.9% to 0.27% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 1.9x. Net Debt / EBITDA increased on 0.1x from 0.9x to 0.9x in 2015. Debt decreased on 6.3% in 2015 while cash increased on 9.7% in 2015.
Management team
Kunlun Energy Co Ltd's CEO Zhao Yongqi has spent 4 years at the company.
Appendix 1: Peers in Oil&Gas
Below we provide Kunlun Energy Co Ltd benchmarking against other companies in Oil&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 CBM Group Co Ltd ($8270) | 9.9% | -27.6% | 1.8% | 60.9% | |
| Brightoil Petroleum Holdings Ltd ($933) | | 76.9% | -20.8% | 52.5% | -12.3% |
| United Energy Group Ltd ($467) | | 266.5% | 49.0% | 27.8% | -11.5% |
| Yanchang Petroleum International Ltd ($346) | -1.8% | 641.9% | 155.6% | 15.5% | |
| Zhongyu Gas Holdings Ltd ($3633) | 53.4% | 53.5% | 13.7% | 9.0% | |
| |
|---|
| Median (17 companies) | 26.5% | 10.3% | 3.7% | -3.9% | -11.9% |
|---|
| Kunlun Energy Co Ltd ($135) | | 27.2% | 31.8% | 10.6% | -13.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| EPI Holdings Ltd ($689) | 0.3% | 58.0% | 50.7% | 54.6% | |
| United Energy Group Ltd ($467) | 15.4% | 39.4% | 48.0% | 53.8% | 51.5% |
| Enviro Energy International Holdings Ltd ($1102) | 25.0% | 49.3% | 76.9% | 38.6% | 3.4% |
| South Sea Petroleum Holdings Ltd ($76) | 48.2% | 27.3% | 25.3% | 38.5% | |
| Zhongyu Gas Holdings Ltd ($3633) | 23.9% | 23.6% | 23.8% | 24.9% | |
| |
|---|
| Median (12 companies) | 6.3% | 8.8% | 5.4% | 9.7% | 3.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| United Energy Group Ltd ($467) | 100.6% | 71.2% | 65.3% | 69.8% | -31.9% |
| MIE Holdings Corp ($1555) | 58.1% | 57.0% | 54.5% | 57.1% | |
| CNOOC Ltd ($883) | 50.3% | 48.5% | 47.2% | 50.7% | |
| Sino Oil And Gas Holdings Ltd ($702) | -273.6% | -170.8% | -132.3% | 49.6% | |
| Zhongyu Gas Holdings Ltd ($3633) | 15.3% | 18.6% | 18.9% | 21.0% | |
| |
|---|
| Median (17 companies) | 4.0% | 3.7% | 1.4% | 5.9% | -21.4% |
|---|
| Kunlun Energy Co Ltd ($135) | 46.8% | 47.0% | 39.5% | 34.9% | 30.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Enviro Energy International Holdings Ltd ($1102) | 1,208.5% | 301.4% | 46.5% | 111.0% | 7.9% |
| MIE Holdings Corp ($1555) | 43.9% | 52.2% | 43.3% | 44.1% | |
| United Energy Group Ltd ($467) | 60.0% | 37.2% | 62.7% | 42.4% | 49.1% |
| CNOOC Ltd ($883) | 21.9% | 25.4% | 30.3% | 34.8% | |
| China CBM Group Co Ltd ($8270) | 52.3% | 58.1% | 81.7% | 22.5% | |
| |
|---|
| Median (17 companies) | 17.6% | 12.5% | 6.7% | 4.5% | 4.4% |
|---|
| Kunlun Energy Co Ltd ($135) | 52.1% | 46.7% | 35.5% | 19.9% | 14.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CNOOC Ltd ($883) | 32.4% | 25.7% | 18.1% | 15.8% | |
| United Energy Group Ltd ($467) | 3.6% | 7.4% | 10.3% | 15.7% | -25.0% |
| Shanghai Tonva Petrochemical Co Ltd ($1103) | 5.4% | 7.3% | 12.6% | 13.0% | |
| Zhongyu Gas Holdings Ltd ($3633) | 10.6% | 17.4% | 15.0% | 12.3% | |
| MIE Holdings Corp ($1555) | 24.4% | 17.5% | 11.8% | 9.7% | |
| |
|---|
| Median (19 companies) | 3.6% | 3.8% | 1.6% | 1.5% | -12.6% |
|---|
| Kunlun Energy Co Ltd ($135) | 12.3% | 13.0% | 12.6% | 11.0% | 7.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Titan Petrochemicals Group Ltd ($1192) | | | | 95.2x | |
| Sino Oil And Gas Holdings Ltd ($702) | | | | 55.5x | |
| Zhongyu Gas Holdings Ltd ($3633) | 2.0x | 1.6x | 2.3x | 3.7x | |
| Shanghai Tonva Petrochemical Co Ltd ($1103) | 8.3x | 6.0x | 4.3x | 3.6x | |
| China CBM Group Co Ltd ($8270) | 1.3x | 3.2x | | 3.3x | |
| |
|---|
| Median (12 companies) | 1.2x | 1.6x | 1.2x | 2.7x | 2.9x |
|---|
| Kunlun Energy Co Ltd ($135) | 1.3x | 0.8x | 1.0x | 0.9x | 0.9x |
