Yip's Chemical Holdings Ltd revenue started to decline in 2015: dropped 16.3% vs. 3.8% growth a year earliner
18/03/2016 • About Yip's Chemical Holdings Ltd (
$408) • By InTwits
Yip's Chemical Holdings 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: 4.6% in 2015 vs. 4.4% in 2014 vs. 3.9% in 2011
- Yip's Chemical Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's a lot of higher than industry average of 8.8%.
- CAPEX is quite volatile: 86.0 in 2015, 47.7 in 2014, 87.6 in 2013, 107 in 2012, 290 in 2011
- The company has potentially unprofitable business model: ROIC is at 4.1%
- It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Yip's Chemical Holdings Ltd ($408) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 8,276 | 8,894 | 9,876 | 10,256 | 8,584 | -16.3% |
| Gross Profit | 1,139 | 1,500 | 1,507 | 1,508 | 1,380 | -8.5% |
| SG&A | | 1,113 | 1,186 | 1,213 | 1,133 | -6.6% |
| EBITDA | 324 | 505 | 532 | 456 | 397 | -12.9% |
| Net Income | 201 | 276 | 251 | 223 | 48 | -78.6% |
Balance Sheet
|
|---|
| Cash | 716 | 947 | 1,318 | 1,343 | 1,350 | 0.5% |
| Short Term Debt | 939 | 923 | 1,506 | 1,811 | 1,171 | -35.3% |
| Long Term Debt | 1,221 | 1,451 | 1,252 | 1,272 | 1,604 | 26.1% |
Cash flow
|
|---|
| Capex | 299 | 351 | 215 | 174 | 231 | 32.5% |
Ratios
|
|---|
| Revenue growth | 51.7% | 7.5% | 11.0% | 3.8% | -16.3% | |
| EBITDA growth | -44.5% | 56.1% | 5.2% | -14.3% | -12.9% | |
| Gross Margin | 13.8% | 16.9% | 15.3% | 14.7% | 16.1% | 1.4% |
| EBITDA Margin | 3.9% | 5.7% | 5.4% | 4.4% | 4.6% | 0.2% |
| Net Income Margin | 2.4% | 3.1% | 2.5% | 2.2% | 0.6% | -1.6% |
| SG&A, % of revenue | | 12.5% | 12.0% | 11.8% | 13.2% | 1.4% |
| CAPEX, % of revenue | 3.6% | 3.9% | 2.2% | 1.7% | 2.7% | 1.0% |
| ROIC | 5.5% | 7.7% | 6.8% | 4.9% | 4.1% | -0.8% |
| ROE | 8.8% | 10.6% | 8.8% | 7.5% | 1.7% | -5.8% |
| Net Debt/EBITDA | 4.5x | 2.8x | 2.7x | 3.8x | 3.6x | -0.2x |
Revenue and profitability
The company's Revenue dropped on 16.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.8 pp from 7.2% to 10.0% in 2015.
Gross Margin increased slightly on 1.4 pp from 14.7% to 16.1% in 2015. SG&A as a % of Revenue increased slightly on 1.4 pp from 11.8% to 13.2% in 2015.
Net Income marign decreased slightly on 1.6 pp from 2.2% to 0.56% in 2015.
Capital expenditures (CAPEX) and working capital investments
Yip's Chemical Holdings Ltd's CAPEX/Revenue was 2.7% in 2015. CAPEX/Revenue decreased slightly on 1.2 pp from 3.9% in 2012 to 2.7% in 2015. It's average CAPEX/Revenue for the last three years was 2.2%.Battling declining revenue the company invested a large share of EBITDA (58.2%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (4.06%) and ROE (1.73%). ROIC decreased slightly on 0.84 pp from 4.9% to 4.1% in 2015. ROE decreased on 5.8 pp from 7.5% to 1.7% in 2015.
Leverage (Debt)
Debt level is 3.6x Net Debt / EBITDA and 7.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 3.8x to 3.6x in 2015. Debt decreased on 10.0% in 2015 while cash increased slightly on 0.53% in 2015.
Appendix 1: Peers in Chemicals
Below you can find Yip's Chemical Holdings Ltd benchmarking vs. other companies in Chemicals 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 |
|---|
| Bestway International Holdings Ltd ($718) | | -25.4% | -62.1% | 330.3% | 238.4% |
| Jilin Qifeng Chemical Fiber Co Ltd ($549) | 39.7% | -33.6% | 5.5% | 29.1% | |
| China XLX Fertiliser Ltd ($1866) | | 7.0% | 0.6% | 28.0% | 13.9% |
| Century Sunshine Group Holdings Ltd ($509) | 49.2% | 68.7% | 32.0% | 26.4% | |
| Landing International Development Ltd ($582) | | 2.1% | 15.9% | 23.3% | 10.4% |
| |
|---|
| Median (31 companies) | 31.3% | 2.0% | 9.4% | 1.4% | -0.6% |
|---|
| Yip's Chemical Holdings Ltd ($408) | | 7.5% | 11.0% | 3.8% | -16.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 74.3% | 70.5% | 69.1% | 70.8% | 69.9% |
| China Flavors & Fragrances Co Ltd ($3318) | 41.3% | 46.8% | 48.6% | 47.8% | 48.9% |
| Smartac Group China Holdings Ltd ($395) | 17.3% | -1.8% | 11.2% | 40.4% | |
| Bracell Ltd ($1768) | 40.1% | 30.5% | 37.3% | 37.3% | 38.4% |
| Yingde Gases Group Co Ltd ($2168) | 34.2% | 31.7% | 31.0% | 32.1% | |
| |
|---|
| Median (31 companies) | 19.8% | 19.5% | 18.5% | 17.7% | 22.6% |
|---|
| Yip's Chemical Holdings Ltd ($408) | 13.8% | 16.9% | 15.3% | 14.7% | 16.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 66.4% | 63.8% | 59.1% | 60.0% | 58.3% |
| Bracell Ltd ($1768) | 30.1% | 22.3% | 30.8% | 38.2% | 35.9% |
| Yingde Gases Group Co Ltd ($2168) | 32.3% | 29.4% | 29.8% | 32.3% | |
| China First Chemical Holdings Ltd ($2121) | 29.7% | 26.6% | 30.0% | 29.6% | |
| Century Sunshine Group Holdings Ltd ($509) | 15.5% | 24.2% | 28.1% | 27.6% | |
| |
|---|
| Median (31 companies) | 15.5% | 15.8% | 14.5% | 13.8% | 13.4% |
|---|
| Yip's Chemical Holdings Ltd ($408) | 3.9% | 5.7% | 5.4% | 4.4% | 4.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Landing International Development Ltd ($582) | 27.9% | 7.2% | 29.6% | 419.5% | 247.4% |
| China Zenith Chemical Group Ltd ($362) | 36.8% | 147.3% | 55.7% | 67.4% | 152.2% |
| Smartac Group China Holdings Ltd ($395) | 22.5% | 14.0% | 4.7% | 49.3% | |
| China Flavors & Fragrances Co Ltd ($3318) | 16.4% | 15.8% | 20.1% | 42.4% | 35.8% |
| Bracell Ltd ($1768) | 24.4% | 22.3% | 64.3% | 35.4% | 11.7% |
| |
|---|
| Median (31 companies) | 8.7% | 9.6% | 8.7% | 5.9% | 8.2% |
|---|
| Yip's Chemical Holdings Ltd ($408) | 3.6% | 3.9% | 2.2% | 1.7% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huabao International Holdings Ltd ($336) | 34.6% | 28.7% | 25.2% | 26.2% | 23.3% |
| Tiande Chemical Holdings Ltd ($609) | 24.4% | 26.2% | 29.4% | 20.7% | 20.6% |
| Century Sunshine Group Holdings Ltd ($509) | 3.5% | 11.3% | 15.9% | 16.4% | |
| Fufeng Group Ltd ($546) | 13.9% | 9.6% | 10.8% | 11.6% | 10.3% |
| Yingde Gases Group Co Ltd ($2168) | 14.7% | 10.6% | 11.5% | 11.5% | |
| |
|---|
| Median (31 companies) | 8.2% | 6.9% | 8.1% | 5.9% | 6.5% |
|---|
| Yip's Chemical Holdings Ltd ($408) | 5.5% | 7.7% | 6.8% | 4.9% | 4.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Sanjiang Fine Chemicals Co Ltd ($2198) | 2.4x | 2.2x | 4.6x | 18.1x | |
| China XLX Fertiliser Ltd ($1866) | 2.4x | 2.6x | 5.1x | 5.8x | 5.1x |
| Ngai Hing Hong Co Ltd ($1047) | 4.8x | 11.7x | 5.3x | 5.4x | 5.3x |
| Jilin Qifeng Chemical Fiber Co Ltd ($549) | 4.3x | 14.1x | 6.5x | 5.3x | |
| Sinofert Holdings Ltd ($297) | 4.3x | 2.9x | 32.4x | 5.0x | |
| |
|---|
| Median (24 companies) | 1.3x | 1.2x | 2.1x | 1.4x | 0.3x |
|---|
| Yip's Chemical Holdings Ltd ($408) | 4.5x | 2.8x | 2.7x | 3.8x | 3.6x |
