China Eco-Farming Ltd revenue surged on 155% in 2015 and EBITDA Margin jumped on 38.8 pp from -114% to -75.0%
22/03/2016 • About China Eco-Farming Ltd (
$8166) • By InTwits
China Eco-Farming Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Eco-Farming Ltd doesn't have a profitable business model yet: 2015 ROIC is -18.0%
- The company operates at negative EBITDA Margin: -75.0%
- China Eco-Farming Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 is 0.0%. Average EBITDA Margin for the same period was -81.8%0
- China Eco-Farming Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's in pair with industry average of 4.9%.
- CAPEX is quite volatile: 1.5 in 2015, 4.2 in 2014, 0.14 in 2013, 0.13 in 2012, 0.079 in 2011
- The company has unprofitable business model: ROIC is at -18.0%
- It operates with high leverage: Net Debt/EBITDA is 32.6x while industry average is -2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Eco-Farming Ltd ($8166) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 27.223 | 20.798 | 19.194 | 23.387 | 59.748 | 155.5% |
| Gross Profit | 5.111 | 2.786 | 3.542 | 0.495 | 2.716 | 448.7% |
| SG&A | | | | 27.790 | 39.950 | 43.8% |
| EBITDA | -10.021 | -17.072 | -24.419 | -26.613 | -44.834 | 68.5% |
| Net Income | -12.658 | -21.046 | -25.746 | -27.393 | -59.214 | 116.2% |
Balance Sheet
|
|---|
| Cash | 0.662 | 0.079 | 14.552 | 36.995 | 36.871 | -0.3% |
| Short Term Debt | 31.327 | 25.350 | 6.300 | 0.000 | 10.332 | |
| Long Term Debt | 3.200 | 0.000 | 4.806 | 16.970 | 53.397 | 214.7% |
Cash flow
|
|---|
| Capex | 0.079 | 0.128 | 0.139 | 4.239 | 1.491 | -64.8% |
Ratios
|
|---|
| Revenue growth | 17.0% | -23.6% | -7.7% | 21.8% | 155.5% | |
| EBITDA growth | -38.7% | 70.4% | 43.0% | 9.0% | 68.5% | |
| Gross Margin | 18.8% | 13.4% | 18.5% | 2.1% | 4.5% | 2.4% |
| EBITDA Margin | -36.8% | -82.1% | -127.2% | -113.8% | -75.0% | 38.8% |
| Net Income Margin | -46.5% | -101.2% | -134.1% | -117.1% | -99.1% | 18.0% |
| SG&A, % of revenue | | | | 118.8% | 66.9% | -52.0% |
| CAPEX, % of revenue | 0.3% | 0.6% | 0.7% | 18.1% | 2.5% | -15.6% |
| ROIC | -62.7% | -145.6% | -164.6% | -31.4% | -18.0% | 13.4% |
| ROE | | | | -37.3% | -32.5% | 4.7% |
Revenue and profitability
The company's Revenue jumped on 155% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 38.8 pp from -114% to -75.0% in 2015.
Gross Margin increased on 2.4 pp from 2.1% to 4.5% in 2015. SG&A as a % of Revenue dropped on 52.0 pp from 119% to 66.9% in 2015.
Net Income marign jumped on 18.0 pp from -117% to -99.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.5% in 2015. CAPEX/Revenue increased slightly on 1.9 pp from 0.62% in 2012 to 2.5% in 2015. For the last three years the average CAPEX/Revenue was 7.1%.
Return on investment
The company operates at negative ROIC (-18.00%) and ROE (-32.52%). ROIC surged on 13.4 pp from -31.4% to -18.0% in 2015. ROE increased on 4.7 pp from -37.3% to -32.5% in 2015.
Leverage (Debt)
Debt level is 32.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2015. Debt jumped on 276% in 2015 while cash showed almost no change in 2015.
Appendix 1: Peers in Software
Below you can find China Eco-Farming Ltd benchmarking vs. other companies in Software 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 |
|---|
| Pizu Group Holdings Ltd ($8053) | | 40.3% | -42.9% | 1,742.9% | 157.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | 194.6% | 164.0% | 33.6% | 100.5% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | -16.7% | 393.7% | -6.6% | 92.2% | |
| Epicurean and Co Ltd ($8213) | | 177.0% | 185.7% | 62.6% | 22.0% |
| China Bio Cassava Holdings Ltd ($8129) | | -14.2% | 38.8% | 55.1% | -19.7% |
| |
|---|
| Median (33 companies) | 16.2% | 10.6% | 11.2% | 20.6% | 14.1% |
|---|
| China Eco-Farming Ltd ($8166) | | -23.6% | -7.7% | 21.8% | 155.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.2% | 90.4% | 97.4% | 98.4% | 98.3% |
| Chanjet Information Technology Co Ltd ($1588) | 91.9% | 89.2% | 91.3% | 92.4% | 91.4% |
| NetDragon Websoft Inc ($777) | 90.1% | 93.4% | 90.8% | 89.3% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | 19.4% | 6.5% | 45.3% | 84.8% | |
| Kingdee International Software Group Co Ltd ($268) | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% |
| |
|---|
| Median (32 companies) | 51.0% | 46.5% | 43.1% | 42.8% | 43.3% |
|---|
| China Eco-Farming Ltd ($8166) | 18.8% | 13.4% | 18.5% | 2.1% | 4.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sinosoft Technology Group Ltd ($1297) | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% |
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
| China Binary Sale Technology Ltd ($8255) | 41.3% | 35.1% | 35.4% | 44.4% | 50.5% |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | 25.8% |
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% |
| |
|---|
| Median (33 companies) | 12.0% | 9.8% | 11.1% | 9.1% | 9.8% |
|---|
| China Eco-Farming Ltd ($8166) | -36.8% | -82.1% | -127.2% | -113.8% | -75.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| NetDragon Websoft Inc ($777) | 13.3% | 21.1% | 34.6% | 54.6% | |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | 11.1% |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | 1.1% |
| Epicurean and Co Ltd ($8213) | 18.7% | 25.3% | 10.4% | 10.3% | 5.5% |
| |
|---|
| Median (32 companies) | 2.0% | 1.4% | 2.5% | 3.5% | 1.7% |
|---|
| China Eco-Farming Ltd ($8166) | 0.3% | 0.6% | 0.7% | 18.1% | 2.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Binary Sale Technology Ltd ($8255) | | 27.7% | 26.9% | 28.4% | 19.0% |
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | 15.6% |
| Finsoft Corp ($8018) | | 140.5% | 4.6% | 25.0% | -5.6% |
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| |
|---|
| Median (33 companies) | 4.9% | 5.2% | 5.8% | 2.6% | 5.0% |
|---|
| China Eco-Farming Ltd ($8166) | -62.7% | -145.6% | -164.6% | -31.4% | -18.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | -0.4x |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | 12.0x |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | 4.4x |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | 0.2x |
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | 0.7x |
| |
|---|
| Median (22 companies) | -1.0x | -1.1x | -1.7x | -1.7x | -0.4x |
|---|
