China Mengniu Dairy Co Ltd CAPEX increased on 2.8% in 2015 while Revenue decreased on 2.0%
22/03/2016 • About China Mengniu Dairy Co Ltd (
$2319) • By InTwits
China Mengniu Dairy 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: 8.5% in 2015 vs. 8.1% in 2014 vs. 7.0% in 2011
- China Mengniu Dairy Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.9%. At the same time it's a lot of higher than industry average of 7.0%.
- CAPEX is quite volatile: 3,352 in 2015, 3,650 in 2014, 1,150 in 2013, 389 in 2012, 432 in 2011
- The company has business model with low profitability: ROIC is at 7.5%
- It operates with high leverage: Net Debt/EBITDA is 1.4x while industry average is -2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Mengniu Dairy Co Ltd ($2319) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 37,388 | 36,000 | 43,357 | 50,049 | 49,027 | -2.0% |
| Gross Profit | 9,592 | 8,950 | 11,697 | 15,434 | 15,375 | -0.4% |
| SG&A | 7,805 | 7,398 | 9,774 | 12,505 | 12,856 | 2.8% |
| EBITDA | 2,616 | 2,605 | 2,912 | 4,040 | 4,143 | 2.5% |
| Net Income | 1,589 | 1,303 | 1,631 | 2,351 | 2,367 | 0.7% |
Balance Sheet
|
|---|
| Cash | 4,360 | 2,918 | 2,271 | 2,414 | 5,225 | 116.4% |
| Short Term Debt | 602 | 625 | 8,554 | 4,457 | 6,151 | 38.0% |
| Long Term Debt | 189 | 145 | 3,336 | 5,528 | 5,038 | -8.9% |
Cash flow
|
|---|
| Capex | 2,387 | 2,152 | 2,488 | 2,804 | 2,883 | 2.8% |
Ratios
|
|---|
| Revenue growth | 23.5% | -3.7% | 20.4% | 15.4% | -2.0% | |
| EBITDA growth | 24.0% | -0.4% | 11.8% | 38.7% | 2.5% | |
| Gross Margin | 25.7% | 24.9% | 27.0% | 30.8% | 31.4% | 0.5% |
| EBITDA Margin | 7.0% | 7.2% | 6.7% | 8.1% | 8.5% | 0.4% |
| Net Income Margin | 4.3% | 3.6% | 3.8% | 4.7% | 4.8% | 0.1% |
| SG&A, % of revenue | 20.9% | 20.5% | 22.5% | 25.0% | 26.2% | 1.2% |
| CAPEX, % of revenue | 6.4% | 6.0% | 5.7% | 5.6% | 5.9% | 0.3% |
| ROIC | 14.7% | 12.0% | 7.7% | 8.4% | 7.5% | -0.9% |
| ROE | 15.0% | 10.9% | 11.7% | 12.8% | 10.9% | -1.9% |
| Net Debt/EBITDA | -1.4x | -0.8x | 3.3x | 1.9x | 1.4x | -0.4x |
Revenue and profitability
The company's Revenue decreased on 2.0% in 2015. EBITDA Margin showed almost no change in 2015.
Gross Margin increased slightly on 0.52 pp from 30.8% to 31.4% in 2015. SG&A as a % of Revenue increased slightly on 1.2 pp from 25.0% to 26.2% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 5.9%. CAPEX/Revenue showed almost no change from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 5.7%.Battling declining revenue China Mengniu Dairy Co Ltd invested a large share of EBITDA (69.6%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (7.46%) and ROE (10.85%). ROIC decreased slightly on 0.90 pp from 8.4% to 7.5% in 2015. ROE decreased slightly on 1.9 pp from 12.8% to 10.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is 2.7x. Net Debt / EBITDA dropped on 0.4x from 1.9x to 1.4x in 2015. Debt jumped on 12.1% in 2015 while cash jumped on 116% in 2015.
Appendix 1: Peers in Food
Below you can find China Mengniu Dairy Co Ltd benchmarking vs. other companies in Food 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 |
|---|
| Wealth Glory Holdings Ltd ($8269) | | -16.5% | -53.8% | 555.7% | -12.4% |
| Natural Dairy NZ Holdings Ltd ($462) | | -47.2% | 19.1% | 76.6% | -54.8% |
| China Modern Dairy Holdings Ltd ($1117) | | 50.7% | 96.1% | 52.8% | -4.0% |
| China Huishan Dairy Holdings Co Ltd ($6863) | | 256.3% | 91.5% | 38.3% | 11.1% |
| Asia Cassava Resources Holdings Ltd ($841) | | -3.0% | 99.6% | 32.6% | -28.4% |
| |
|---|
| Median (37 companies) | 22.4% | 9.8% | 5.6% | 0.4% | -3.7% |
|---|
| China Mengniu Dairy Co Ltd ($2319) | | -3.7% | 20.4% | 15.4% | -2.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Honworld Group Ltd ($2226) | 42.2% | 57.2% | 59.0% | 57.8% | |
| Shenguan Holdings Group Ltd ($829) | 61.9% | 58.2% | 58.5% | 54.9% | 44.2% |
| Yashili International Holdings Ltd ($1230) | 52.0% | 53.7% | 53.5% | 51.2% | 50.8% |
| Natural Dairy NZ Holdings Ltd ($462) | 16.3% | -13.7% | 27.5% | 48.8% | 49.6% |
| Christine International Holdings Ltd ($1210) | 51.3% | 50.2% | 49.7% | 47.2% | |
| |
|---|
| Median (37 companies) | 17.7% | 16.5% | 18.5% | 19.8% | 22.8% |
|---|
| China Mengniu Dairy Co Ltd ($2319) | 25.7% | 24.9% | 27.0% | 30.8% | 31.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Shenguan Holdings Group Ltd ($829) | 57.2% | 58.7% | 59.2% | 54.5% | 43.6% |
| YuanShengTai Dairy Farm Ltd ($1431) | 147.8% | 40.3% | 48.4% | 47.1% | 35.4% |
| China Huishan Dairy Holdings Co Ltd ($6863) | 109.2% | 45.1% | 47.9% | 47.1% | 37.2% |
| Honworld Group Ltd ($2226) | 28.4% | 44.4% | 42.1% | 42.0% | |
| China Modern Dairy Holdings Ltd ($1117) | 33.9% | 33.5% | 27.0% | 25.3% | 21.1% |
| |
|---|
| Median (37 companies) | 8.8% | 7.9% | 6.5% | 7.4% | 8.0% |
|---|
| China Mengniu Dairy Co Ltd ($2319) | 7.0% | 7.2% | 6.7% | 8.1% | 8.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 453.6% | 98.2% | 29.8% | 132.0% | 109.8% |
| Honworld Group Ltd ($2226) | 25.3% | 6.0% | 10.8% | 50.8% | |
| YuanShengTai Dairy Farm Ltd ($1431) | 182.5% | 26.1% | 18.3% | 43.4% | 30.1% |
| Yashili International Holdings Ltd ($1230) | 3.6% | 8.2% | 7.1% | 20.1% | 12.5% |
| Vedan International Holdings Ltd ($2317) | 2.8% | 2.5% | 2.4% | 18.8% | |
| |
|---|
| Median (37 companies) | 3.6% | 5.9% | 6.0% | 5.1% | 5.2% |
|---|
| China Mengniu Dairy Co Ltd ($2319) | 6.4% | 6.0% | 5.7% | 5.6% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Honworld Group Ltd ($2226) | 22.1% | 50.4% | 44.5% | 23.6% | |
| Want Want China Holdings Ltd ($151) | 24.9% | 27.9% | 29.4% | 22.8% | 21.8% |
| Shenguan Holdings Group Ltd ($829) | 40.6% | 40.0% | 33.2% | 21.4% | 10.0% |
| Huisheng International Holdings Ltd ($1340) | 63.0% | 31.9% | 23.7% | 16.3% | |
| Asia Cassava Resources Holdings Ltd ($841) | 13.8% | 4.2% | 5.9% | 13.6% | 11.6% |
| |
|---|
| Median (38 companies) | 10.4% | 6.7% | 5.9% | 5.5% | 5.8% |
|---|
| China Mengniu Dairy Co Ltd ($2319) | 14.7% | 12.0% | 7.7% | 8.4% | 7.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Yurun Food Group Ltd ($1068) | 0.4x | 40.7x | 6.9x | 9.4x | |
| Beijing Jingkelong Co Ltd ($814) | 3.4x | 5.0x | 4.8x | 5.3x | 9.3x |
| CP Lotus Corp ($121) | 2.3x | | 6.5x | 5.1x | 3.0x |
| DaChan Food Asia Ltd ($3999) | -0.3x | 0.1x | 1.3x | 4.8x | |
| First Pacific Co Ltd/Hong Kong ($142) | 1.3x | 1.8x | 3.8x | 4.5x | |
| |
|---|
| Median (29 companies) | 0.2x | -0.3x | 0.6x | 0.7x | 1.3x |
|---|
| China Mengniu Dairy Co Ltd ($2319) | -1.4x | -0.8x | 3.3x | 1.9x | 1.4x |
