CHTC Fong's Industries Co Ltd reports 40.8% Net Income growth while 5.6% Revenue decline
23/03/2016 • About CHTC Fong's Industries Co Ltd (
$641) • By InTwits
CHTC Fong's Industries Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 5.7% in 2015, 9.0% in 2014, 8.4% in 2013, -0.6% in 2012, 6.4% in 2011
- CHTC Fong's Industries Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.7%.
- CAPEX is quite volatile: 70.4 in 2015, 38.2 in 2014, 231 in 2013, 64.6 in 2012, 116 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.8%
- It operates with high leverage: Net Debt/EBITDA is 3.5x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
CHTC Fong's Industries Co Ltd ($641) key annual financial indicators
| mln. | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,199 | 2,126 | 3,757 | 3,415 | 3,223 | -5.6% |
| Gross Profit | 583 | 518 | 1,126 | 1,104 | 1,005 | -9.0% |
| SG&A | | 420 | 538 | 536 | 655 | 22.2% |
| EBITDA | 140 | -12 | 314 | 306 | 185 | -39.6% |
| Net Income | 59 | 152 | 80 | 118 | 166 | 40.8% |
Balance Sheet
|
|---|
| Cash | 278 | 413 | 470 | 496 | 443 | -10.6% |
| Short Term Debt | 756 | 1,186 | 1,040 | 1,139 | 993 | -12.9% |
| Long Term Debt | 0 | 169 | 135 | 124 | 100 | -19.5% |
Cash flow
|
|---|
| Capex | 116 | 65 | 231 | 38 | 70 | 84.3% |
Ratios
|
|---|
| Revenue growth | -15.0% | -3.3% | 76.7% | -9.1% | -5.6% | |
| EBITDA growth | -63.1% | -108.5% | -2,731.8% | -2.5% | -39.6% | |
| Gross Margin | 26.5% | 24.4% | 30.0% | 32.3% | 31.2% | -1.2% |
| EBITDA Margin | 6.4% | -0.6% | 8.4% | 9.0% | 5.7% | -3.2% |
| Net Income Margin | 2.7% | 7.1% | 2.1% | 3.5% | 5.2% | 1.7% |
| SG&A, % of revenue | | 19.8% | 14.3% | 15.7% | 20.3% | 4.6% |
| CAPEX, % of revenue | 5.3% | 3.0% | 6.2% | 1.1% | 2.2% | 1.1% |
| ROIC | 4.0% | -4.0% | 8.3% | 8.2% | 3.8% | -4.4% |
| ROE | 5.9% | 14.3% | 6.7% | 9.3% | 12.5% | 3.2% |
| Net Debt/EBITDA | 3.4x | | 2.2x | 2.5x | 3.5x | 1.0x |
Revenue and profitability
The company's Revenue decreased on 5.6% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.2 pp from 9.0% to 5.7% in 2015.
Gross Margin decreased slightly on 1.2 pp from 32.3% to 31.2% in 2015. SG&A as a % of Revenue increased on 4.6 pp from 15.7% to 20.3% in 2015.
Net Income marign increased slightly on 1.7 pp from 3.5% to 5.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 CHTC Fong's Industries Co Ltd had CAPEX/Revenue of 2.2%. The company's CAPEX/Revenue decreased slightly on 0.85 pp from 3.0% in 2012 to 2.2% in 2015. It's average level of CAPEX/Revenue for the last three years was 3.2%.
Return on investment
The company operates at good ROE (12.47%) while ROIC is low (3.78%). ROIC decreased on 4.4 pp from 8.2% to 3.8% in 2015. ROE increased on 3.2 pp from 9.3% to 12.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 5.9x. Net Debt / EBITDA jumped on 1.0x from 2.5x to 3.5x in 2015. Debt dropped on 13.5% in 2015 while cash dropped on 10.6% in 2015.
Appendix 1: Peers in Machinery-Diversified
Below we provide CHTC Fong's Industries Co Ltd benchmarking against other companies in Machinery-Diversified 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 |
|---|
| Sun East Technology Holdings Ltd ($365) | | -25.1% | -10.7% | 39.3% | 6.4% |
| Shanghai Prime Machinery Co Ltd ($2345) | | 2.6% | -8.9% | 37.3% | 52.8% |
| Sinoref Holdings Ltd ($1020) | 1.5% | -0.2% | -42.2% | 29.2% | |
| North Asia Strategic Holdings Ltd ($8080) | | -52.2% | -29.1% | 23.7% | 42.6% |
| Huazhang Technology Holding Ltd ($1673) | | 131.6% | 9.5% | 22.9% | 23.5% |
| |
|---|
| Median (22 companies) | 13.5% | -5.2% | -4.7% | 2.0% | 6.4% |
|---|
| CHTC Fong's Industries Co Ltd ($641) | | -3.3% | 76.7% | -9.1% | -5.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 38.3% | 49.1% | 51.7% | 54.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | |
| Haitian International Holdings Ltd ($1882) | 29.7% | 30.1% | 31.6% | 32.4% | 33.0% |
| Huazhang Technology Holding Ltd ($1673) | 29.0% | 28.0% | 28.5% | 27.9% | 24.7% |
| Good Friend International Holdings Inc ($2398) | 23.3% | 20.1% | 22.9% | 26.5% | |
| |
|---|
| Median (22 companies) | 23.6% | 22.7% | 20.8% | 18.6% | 20.9% |
|---|
| CHTC Fong's Industries Co Ltd ($641) | 26.5% | 24.4% | 30.0% | 32.3% | 31.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 18.5% | 24.0% | 26.9% | 28.0% | |
| Haitian International Holdings Ltd ($1882) | 20.5% | 19.7% | 20.7% | 21.9% | 22.8% |
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | |
| Huazhang Technology Holding Ltd ($1673) | 3.1% | 11.6% | 11.2% | 12.5% | 11.3% |
| |
|---|
| Median (22 companies) | 9.6% | 9.8% | 8.6% | 8.1% | 6.0% |
|---|
| CHTC Fong's Industries Co Ltd ($641) | 6.4% | -0.6% | 8.4% | 9.0% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China High Precision Automation Group Ltd ($591) | 33.0% | 20.5% | 9.1% | 18.4% | 0.6% |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | |
| LK Technology Holdings Ltd ($558) | 7.6% | 9.3% | 10.2% | 9.1% | 5.6% |
| First Tractor Co Ltd ($38) | 6.3% | 4.9% | 4.3% | 7.3% | |
| Greens Holdings Ltd ($1318) | 9.3% | 8.9% | 3.1% | 7.1% | |
| |
|---|
| Median (22 companies) | 6.2% | 4.2% | 3.4% | 4.4% | 2.4% |
|---|
| CHTC Fong's Industries Co Ltd ($641) | 5.3% | 3.0% | 6.2% | 1.1% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | 16.3% |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | |
| Huazhang Technology Holding Ltd ($1673) | | 29.6% | 16.2% | 16.3% | 16.2% |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | |
| China CNR Corp Ltd ($6199) | 11.1% | 7.9% | 9.3% | 10.6% | |
| |
|---|
| Median (22 companies) | 9.9% | 7.5% | 3.6% | 2.6% | 1.9% |
|---|
| CHTC Fong's Industries Co Ltd ($641) | 4.0% | -4.0% | 8.3% | 8.2% | 3.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | |
| Shanghai Prime Machinery Co Ltd ($2345) | -0.0x | -0.6x | 0.3x | 6.0x | 3.2x |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 1.9x | 3.0x | 11.4x | 5.6x | |
| Honghua Group Ltd ($196) | 0.1x | 1.2x | 3.2x | 5.2x | |
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x |
| |
|---|
| Median (18 companies) | -0.6x | -1.1x | -1.5x | -0.5x | -0.4x |
|---|
| CHTC Fong's Industries Co Ltd ($641) | 3.4x | | 2.2x | 2.5x | 3.5x |
