Lee's Pharmaceutical Holdings Ltd CAPEX jumped on 255% in 2015 while Revenue decreased on 3.5%
23/03/2016 • About Lee's Pharmaceutical Holdings Ltd (
$950) • By InTwits
Lee's Pharmaceutical Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lee's Pharmaceutical Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.2%. At the same time it's a lot of higher than industry average of 9.1%.
- CAPEX is quite volatile: 241 in 2015, 67.9 in 2014, 146 in 2013, 99.2 in 2012, 33.9 in 2011
- The company has highly profitable business model: ROIC is at 22.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lee's Pharmaceutical Holdings Ltd ($950) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 399.7 | 534.3 | 697.0 | 955.2 | 922.2 | -3.5% |
| Gross Profit | 291.8 | 380.8 | 503.3 | 670.5 | 648.2 | -3.3% |
| SG&A | 193.5 | 242.6 | 301.4 | 408.5 | 368.8 | -9.7% |
| EBITDA | 109.5 | 146.9 | 193.5 | 256.9 | 349.8 | 36.2% |
| Net Income | 83.9 | 113.8 | 150.5 | 192.8 | 229.1 | 18.8% |
Balance Sheet
|
|---|
| Cash | 134.5 | 333.9 | 379.1 | 392.9 | 394.1 | 0.3% |
| Short Term Debt | 17.7 | 32.0 | 69.6 | 52.3 | 67.1 | 28.3% |
| Long Term Debt | 0.9 | 0.3 | 0.0 | 0.0 | 0.9 | |
Cash flow
|
|---|
| Capex | 33.9 | 99.2 | 145.9 | 67.9 | 240.8 | 254.8% |
Ratios
|
|---|
| Revenue growth | 56.2% | 33.7% | 30.4% | 37.1% | -3.5% | |
| EBITDA growth | 41.1% | 34.2% | 31.7% | 32.7% | 36.2% | |
| Gross Margin | 73.0% | 71.3% | 72.2% | 70.2% | 70.3% | 0.1% |
| EBITDA Margin | 27.4% | 27.5% | 27.8% | 26.9% | 37.9% | 11.0% |
| Net Income Margin | 21.0% | 21.3% | 21.6% | 20.2% | 24.8% | 4.7% |
| SG&A, % of revenue | 48.4% | 45.4% | 43.2% | 42.8% | 40.0% | -2.8% |
| CAPEX, % of revenue | 8.5% | 18.6% | 20.9% | 7.1% | 26.1% | 19.0% |
| ROIC | 31.3% | 26.1% | 22.0% | 22.4% | 22.7% | 0.3% |
| ROE | 30.3% | 25.5% | 22.0% | 22.4% | 19.1% | -3.3% |
| Net Debt/EBITDA | -1.1x | -2.1x | -1.6x | -1.3x | -0.9x | 0.4x |
Revenue and profitability
The company's Revenue decreased on 3.5% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 11.0 pp from 26.9% to 37.9% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue decreased on 2.8 pp from 42.8% to 40.0% in 2015.
Net Income marign increased on 4.7 pp from 20.2% to 24.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Lee's Pharmaceutical Holdings Ltd had CAPEX/Revenue of 26.1%. CAPEX/Revenue increased on 7.5 pp from 18.6% in 2012 to 26.1% in 2015. Average CAPEX/Revenue for the last three years was 18.0%.Battling declining revenue Lee's Pharmaceutical Holdings Ltd invested a large share of EBITDA (68.8%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at high and attractive ROIC (22.68%) while ROE is a bit lower (19.07%). ROIC showed almost no change in 2015. ROE decreased on 3.3 pp from 22.4% to 19.1% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.9x and Debt / EBITDA is 0.2x. Net Debt / EBITDA surged on 0.4x from -1.3x to -0.9x in 2015. Debt jumped on 30.0% in 2015 while cash showed almost no change in 2015.
Appendix 1: Peers in Pharmaceuticals
Below you can find Lee's Pharmaceutical Holdings Ltd benchmarking vs. other companies in Pharmaceuticals 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 |
|---|
| Hong Kong Life Sciences and Technology Group Ltd ($8085) | | -10.0% | -45.4% | 1,636.5% | -52.9% |
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | | 15.1% | -99.9% | 480.0% | -93.1% |
| United Gene High-Tech Group Ltd ($399) | | -71.8% | -60.5% | 196.0% | 14.2% |
| China Traditional Chinese Medicine Co Ltd ($570) | | 22.3% | 35.2% | 90.0% | 40.0% |
| Dragonite International Ltd ($329) | -8.8% | -10.5% | 13.5% | 64.8% | |
| |
|---|
| Median (41 companies) | 25.8% | 13.4% | 13.5% | 15.7% | 11.3% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | | 33.7% | 30.4% | 37.1% | -3.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 83.9% | 82.0% | 81.5% | 80.9% | |
| Consun Pharmaceutical Group Ltd ($1681) | 75.5% | 75.7% | 79.1% | 78.3% | |
| Sino Biopharmaceutical Ltd ($1177) | 78.5% | 78.5% | 77.5% | 76.4% | |
| China Health Group Inc ($8225) | 38.7% | 43.4% | 33.6% | 76.2% | 75.7% |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 72.6% | 65.2% | 77.9% | 72.1% | 68.7% |
| |
|---|
| Median (39 companies) | 37.6% | 38.5% | 35.9% | 48.3% | 49.9% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 73.0% | 71.3% | 72.2% | 70.2% | 70.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Resources Holdings Ltd ($899) | 3.5% | -80.8% | 25.1% | 113.7% | |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 48.4% | 38.8% | 65.4% | 70.9% | |
| Pak Fah Yeow International Ltd ($239) | 28.7% | 33.9% | 28.4% | 52.4% | |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 29.7% | 41.3% | 45.4% | 47.5% | 49.1% |
| Real Nutriceutical Group Ltd ($2010) | 45.6% | 42.8% | 43.4% | 46.0% | |
| |
|---|
| Median (40 companies) | 17.2% | 19.0% | 19.3% | 21.1% | 19.0% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 27.4% | 27.5% | 27.8% | 26.9% | 37.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 0.2% | | 11,100.0% | 103.4% | 0.0% |
| Extrawell Pharmaceutical Holdings Ltd ($858) | 5.7% | 1.7% | 20.6% | 92.4% | 3.6% |
| Asia Resources Holdings Ltd ($899) | 12.2% | 4.4% | 8.1% | 92.0% | |
| Lijun International Pharmaceutical Holding Co Ltd ($2005) | 19.5% | 16.8% | 52.4% | 39.6% | |
| Hao Wen Holdings Ltd ($8019) | 6.4% | 30.0% | 2.3% | 38.2% | |
| |
|---|
| Median (40 companies) | 10.6% | 8.2% | 7.5% | 7.5% | 4.0% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 8.5% | 18.6% | 20.9% | 7.1% | 26.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 18.5% | 16.7% | 20.8% | 33.0% | |
| Sino Biopharmaceutical Ltd ($1177) | 19.9% | 26.2% | 26.8% | 26.5% | |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | | 25.3% | 27.5% | 23.8% | 25.9% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 14.3% | 13.7% | 18.3% | 22.0% | |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | 34.4% | 27.6% | 22.2% | 19.9% | 20.8% |
| |
|---|
| Median (41 companies) | 8.5% | 12.2% | 9.2% | 10.6% | 6.7% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 31.3% | 26.1% | 22.0% | 22.4% | 22.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China NT Pharma Group Co Ltd ($1011) | 0.4x | | | 7.2x | -0.4x |
| United Laboratories International Holdings Ltd/The ($3933) | 4.4x | 6.5x | 4.6x | 4.2x | 4.0x |
| Lansen Pharmaceutical Holdings Ltd ($503) | 0.9x | 1.7x | 2.8x | 3.4x | |
| China Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 2.5x | 5.4x | 4.0x | 3.4x | |
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 1.4x | 3.5x | 3.4x | 2.8x | |
| |
|---|
| Median (33 companies) | -0.6x | -0.2x | -0.4x | -0.6x | -1.2x |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | -1.1x | -2.1x | -1.6x | -1.3x | -0.9x |
