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PetroChina Co Ltd reports 29.0% CAPEX decline and 24.4% Revenue decline

23/03/2016 • About PetroChina Co Ltd ($857) • By InTwits

PetroChina 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: 16.3% in 2015 vs. 15.2% in 2014 vs. 16.0% in 2011
  • PetroChina Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.4%. At the same time it's in pair with industry average of 13.0%.
  • CAPEX is quite volatile: 8.4 in 2015, 2.8 in 2014, 11.8 in 2013, 97.4 in 2012, 283 in 2011
  • The company has potentially unprofitable business model: ROIC is at 4.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

PetroChina Co Ltd ($857) key annual financial indicators

mln. CNY201120122013201420152015/2014
P&L
Revenue2,003,8432,195,2962,258,1242,282,9621,725,428-24.4%
SG&A69,96974,69279,02173,41371,270-2.9%
EBITDA320,321326,155351,649347,021281,839-18.8%
Net Income132,961115,326129,599107,17235,517-66.9%
Balance Sheet
Cash61,17243,39551,40773,77872,773-1.4%
Short Term Debt137,327151,052192,586167,783106,027-36.8%
Long Term Debt180,675293,774302,862370,301434,47517.3%
Cash flow
Capex267,975311,744304,100306,551217,750-29.0%
Ratios
Revenue growth36.7%9.6%2.9%1.1%-24.4%
EBITDA growth6.5%1.8%7.8%-1.3%-18.8%
EBITDA Margin16.0%14.9%15.6%15.2%16.3%1.1%
Net Income Margin6.6%5.3%5.7%4.7%2.1%-2.6%
SG&A, % of revenue3.5%3.4%3.5%3.2%4.1%0.9%
CAPEX, % of revenue13.4%14.2%13.5%13.4%12.6%-0.8%
ROIC13.4%11.2%10.9%9.3%4.2%-5.1%
ROE13.7%11.2%11.8%9.3%3.0%-6.3%
Net Debt/EBITDA0.8x1.2x1.3x1.3x1.7x0.3x

Revenue and profitability


The company's Revenue dropped on 24.4% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.1 pp from 15.2% to 16.3% in 2015.

SG&A as a % of Revenue increased slightly on 0.91 pp from 3.2% to 4.1% in 2015.

Net Income marign decreased on 2.6 pp from 4.7% to 2.1% in 2015.

Capital expenditures (CAPEX) and working capital investments


In 2015 the company had CAPEX/Revenue of 12.6%. The company showed small CAPEX/Revenue decline of 1.6 pp from 14.2% in 2012 to 12.6% in 2015. It's average CAPEX/Revenue for the last three years was 13.2%.The company invested a big chunk of EBITDA (77.3%) to CAPEX which didn't stop revenue from falling.

Return on investment


The company operates at low ROIC (4.21%) and ROE (3.02%). ROIC decreased on 5.1 pp from 9.3% to 4.2% in 2015. ROE decreased on 6.3 pp from 9.3% to 3.0% in 2015.

Leverage (Debt)


Company's Net Debt / EBITDA is 1.7x and Debt / EBITDA is 1.9x. Net Debt / EBITDA surged on 0.3x from 1.3x to 1.7x in 2015. Debt showed almost no change in 2015 while cash decreased slightly on 1.4% in 2015.

Management team


Wang Dongjin is a PetroChina Co Ltd's CEO. Wang Dongjin has spent 3 years at the company.

Appendix 1: Peers in Oil&Gas


Below we provide PetroChina Co Ltd benchmarking against other companies in Oil&Gas 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
China CBM Group Co Ltd ($8270)9.9%-27.6%1.8%60.9%
Brightoil Petroleum Holdings Ltd ($933)76.9%-20.8%52.5%-12.3%
United Energy Group Ltd ($467)266.5%49.0%27.8%-11.5%
Yanchang Petroleum International Ltd ($346)-1.8%641.9%155.6%15.5%
Kunlun Energy Co Ltd ($135)27.2%31.8%10.6%-13.3%
 
Median (17 companies)25.1%15.7%8.7%-3.9%-12.8%
PetroChina Co Ltd ($857)9.6%2.9%1.1%-24.4%


Top companies by Gross margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
EPI Holdings Ltd ($689)0.3%58.0%50.7%54.6%
United Energy Group Ltd ($467)15.4%39.4%48.0%53.8%51.5%
Enviro Energy International Holdings Ltd ($1102)25.0%49.3%76.9%38.6%3.4%
South Sea Petroleum Holdings Ltd ($76)48.2%27.3%25.3%38.5%
Zhongyu Gas Holdings Ltd ($3633)23.9%23.6%23.8%24.9%
 
Median (12 companies)6.3%8.8%5.4%9.7%3.4%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
United Energy Group Ltd ($467)100.6%71.2%65.3%69.8%-31.9%
MIE Holdings Corp ($1555)58.1%57.0%54.5%57.1%
CNOOC Ltd ($883)50.3%48.5%47.2%50.7%
Sino Oil And Gas Holdings Ltd ($702)-273.6%-170.8%-132.3%49.6%
Kunlun Energy Co Ltd ($135)46.8%47.0%39.5%34.9%30.9%
 
Median (17 companies)4.0%3.7%1.4%5.9%-3.3%
PetroChina Co Ltd ($857)16.0%14.9%15.6%15.2%16.3%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Enviro Energy International Holdings Ltd ($1102)1,208.5%301.4%46.5%111.0%7.9%
MIE Holdings Corp ($1555)43.9%52.2%43.3%44.1%
United Energy Group Ltd ($467)60.0%37.2%62.7%42.4%49.1%
CNOOC Ltd ($883)21.9%25.4%30.3%34.8%
China CBM Group Co Ltd ($8270)52.3%58.1%81.7%22.5%
 
Median (17 companies)27.7%13.4%6.7%4.5%5.4%
PetroChina Co Ltd ($857)13.4%14.2%13.5%13.4%12.6%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
CNOOC Ltd ($883)32.4%25.7%18.1%15.8%
United Energy Group Ltd ($467)3.6%7.4%10.3%15.7%-25.0%
Shanghai Tonva Petrochemical Co Ltd ($1103)5.4%7.3%12.6%13.0%
Zhongyu Gas Holdings Ltd ($3633)10.6%17.4%15.0%12.3%
Kunlun Energy Co Ltd ($135)12.3%13.0%12.6%11.0%7.7%
 
Median (19 companies)3.6%3.8%1.6%1.5%-4.4%
PetroChina Co Ltd ($857)13.4%11.2%10.9%9.3%4.2%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Titan Petrochemicals Group Ltd ($1192)95.2x
Sino Oil And Gas Holdings Ltd ($702)55.5x
Zhongyu Gas Holdings Ltd ($3633)2.0x1.6x2.3x3.7x
Shanghai Tonva Petrochemical Co Ltd ($1103)8.3x6.0x4.3x3.6x
China CBM Group Co Ltd ($8270)1.3x3.2x3.3x
 
Median (12 companies)1.3x1.6x1.0x2.7x0.9x
PetroChina Co Ltd ($857)0.8x1.2x1.3x1.3x1.7x