China Oil & Gas Group Ltd EBITDA dropped on 48.0% in 2015 and Revenue decreased on 4.2%
24/03/2016 • About China Oil & Gas Group Ltd (
$603) • By InTwits
China Oil & Gas Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Oil & Gas Group Ltd doesn't have a profitable business model yet: 2015 ROIC is 1.5%
- EBITDA Margin is declining: 8.7% in 2015 vs. 16.0% in 2014 vs. 17.6% in 2011
- China Oil & Gas Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.4%. At the same time it's a lot of higher than industry average of 12.0%.
- CAPEX is quite volatile: 172 in 2015, 139 in 2014, 181 in 2013, 42.4 in 2012, 178 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.5%
- It operates with high leverage: Net Debt/EBITDA is 6.0x while industry average is 2.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Oil & Gas Group Ltd ($603) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,391 | 4,889 | 6,440 | 7,698 | 7,374 | -4.2% |
| Gross Profit | 901 | 1,102 | 1,454 | 1,153 | 1,036 | -10.2% |
| SG&A | 242 | 293 | 276 | 394 | 388 | -1.5% |
| EBITDA | 773 | 1,053 | 1,364 | 1,229 | 640 | -48.0% |
| Net Income | 209 | 366 | 401 | 309 | -184 | -159.6% |
Balance Sheet
|
|---|
| Cash | 1,975 | 2,397 | 3,019 | 2,395 | 2,107 | -12.0% |
| Short Term Debt | 398 | 1,161 | 709 | 808 | 973 | 20.3% |
| Long Term Debt | 953 | 1,196 | 3,626 | 4,979 | 4,992 | 0.3% |
Cash flow
|
|---|
| Capex | 749 | 731 | 1,177 | 1,189 | 820 | -31.1% |
Ratios
|
|---|
| Revenue growth | 67.2% | 11.4% | 31.7% | 19.5% | -4.2% | |
| EBITDA growth | 41.6% | 36.2% | 29.6% | -9.9% | -48.0% | |
| Gross Margin | 20.5% | 22.5% | 22.6% | 15.0% | 14.0% | -0.9% |
| EBITDA Margin | 17.6% | 21.5% | 21.2% | 16.0% | 8.7% | -7.3% |
| Net Income Margin | 4.8% | 7.5% | 6.2% | 4.0% | -2.5% | -6.5% |
| SG&A, % of revenue | 5.5% | 6.0% | 4.3% | 5.1% | 5.3% | 0.1% |
| CAPEX, % of revenue | 17.1% | 15.0% | 18.3% | 15.4% | 11.1% | -4.3% |
| ROIC | 14.0% | 13.7% | 13.2% | 7.6% | 1.5% | -6.1% |
| ROE | 8.1% | 12.3% | 11.9% | 8.6% | -5.8% | -14.4% |
| Net Debt/EBITDA | -0.8x | -0.0x | 1.0x | 2.8x | 6.0x | 3.3x |
Revenue and profitability
The company's Revenue decreased on 4.2% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 10.5 pp from 45.2% to 55.7% in 2015.
Gross Margin decreased slightly on 0.94 pp from 15.0% to 14.0% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 6.5 pp from 4.0% to -2.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 China Oil & Gas Group Ltd had CAPEX/Revenue of 11.1%. China Oil & Gas Group Ltd's CAPEX/Revenue decreased on 3.8 pp from 15.0% in 2012 to 11.1% in 2015. It's average CAPEX/Revenue for the last three years was 14.9%.China Oil & Gas Group Ltd has spent a lot to CAPEX (128% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (1.46%) and negative ROE (-5.76%). ROIC decreased on 6.1 pp from 7.6% to 1.5% in 2015. ROE dropped on 14.4 pp from 8.6% to -5.8% in 2015.
Leverage (Debt)
Debt level is 6.0x Net Debt / EBITDA and 9.3x Debt / EBITDA. Net Debt / EBITDA jumped on 3.3x from 2.8x to 6.0x in 2015. Debt increased on 3.1% in 2015 while cash dropped on 12.0% in 2015.
Management team
Xu Tie-Liang is a the company's CEO. Xu Tie-Liang has spent 9 years at the company.
Appendix 1: Peers in Gas
Below we provide China Oil & Gas Group Ltd benchmarking against other companies in 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 Gas Holdings Ltd ($384) | | 19.4% | -5.2% | 44.8% | 21.8% |
| China Resources Gas Group Ltd ($1193) | 52.3% | -4.1% | 63.6% | 28.8% | |
| ENN Energy Holdings Ltd ($2688) | | 19.6% | 27.4% | 26.7% | 10.2% |
| Towngas China Co Ltd ($1083) | | 20.0% | 29.6% | 17.4% | -2.1% |
| Binhai Investment Co Ltd ($2886) | | 35.0% | 34.2% | 14.1% | 0.5% |
| |
|---|
| Median (8 companies) | 31.3% | 16.7% | 27.4% | 15.7% | -0.8% |
|---|
| China Oil & Gas Group Ltd ($603) | | 11.4% | 31.7% | 19.5% | -4.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Resources Gas Group Ltd ($1193) | 29.3% | 31.2% | 34.2% | 30.3% | |
| ENN Energy Holdings Ltd ($2688) | 25.9% | 26.9% | 23.8% | 20.9% | 21.4% |
| China Gas Holdings Ltd ($384) | 18.3% | 19.0% | 21.0% | 20.3% | 20.4% |
| Binhai Investment Co Ltd ($2886) | 13.6% | 20.1% | 20.6% | 18.3% | 21.3% |
| Beijing Enterprises Holdings Ltd ($392) | 22.1% | 20.7% | 19.7% | 17.9% | |
| |
|---|
| Median (6 companies) | 21.6% | 20.4% | 20.8% | 19.3% | 20.8% |
|---|
| China Oil & Gas Group Ltd ($603) | 20.5% | 22.5% | 22.6% | 15.0% | 14.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 31.1% | 30.0% | 29.6% | 29.2% | 30.7% |
| Binhai Investment Co Ltd ($2886) | 5.9% | 14.8% | 17.0% | 15.2% | 20.7% |
| Towngas China Co Ltd ($1083) | 19.3% | 19.9% | 18.9% | 18.8% | 19.2% |
| China Gas Holdings Ltd ($384) | 14.2% | 15.2% | 16.5% | 16.6% | 16.8% |
| ENN Energy Holdings Ltd ($2688) | 18.4% | 20.4% | 15.1% | 18.2% | 16.5% |
| |
|---|
| Median (7 companies) | 18.2% | 16.2% | 17.0% | 17.1% | 16.8% |
|---|
| China Oil & Gas Group Ltd ($603) | 17.6% | 21.5% | 21.2% | 16.0% | 8.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Towngas China Co Ltd ($1083) | 21.1% | 31.3% | 25.7% | 26.2% | 26.4% |
| Hong Kong & China Gas Co Ltd ($3) | 20.7% | 23.7% | 18.7% | 20.1% | 21.5% |
| Binhai Investment Co Ltd ($2886) | 23.6% | 26.9% | 18.0% | 15.5% | 16.7% |
| China Gas Holdings Ltd ($384) | 12.2% | 9.4% | 13.7% | 12.3% | 12.3% |
| ENN Energy Holdings Ltd ($2688) | 18.4% | 16.0% | 13.5% | 9.6% | 8.1% |
| |
|---|
| Median (7 companies) | 14.3% | 20.6% | 15.1% | 12.4% | 12.3% |
|---|
| China Oil & Gas Group Ltd ($603) | 17.1% | 15.0% | 18.3% | 15.4% | 11.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Binhai Investment Co Ltd ($2886) | 7.6% | 12.2% | 12.2% | 10.9% | 14.7% |
| ENN Energy Holdings Ltd ($2688) | 13.1% | 14.3% | 11.7% | 16.4% | 13.6% |
| China Gas Holdings Ltd ($384) | 6.8% | 8.4% | 8.6% | 10.6% | 10.6% |
| Hong Kong & China Gas Co Ltd ($3) | 8.0% | 7.3% | 7.4% | 7.5% | 6.9% |
| Chinese Energy Holdings Ltd ($8009) | 0.8% | 7.6% | 29.6% | -8.6% | 5.9% |
| |
|---|
| Median (7 companies) | 7.6% | 7.3% | 8.6% | 7.5% | 6.9% |
|---|
| China Oil & Gas Group Ltd ($603) | 14.0% | 13.7% | 13.2% | 7.6% | 1.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Towngas China Co Ltd ($1083) | 3.6x | 3.5x | 3.7x | 4.1x | 4.5x |
| China Gas Holdings Ltd ($384) | 4.4x | 3.7x | 3.7x | 3.1x | 2.9x |
| Binhai Investment Co Ltd ($2886) | -0.4x | 3.4x | 2.8x | 3.5x | 2.8x |
| Hong Kong & China Gas Co Ltd ($3) | 2.2x | 2.6x | 2.8x | 2.1x | 2.3x |
| ENN Energy Holdings Ltd ($2688) | 2.6x | 1.4x | 1.6x | 0.8x | 1.6x |
| |
|---|
| Median (6 companies) | 1.6x | 3.1x | 2.6x | 3.1x | 2.5x |
|---|
| China Oil & Gas Group Ltd ($603) | -0.8x | -0.0x | 1.0x | 2.8x | 6.0x |
