China Shenhua Energy Co Ltd Net Income dropped on 58.9% in 2015 and EBITDA Margin showed almost no change
24/03/2016 • About China Shenhua Energy Co Ltd (
$1088) • By InTwits
China Shenhua Energy Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Shenhua Energy Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.4%. At the same time it's a lot of higher than industry average of 14.3%.
- CAPEX is quite volatile: 3,357 in 2015, 2,760 in 2014, 2,902 in 2013, 5,334 in 2012, 9,510 in 2011
- The company has business model with low profitability: ROIC is at 7.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Shenhua Energy Co Ltd ($1088) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 204,863 | 254,575 | 283,797 | 253,081 | 171,236 | -32.3% |
| Gross Profit | 81,711 | 79,898 | 81,366 | 74,972 | 60,809 | -18.9% |
| SG&A | 13,523 | 9,160 | 10,118 | 9,629 | 17,507 | 81.8% |
| EBITDA | 84,482 | 90,602 | 89,715 | 86,436 | 58,112 | -32.8% |
| Net Income | 44,991 | 49,708 | 45,079 | 39,301 | 16,144 | -58.9% |
Balance Sheet
|
|---|
| Cash | 65,160 | 51,637 | 38,332 | 35,962 | 43,239 | 20.2% |
| Short Term Debt | 16,553 | 28,103 | 48,485 | 28,435 | 20,283 | -28.7% |
| Long Term Debt | 45,443 | 39,624 | 42,042 | 69,552 | 88,785 | 27.7% |
Cash flow
|
|---|
| Capex | 45,341 | 54,629 | 51,665 | 45,151 | 29,876 | -33.8% |
Ratios
|
|---|
| Revenue growth | 29.9% | 24.3% | 11.5% | -10.8% | -32.3% | |
| EBITDA growth | 18.6% | 7.2% | -1.0% | -3.7% | -32.8% | |
| Gross Margin | 39.9% | 31.4% | 28.7% | 29.6% | 35.5% | 5.9% |
| EBITDA Margin | 41.2% | 35.6% | 31.6% | 34.2% | 33.9% | -0.2% |
| Net Income Margin | 22.0% | 19.5% | 15.9% | 15.5% | 9.4% | -6.1% |
| SG&A, % of revenue | 6.6% | 3.6% | 3.6% | 3.8% | 10.2% | 6.4% |
| CAPEX, % of revenue | 22.1% | 21.5% | 18.2% | 17.8% | 17.4% | -0.4% |
| ROIC | 21.0% | 19.5% | 17.4% | 14.6% | 7.7% | -6.9% |
| ROE | 20.9% | 20.3% | 16.7% | 13.6% | 5.4% | -8.2% |
| Net Debt/EBITDA | -0.0x | 0.2x | 0.6x | 0.7x | 1.1x | 0.4x |
Revenue and profitability
China Shenhua Energy Co Ltd's Revenue dropped on 32.3% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.3 pp from 50.7% to 53.0% in 2015.
Gross Margin increased on 5.9 pp from 29.6% to 35.5% in 2015. SG&A as a % of Revenue increased on 6.4 pp from 3.8% to 10.2% in 2015.
Net Income marign decreased on 6.1 pp from 15.5% to 9.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 17.4%. China Shenhua Energy Co Ltd's CAPEX/Revenue decreased on 4.0 pp from 21.5% in 2012 to 17.4% in 2015. For the last three years the average CAPEX/Revenue was 17.8%.Battling declining revenue the company invested a large share of EBITDA (51.4%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (7.72%) and ROE (5.44%). ROIC decreased on 6.9 pp from 14.6% to 7.7% in 2015. ROE decreased on 8.2 pp from 13.6% to 5.4% in 2015.
Leverage (Debt)
Debt level is 1.1x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 0.7x to 1.1x in 2015. Debt jumped on 11.3% in 2015 while cash jumped on 20.2% in 2015.
Management team
China Shenhua Energy Co Ltd's CEO is Zhang Yuzhuo. Zhang Yuzhuo has 4 years tenure at the company. Zhang Kehui is a The company's CFO. Zhang Kehui has spent 11 years at the company.
Appendix 1: Peers in Coal
Below we provide China Shenhua Energy Co Ltd benchmarking against other companies in Coal 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 |
|---|
| Kinetic Mines and Energy Ltd ($1277) | | | 299.9% | 563.4% | 40.0% |
| Feishang Anthracite Resources Ltd ($1738) | 172.1% | 34.9% | 25.8% | 103.6% | |
| Loudong General Nice Resources China Holdings Ltd ($988) | 8.5% | -12.7% | 39.1% | 87.6% | |
| Rosan Resources Holdings Ltd ($578) | -19.9% | -74.1% | 71.1% | 49.1% | |
| Asia Coal Ltd ($835) | | 32.1% | -15.3% | 43.2% | 133.6% |
| |
|---|
| Median (22 companies) | 17.4% | -6.5% | -8.6% | -9.8% | 14.8% |
|---|
| China Shenhua Energy Co Ltd ($1088) | | 24.3% | 11.5% | -10.8% | -32.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Coal Ltd ($835) | 32.4% | 56.7% | 62.6% | 76.7% | 5.8% |
| Shougang Fushan Resources Group Ltd ($639) | 70.4% | 63.5% | 50.9% | 40.1% | 24.5% |
| Agritrade Resources Ltd ($1131) | 7.6% | 22.9% | 29.4% | 31.8% | 30.0% |
| Kinetic Mines and Energy Ltd ($1277) | | 20.6% | 28.8% | 30.3% | 10.9% |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 44.7% | 35.2% | 33.7% | 27.4% | |
| |
|---|
| Median (22 companies) | 30.0% | 19.9% | 17.3% | 9.4% | 6.4% |
|---|
| China Shenhua Energy Co Ltd ($1088) | 39.9% | 31.4% | 28.7% | 29.6% | 35.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Agritrade Resources Ltd ($1131) | 1.4% | 41.6% | 37.3% | 33.4% | 31.1% |
| Kinetic Mines and Energy Ltd ($1277) | | -277.0% | -51.9% | 29.3% | 15.8% |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 40.9% | 33.1% | 30.7% | 22.8% | |
| Feishang Anthracite Resources Ltd ($1738) | -9.2% | -13.1% | -32.9% | 19.0% | |
| Yanzhou Coal Mining Co Ltd ($1171) | 32.3% | 14.9% | 11.5% | 12.2% | |
| |
|---|
| Median (23 companies) | 11.1% | -1.1% | -4.3% | -8.6% | -18.8% |
|---|
| China Shenhua Energy Co Ltd ($1088) | 41.2% | 35.6% | 31.6% | 34.2% | 33.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Up Energy Development Group Ltd ($307) | | | | 279.5% | 75.2% |
| Siberian Mining Group Co Ltd ($1142) | 129.1% | 4.6% | 78.8% | 217.3% | 279.7% |
| King Stone Energy Group Ltd ($663) | 82.7% | 58.5% | 135.3% | 205.7% | |
| Asia Coal Ltd ($835) | 121.4% | 12.5% | 25.8% | 111.0% | 0.3% |
| Hidili Industry International Development Ltd ($1393) | 74.1% | 82.3% | 144.6% | 92.3% | |
| |
|---|
| Median (23 companies) | 21.9% | 13.7% | 26.0% | 20.5% | 12.3% |
|---|
| China Shenhua Energy Co Ltd ($1088) | 22.1% | 21.5% | 18.2% | 17.8% | 17.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Loudong General Nice Resources China Holdings Ltd ($988) | 11.5% | 4.1% | 8.2% | 9.6% | |
| Kinetic Mines and Energy Ltd ($1277) | -2.6% | -6.6% | -5.7% | 8.5% | 3.2% |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 37.6% | 28.5% | 15.2% | 8.5% | |
| Agritrade Resources Ltd ($1131) | -2.3% | 2.7% | 5.8% | 6.4% | 6.9% |
| Yanzhou Coal Mining Co Ltd ($1171) | 16.8% | 5.3% | 2.0% | 3.7% | |
| |
|---|
| Median (23 companies) | 0.6% | -2.6% | -2.1% | -5.2% | -2.4% |
|---|
| China Shenhua Energy Co Ltd ($1088) | 21.0% | 19.5% | 17.4% | 14.6% | 7.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Feishang Anthracite Resources Ltd ($1738) | | | | 24.3x | |
| China Coal Energy Co Ltd ($1898) | 0.5x | 1.9x | 4.9x | 9.7x | 14.4x |
| Loudong General Nice Resources China Holdings Ltd ($988) | 2.0x | 5.8x | 4.4x | 6.0x | |
| Yanzhou Coal Mining Co Ltd ($1171) | 1.1x | 2.9x | 6.2x | 4.9x | |
| Kinetic Mines and Energy Ltd ($1277) | | | | 4.5x | 5.9x |
| |
|---|
| Median (8 companies) | 1.6x | 2.9x | 4.7x | 4.7x | 3.6x |
|---|
| China Shenhua Energy Co Ltd ($1088) | -0.0x | 0.2x | 0.6x | 0.7x | 1.1x |
