China ZhengTong Auto Services Holdings Ltd EBITDA decreased on 8.6% in 2015 and Revenue decreased on 5.0%
24/03/2016 • About China ZhengTong Auto Services Holdings Ltd (
$1728) • By InTwits
China ZhengTong Auto Services Holdings 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: 6.1% in 2015 vs. 6.4% in 2014 vs. 6.4% in 2011
- China ZhengTong Auto Services Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's in pair with industry average of 5.6%.
- CAPEX is quite volatile: 1,025 in 2015, 1,714 in 2014, 1,141 in 2013, 1,101 in 2012, 459 in 2011
- The company has potentially unprofitable business model: ROIC is at 6.8%
- It operates with high leverage: Net Debt/EBITDA is 5.5x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China ZhengTong Auto Services Holdings Ltd ($1728) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 14,444 | 27,649 | 29,840 | 30,910 | 29,361 | -5.0% |
| Gross Profit | 1,386 | 2,452 | 2,588 | 2,726 | 2,587 | -5.1% |
| SG&A | 650 | 1,422 | 1,279 | 1,588 | 1,759 | 10.8% |
| EBITDA | 918 | 1,668 | 1,889 | 1,967 | 1,798 | -8.6% |
| Net Income | 524 | 604 | 837 | 804 | 619 | -23.0% |
Balance Sheet
|
|---|
| Cash | 1,109 | 1,207 | 1,487 | 1,466 | 1,599 | 9.1% |
| Short Term Debt | 7,086 | 6,548 | 6,196 | 8,694 | 9,082 | 4.5% |
| Long Term Debt | 0 | 1,205 | 2,353 | 2,032 | 2,346 | 15.5% |
Cash flow
|
|---|
| Capex | 459 | 1,101 | 1,141 | 1,714 | 1,025 | -40.2% |
Ratios
|
|---|
| Revenue growth | 79.8% | 91.4% | 7.9% | 3.6% | -5.0% | |
| EBITDA growth | 103.2% | 81.7% | 13.3% | 4.1% | -8.6% | |
| Gross Margin | 9.6% | 8.9% | 8.7% | 8.8% | 8.8% | -0.0% |
| EBITDA Margin | 6.4% | 6.0% | 6.3% | 6.4% | 6.1% | -0.2% |
| Net Income Margin | 3.6% | 2.2% | 2.8% | 2.6% | 2.1% | -0.5% |
| SG&A, % of revenue | 4.5% | 5.1% | 4.3% | 5.1% | 6.0% | 0.9% |
| CAPEX, % of revenue | 3.2% | 4.0% | 3.8% | 5.5% | 3.5% | -2.1% |
| ROIC | 8.0% | 8.5% | 9.5% | 8.5% | 6.8% | -1.7% |
| ROE | 10.3% | 9.4% | 11.8% | 10.2% | 7.4% | -2.8% |
| Net Debt/EBITDA | 6.5x | 3.9x | 3.7x | 4.7x | 5.5x | 0.8x |
Revenue and profitability
The company's Revenue decreased on 5.0% in 2015. EBITDA Margin showed almost no change in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased slightly on 0.85 pp from 5.1% to 6.0% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
China ZhengTong Auto Services Holdings Ltd's CAPEX/Revenue was 3.5% in 2015. CAPEX/Revenue showed almost no change from 2012 to 2015. For the last three years the average CAPEX/Revenue was 4.3%.Battling declining revenue China ZhengTong Auto Services Holdings Ltd invested a large share of EBITDA (57.0%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (6.77%) and ROE (7.38%). ROIC decreased slightly on 1.7 pp from 8.5% to 6.8% in 2015. ROE decreased on 2.8 pp from 10.2% to 7.4% in 2015.
Leverage (Debt)
Debt level is 5.5x Net Debt / EBITDA and 6.4x Debt / EBITDA. Net Debt / EBITDA surged on 0.8x from 4.7x to 5.5x in 2015. Debt increased on 6.5% in 2015 while cash increased on 9.1% in 2015.
Appendix 1: Peers in Retail
Below you can find China ZhengTong Auto Services Holdings Ltd benchmarking vs. other companies in Retail 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 |
|---|
| China Household Holdings Ltd ($692) | -87.0% | -32.8% | 5,357.9% | 76.2% | |
| Ming Fung Jewellery Group Ltd ($860) | | 3.3% | -14.9% | 54.3% | -70.8% |
| Merry Garden Holdings Ltd ($1237) | 53.9% | 37.1% | 12.8% | 47.6% | |
| Luk Fook Holdings International Ltd ($590) | | 47.2% | 12.6% | 43.3% | -17.1% |
| NewOcean Energy Holdings Ltd ($342) | | 23.1% | 15.9% | 36.0% | -21.0% |
| |
|---|
| Median (112 companies) | 29.9% | 10.4% | 6.0% | 3.1% | -0.8% |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | | 91.4% | 7.9% | 3.6% | -5.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.5% | 91.1% | 99.4% | 99.5% | |
| Modern Beauty Salon Holdings Ltd ($919) | 97.3% | 97.4% | 95.9% | 96.8% | 96.7% |
| Vongroup Ltd ($318) | | | | 95.1% | 99.1% |
| Nanjing Sinolife United Co Ltd ($3332) | 80.6% | 86.5% | 89.3% | 90.9% | |
| Embry Holdings Ltd ($1388) | 82.3% | 81.2% | 80.4% | 82.3% | 81.6% |
| |
|---|
| Median (101 companies) | 40.0% | 37.7% | 38.0% | 35.6% | 42.3% |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | 9.6% | 8.9% | 8.7% | 8.8% | 8.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Maoye International Holdings Ltd ($848) | 45.5% | 47.4% | 46.3% | 73.2% | 39.6% |
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 6.0% | 5.6% | 58.3% | 41.4% |
| Nanjing Sinolife United Co Ltd ($3332) | 47.8% | 51.6% | 56.9% | 54.4% | |
| Lifestyle International Holdings Ltd ($1212) | 49.6% | 47.5% | 47.0% | 44.7% | 43.4% |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | |
| |
|---|
| Median (111 companies) | 13.2% | 9.9% | 7.3% | 8.8% | 6.8% |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | 6.4% | 6.0% | 6.3% | 6.4% | 6.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Intime Retail Group Co Ltd ($1833) | 58.4% | 28.3% | 55.4% | 37.0% | 17.6% |
| Future Bright Holdings Ltd ($703) | 6.2% | 2.6% | 3.7% | 36.8% | 24.9% |
| Sage International Group Ltd ($8082) | 20.4% | 236.6% | 28.2% | 35.4% | 9.3% |
| Maoye International Holdings Ltd ($848) | 30.9% | 32.8% | 24.1% | 31.5% | 17.7% |
| Tsui Wah Holdings Ltd ($1314) | 5.2% | 8.3% | 9.3% | 30.5% | 10.6% |
| |
|---|
| Median (112 companies) | 3.9% | 4.0% | 3.6% | 3.4% | 3.0% |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | 3.2% | 4.0% | 3.8% | 5.5% | 3.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 48.1% | 50.7% | -4.6% | 81.3% | 71.8% |
| Starbucks Corp ($4337) | 36.4% | 36.4% | -6.0% | 52.8% | 51.4% |
| Sa Sa International Holdings Ltd ($178) | 45.7% | 53.5% | 52.7% | 49.0% | 39.8% |
| Coach Inc ($6388) | 82.0% | 82.3% | 68.7% | 45.0% | 20.8% |
| Nanjing Sinolife United Co Ltd ($3332) | 57.4% | 67.3% | 68.1% | 32.2% | |
| |
|---|
| Median (112 companies) | 17.2% | 12.3% | 8.2% | 8.4% | 5.7% |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | 8.0% | 8.5% | 9.5% | 8.5% | 6.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.8x | 0.6x | 4.0x | 9.3x | 23.5x |
| China Yongda Automobiles Services Holdings Ltd ($3669) | 3.3x | 3.4x | 4.7x | 5.5x | 3.4x |
| Zhongsheng Group Holdings Ltd ($881) | 2.2x | 4.6x | 4.5x | 5.3x | |
| NewOcean Energy Holdings Ltd ($342) | 35.2x | 6.2x | 6.1x | 5.3x | 2.6x |
| Century Ginwa Retail Holdings Ltd ($162) | 6.5x | 2.0x | 2.5x | 4.8x | 7.3x |
| |
|---|
| Median (87 companies) | -0.8x | -0.5x | -0.8x | -0.2x | -0.5x |
|---|
| China ZhengTong Auto Services Holdings Ltd ($1728) | 6.5x | 3.9x | 3.7x | 4.7x | 5.5x |
