China Machinery Engineering Corp reports 23.2% EBITDA decline and 12.6% Revenue decline
29/03/2016 • About China Machinery Engineering Corp (
$1829) • By InTwits
China Machinery Engineering Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Machinery Engineering Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's in pair with industry average of 45.0%.
- CAPEX is quite volatile: 459 in 2015, 340 in 2014, 244 in 2013, 304 in 2012, 924 in 2011
- The company has business model with average profitability: ROIC is at 10.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Machinery Engineering Corp ($1829) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 20,518 | 21,296 | 21,426 | 23,747 | 20,757 | -12.6% |
| Gross Profit | 3,659 | 3,732 | 3,742 | 3,814 | 3,391 | -11.1% |
| SG&A | 1,385 | 1,565 | 1,715 | 1,690 | 1,744 | 3.2% |
| EBITDA | 2,206 | 2,150 | 2,398 | 2,175 | 1,670 | -23.2% |
| Net Income | 1,475 | 1,928 | 1,959 | 2,119 | 2,052 | -3.2% |
Balance Sheet
|
|---|
| Cash | 5,171 | 12,089 | 14,550 | 17,986 | 20,345 | 13.1% |
| Short Term Debt | 160 | 134 | 234 | 206 | 428 | 108.2% |
| Long Term Debt | 226 | 155 | 80 | 360 | 397 | 10.4% |
Cash flow
|
|---|
| Capex | 924 | 304 | 244 | 340 | 459 | 34.9% |
Ratios
|
|---|
| Revenue growth | 7.6% | 3.8% | 0.6% | 10.8% | -12.6% | |
| EBITDA growth | 41.2% | -2.5% | 11.6% | -9.3% | -23.2% | |
| Gross Margin | 17.8% | 17.5% | 17.5% | 16.1% | 16.3% | 0.3% |
| EBITDA Margin | 10.8% | 10.1% | 11.2% | 9.2% | 8.0% | -1.1% |
| Net Income Margin | 7.2% | 9.1% | 9.1% | 8.9% | 9.9% | 1.0% |
| SG&A, % of revenue | 6.7% | 7.3% | 8.0% | 7.1% | 8.4% | 1.3% |
| CAPEX, % of revenue | 4.5% | 1.4% | 1.1% | 1.4% | 2.2% | 0.8% |
| ROIC | 35.5% | 24.9% | 20.4% | 16.0% | 10.8% | -5.2% |
| ROE | 31.6% | 25.2% | 18.1% | 17.0% | 15.0% | -2.0% |
| Net Debt/EBITDA | -2.2x | -5.5x | -5.9x | -8.0x | -11.7x | -3.7x |
Revenue and profitability
China Machinery Engineering Corp's Revenue dropped on 12.6% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.2 pp from 13.1% to 14.3% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased slightly on 1.3 pp from 7.1% to 8.4% in 2015.
Net Income marign increased slightly on 0.96 pp from 8.9% to 9.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
China Machinery Engineering Corp's CAPEX/Revenue was 2.2% in 2015. The company's CAPEX/Revenue increased slightly on 0.78 pp from 1.4% in 2012 to 2.2% in 2015. For the last three years the average CAPEX/Revenue was 1.6%.
Return on investment
The company operates at good ROE (15.03%) while ROIC is low (10.82%). ROIC decreased on 5.2 pp from 16.0% to 10.8% in 2015. ROE decreased on 2.0 pp from 17.0% to 15.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -11.7x and Debt / EBITDA is 0.5x. Net Debt / EBITDA dropped on 3.7x from -8.0x to -11.7x in 2015. Debt jumped on 45.9% in 2015 while cash surged on 13.1% in 2015.
Appendix 1: Peers in Engineering&Construction
Below you can find China Machinery Engineering Corp benchmarking vs. other companies in Engineering&Construction 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 |
|---|
| CNQC International Holdings Ltd ($1240) | | 21.6% | 91.0% | 103.7% | 807.4% |
| China National Culture Group Ltd ($745) | | -39.1% | -76.8% | -55.8% | 592.3% |
| Vision Fame International Holding Ltd ($1315) | | -9.9% | 45.9% | -10.5% | 105.6% |
| Sino Credit Holdings Ltd ($628) | | -13.8% | | | 97.4% |
| Grand Ming Group Holdings Ltd ($1271) | | 131.0% | -26.9% | -37.4% | 74.8% |
| |
|---|
| Median (38 companies) | 15.7% | 11.5% | 21.8% | 16.8% | 10.7% |
|---|
| China Machinery Engineering Corp ($1829) | | 3.8% | 0.6% | 10.8% | -12.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HNA Infrastructure Company Ltd ($357) | 61.6% | 66.4% | 62.1% | 62.4% | 61.1% |
| Broad Greenstate International Co Ltd ($1253) | 16.7% | 20.1% | 28.7% | 35.8% | 36.7% |
| China National Culture Group Ltd ($745) | -46.6% | 0.9% | 12.1% | 10.3% | 32.3% |
| Kingbo Strike Ltd ($1421) | 22.9% | 32.4% | 44.4% | 40.3% | 30.7% |
| Freetech Road Recycling Technology Holdings Ltd ($6888) | 50.1% | 54.1% | 54.3% | 41.5% | 30.1% |
| |
|---|
| Median (33 companies) | 12.0% | 13.3% | 13.7% | 13.8% | 15.1% |
|---|
| China Machinery Engineering Corp ($1829) | 17.8% | 17.5% | 17.5% | 16.1% | 16.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HNA Infrastructure Company Ltd ($357) | 60.0% | 62.8% | 63.7% | 62.8% | 61.7% |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 39.8% | 31.2% | 20.6% | 36.2% | 60.9% |
| Beijing Capital International Airport Co Ltd ($694) | 55.1% | 53.4% | 52.9% | 50.3% | 51.6% |
| China National Culture Group Ltd ($745) | -70.3% | -30.4% | -72.7% | -279.2% | 45.3% |
| Chevalier International Holdings Ltd ($25) | 6.7% | 10.4% | 11.9% | 12.8% | 37.5% |
| |
|---|
| Median (38 companies) | 8.5% | 9.4% | 8.3% | 7.4% | 8.1% |
|---|
| China Machinery Engineering Corp ($1829) | 10.8% | 10.1% | 11.2% | 9.2% | 8.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HNA Infrastructure Company Ltd ($357) | 43.3% | 36.8% | 5.7% | 85.4% | 155.4% |
| Grand Ming Group Holdings Ltd ($1271) | 10.6% | 0.0% | 16.1% | 8.7% | 33.8% |
| Beijing Capital International Airport Co Ltd ($694) | 5.3% | 3.5% | 6.6% | 7.2% | 28.2% |
| Louis XIII Holdings Ltd ($577) | 2.3% | 1.2% | 29.5% | 9.3% | 16.1% |
| PYI Corp Ltd ($498) | 6.6% | 3.7% | 4.2% | 24.5% | 13.1% |
| |
|---|
| Median (38 companies) | 4.1% | 2.5% | 2.5% | 1.7% | 2.1% |
|---|
| China Machinery Engineering Corp ($1829) | 4.5% | 1.4% | 1.1% | 1.4% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chun Sing Engineering Holdings Ltd ($2277) | | | 98.3% | 54.9% | 43.7% |
| Ngai Shun Holdings Ltd ($1246) | | 68.8% | 77.2% | 45.2% | 31.0% |
| Broad Greenstate International Co Ltd ($1253) | | 33.2% | 85.1% | 51.2% | 26.0% |
| CNQC International Holdings Ltd ($1240) | 23.1% | 12.2% | 22.3% | 40.4% | 21.8% |
| Tysan Holdings Ltd ($687) | 16.1% | 4.1% | 10.6% | 14.0% | 21.0% |
| |
|---|
| Median (40 companies) | 6.9% | 6.4% | 5.6% | 4.4% | 3.1% |
|---|
| China Machinery Engineering Corp ($1829) | 35.5% | 24.9% | 20.4% | 16.0% | 10.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Deson Development International Holdings ($262) | 3.1x | 3.8x | 4.9x | 13.7x | 47.0x |
| Hsin Chong Construction Group Ltd ($404) | 4.3x | 1.8x | 8.0x | 10.2x | 41.7x |
| China Resources and Transportation Group Ltd ($269) | | | | 66.7x | 29.7x |
| CNC Holdings Ltd ($8356) | -0.7x | | 22.0x | 21.9x | 24.3x |
| Louis XIII Holdings Ltd ($577) | -1.6x | 0.8x | -12.5x | -23.2x | 19.1x |
| |
|---|
| Median (33 companies) | 0.5x | 1.2x | 1.2x | 2.0x | 2.4x |
|---|
| China Machinery Engineering Corp ($1829) | -2.2x | -5.5x | -5.9x | -8.0x | -11.7x |
