Hengshi Mining Investments Ltd Net Income dropped on 189% in 2015 and EBITDA Margin dropped on 10.2 pp from 45.4% to 35.3%
30/03/2016 • About Hengshi Mining Investments Ltd (
$1370) • By InTwits
Hengshi Mining Investments Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hengshi Mining Investments Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.6%. At the same time it's a lot of higher than industry average of 13.8%.
- CAPEX is quite volatile: 23.4 in FY2015, 35.3 in FY2014, 4.6 in FY2013, 8.3 in FY2012, 6.4 in FY2011
- The company has business model with low profitability: ROIC is at 7.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hengshi Mining Investments Ltd ($1370) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 773 | 582 | 1,286 | 1,108 | 754 | -32.0% |
| Gross Profit | 422 | 188 | 711 | 555 | 266 | -52.0% |
| SG&A | 111 | 103 | 112 | 159 | 135 | -14.9% |
| EBITDA | 353 | 132 | 669 | 504 | 266 | -47.2% |
| Net Income | 163 | 48 | 398 | 263 | -235 | -189.4% |
Balance Sheet
|
|---|
| Cash | 42 | 23 | 988 | 167 | 59 | -64.5% |
| Short Term Debt | 0 | 0 | 40 | 155 | 206 | 33.0% |
| Long Term Debt | 0 | 0 | 270 | 277 | 230 | -17.0% |
Cash flow
|
|---|
| Capex | 242 | 183 | 260 | 266 | 195 | -26.6% |
Ratios
|
|---|
| Revenue growth | 112.1% | -24.8% | 121.1% | -13.8% | -32.0% | |
| EBITDA growth | 158.0% | -62.5% | 405.2% | -24.7% | -47.2% | |
| Gross Margin | 54.6% | 32.4% | 55.3% | 50.1% | 35.3% | -14.8% |
| EBITDA Margin | 45.7% | 22.8% | 52.0% | 45.4% | 35.3% | -10.2% |
| Net Income Margin | 21.0% | 8.3% | 30.9% | 23.7% | -31.2% | -54.9% |
| SG&A, % of revenue | 14.4% | 17.8% | 8.7% | 14.3% | 17.9% | 3.6% |
| CAPEX, % of revenue | 31.3% | 31.4% | 20.2% | 24.0% | 25.8% | 1.9% |
| ROIC | 153.0% | 50.1% | 60.1% | 20.7% | 7.9% | -12.8% |
| ROE | 118.0% | 35.8% | 49.8% | 16.9% | -15.2% | -32.1% |
| Net Debt/EBITDA | -0.1x | -0.2x | -1.0x | 0.5x | 1.4x | 0.9x |
Revenue and profitability
Hengshi Mining Investments Ltd's Revenue dropped on 32.0% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 10.2 pp from 45.4% to 35.3% in 2015.
Gross Margin dropped on 14.8 pp from 50.1% to 35.3% in 2015. SG&A as a % of Revenue increased on 3.6 pp from 14.3% to 17.9% in 2015.
Net Income marign dropped on 54.9 pp from 23.7% to -31.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 25.8% in 2015. Hengshi Mining Investments Ltd showed decline in CAPEX/Revenue of 5.6 pp from 31.4% in 2012 to 25.8% in 2015. It's average level of CAPEX/Revenue for the last three years was 23.3%.Hengshi Mining Investments Ltd invested a big chunk of EBITDA (73.3%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (7.95%) and negative ROE (-15.21%). ROIC dropped on 12.8 pp from 20.7% to 7.9% in 2015. ROE dropped on 32.1 pp from 16.9% to -15.2% in 2015.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 1.6x Debt / EBITDA. Net Debt / EBITDA surged on 0.9x from 0.5x to 1.4x in 2015. Debt increased slightly on 0.87% in 2015 while cash dropped on 64.5% in 2015.
Appendix 1: Peers in Mining
Below you can find Hengshi Mining Investments Ltd benchmarking vs. other companies in Mining 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 |
|---|
| Mongolia Energy Corp Ltd ($276) | | | 89.7% | -95.8% | 2,361.6% |
| REX Global Entertainment Holdings Ltd ($164) | | -12.3% | 81.6% | -15.5% | 96.4% |
| Hengxing Gold Holding Co Ltd ($2303) | | | | 3,467.3% | 78.0% |
| Zijin Mining Group Co Ltd ($2899) | | 21.6% | 2.5% | 18.1% | 26.9% |
| China Gold International Resources Corp Ltd ($2099) | | | -9.0% | -8.2% | 22.4% |
| |
|---|
| Median (40 companies) | 68.5% | 5.4% | 0.6% | -5.1% | -13.0% |
|---|
| Hengshi Mining Investments Ltd ($1370) | | -24.8% | 121.1% | -13.8% | -32.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sino Prosper Group Holdings Ltd ($766) | -6.5% | 2.5% | 5.1% | 39.6% | 93.0% |
| REX Global Entertainment Holdings Ltd ($164) | 15.4% | -15.8% | -7.8% | -0.8% | 88.6% |
| China Billion Resources Ltd ($274) | 20.3% | 71.4% | 47.2% | 73.4% | 79.7% |
| Sun International Resources Ltd ($8029) | 77.6% | 83.2% | 73.1% | 64.8% | 69.4% |
| Timeless Software Ltd ($8028) | 19.2% | 17.7% | 48.5% | 29.4% | 42.1% |
| |
|---|
| Median (41 companies) | 19.1% | 13.4% | 13.8% | 15.4% | 20.3% |
|---|
| Hengshi Mining Investments Ltd ($1370) | 54.6% | 32.4% | 55.3% | 50.1% | 35.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| G-Resources Group Ltd ($1051) | | | 54.5% | 53.4% | 58.3% |
| China Precious Metal Resources Holdings Co Ltd ($1194) | 73.1% | 70.0% | 64.6% | 59.6% | 51.3% |
| Timeless Software Ltd ($8028) | -70.8% | -113.1% | 24.7% | -13.7% | 46.1% |
| Hengxing Gold Holding Co Ltd ($2303) | | | -766.2% | 24.5% | 43.9% |
| Sino Prosper Group Holdings Ltd ($766) | -127.2% | -138.6% | -138.2% | -378.4% | 42.9% |
| |
|---|
| Median (41 companies) | 5.9% | 4.7% | 7.5% | 4.7% | 5.5% |
|---|
| Hengshi Mining Investments Ltd ($1370) | 45.7% | 22.8% | 52.0% | 45.4% | 35.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mongolia Energy Corp Ltd ($276) | | 8,006.5% | 1,061.7% | 30,555.4% | 1,973.0% |
| Kaz Minerals ($847) | 19.8% | 36.6% | 136.5% | 168.8% | 168.7% |
| Chinalco Mining Corp International ($3668) | | | | | 115.6% |
| China Dynamics Holdings Ltd ($476) | 1.6% | 1.8% | 0.0% | 1.0% | 113.8% |
| MMG Ltd ($1208) | 17.1% | 25.7% | 22.6% | 41.9% | 100.4% |
| |
|---|
| Median (41 companies) | 14.3% | 17.0% | 15.7% | 13.4% | 11.9% |
|---|
| Hengshi Mining Investments Ltd ($1370) | 31.3% | 31.4% | 20.2% | 24.0% | 25.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CGN Mining Co Ltd ($1164) | -6.4% | 2.6% | 3.3% | 7.9% | 16.7% |
| United Co RUSAL PLC ($486) | 7.5% | 0.3% | -9.0% | 6.3% | 12.3% |
| Timeless Software Ltd ($8028) | -18.0% | -29.1% | 7.3% | -4.6% | 11.6% |
| China Hongqiao Group Ltd ($1378) | 44.6% | 24.8% | 17.0% | 14.1% | 10.6% |
| Hengxing Gold Holding Co Ltd ($2303) | | -7.2% | -8.1% | 0.0% | 8.6% |
| |
|---|
| Median (42 companies) | 2.9% | 0.9% | 2.7% | 0.0% | 1.1% |
|---|
| Hengshi Mining Investments Ltd ($1370) | 153.0% | 50.1% | 60.1% | 20.7% | 7.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chinalco Mining Corp International ($3668) | | | | | 25.0x |
| MMG Ltd ($1208) | -0.0x | 2.1x | 2.0x | 10.2x | 20.2x |
| Kaz Minerals ($847) | 0.6x | 2.4x | 2.9x | 5.5x | 18.7x |
| Aluminum Corp of China Ltd ($2600) | 7.7x | 139.2x | 8.5x | | 18.0x |
| China Precious Metal Resources Holdings Co Ltd ($1194) | 1.5x | 1.5x | 4.1x | 6.4x | 13.5x |
| |
|---|
| Median (27 companies) | 1.4x | 2.1x | 2.0x | 4.6x | 4.1x |
|---|
| Hengshi Mining Investments Ltd ($1370) | -0.1x | -0.2x | -1.0x | 0.5x | 1.4x |
