Hop Fung Group Holdings Ltd reports 90.7% Net Income decline and 2.8% Revenue decline
30/03/2016 • About Hop Fung Group Holdings Ltd (
$2320) • By InTwits
Hop Fung Group Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hop Fung Group Holdings Ltd is a company in decline: 2015 revenue growth was -2.8%, 5 years revenue CAGR was -5.7%
- Hop Fung Group Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.9%. At the same time it's in pair with industry average of 21.4%.
- CAPEX is quite volatile: 56.4 in 2015, 37.5 in 2014, 80.2 in 2013, 92.8 in 2012, 133 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hop Fung Group Holdings Ltd ($2320) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,440 | 1,051 | 1,027 | 1,097 | 1,067 | -2.8% |
| Gross Profit | 216 | 171 | 174 | 184 | 213 | 15.8% |
| SG&A | | 125 | 132 | 139 | 150 | 8.2% |
| EBITDA | 140 | 108 | 106 | 111 | 125 | 12.5% |
| Net Income | 27 | 21 | 6 | 389 | 36 | -90.7% |
Balance Sheet
|
|---|
| Cash | 300 | 289 | 240 | 394 | 152 | -61.5% |
| Short Term Debt | 440 | 313 | 348 | 297 | 111 | -62.5% |
| Long Term Debt | 329 | 350 | 297 | 221 | 83 | -62.3% |
Cash flow
|
|---|
| Capex | 133 | 93 | 80 | 37 | 56 | 50.5% |
Ratios
|
|---|
| Revenue growth | 0.8% | -27.0% | -2.3% | 6.9% | -2.8% | |
| EBITDA growth | -17.7% | -22.9% | -1.9% | 4.9% | 12.5% | |
| Gross Margin | 15.0% | 16.2% | 16.9% | 16.7% | 19.9% | 3.2% |
| EBITDA Margin | 9.7% | 10.3% | 10.3% | 10.2% | 11.8% | 1.6% |
| Net Income Margin | 1.9% | 2.0% | 0.6% | 35.5% | 3.4% | -32.1% |
| SG&A, % of revenue | | 11.9% | 12.9% | 12.6% | 14.1% | 1.4% |
| CAPEX, % of revenue | 9.3% | 8.8% | 7.8% | 3.4% | 5.3% | 1.9% |
| ROIC | 3.7% | 1.7% | 1.4% | 1.6% | 2.6% | 1.0% |
| ROE | 2.7% | 1.9% | 0.5% | 29.0% | 2.4% | -26.6% |
| Net Debt/EBITDA | 3.3x | 3.5x | 3.8x | 1.1x | 0.3x | -0.8x |
Revenue and profitability
Hop Fung Group Holdings Ltd's Revenue decreased on 2.8% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 10.2% to 11.8% in 2015.
Gross Margin increased on 3.2 pp from 16.7% to 19.9% in 2015. SG&A as a % of Revenue increased slightly on 1.4 pp from 12.6% to 14.1% in 2015.
Net Income marign dropped on 32.1 pp from 35.5% to 3.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Hop Fung Group Holdings Ltd had CAPEX/Revenue of 5.3%. The company's CAPEX/Revenue decreased on 3.5 pp from 8.8% in 2012 to 5.3% in 2015. It's average CAPEX/Revenue for the last three years was 5.5%.
Return on investment
The company operates at low ROIC (2.60%) and ROE (2.41%). ROIC increased slightly on 1.00 pp from 1.6% to 2.6% in 2015. ROE dropped on 26.6 pp from 29.0% to 2.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 1.6x. Net Debt / EBITDA dropped on 0.8x from 1.1x to 0.3x in 2015. Debt dropped on 62.4% in 2015 while cash dropped on 61.5% in 2015.
Appendix 1: Peers in Forest Products&Paper
Below you can find Hop Fung Group Holdings Ltd benchmarking vs. other companies in Forest Products&Paper 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 |
|---|
| Merdeka Mobile Group Ltd ($8163) | | -11.0% | 415.4% | 71.4% | 88.0% |
| KuangChi Science Ltd ($439) | | | | 39.7% | |
| PNG Resources Holdings Ltd ($221) | | 323.7% | 248.6% | 8.5% | 8.7% |
| Samson Paper Holdings Ltd ($731) | | 7.4% | -7.1% | 6.4% | 6.2% |
| Youyuan International Holdings Ltd ($2268) | | 0.4% | 6.7% | 0.8% | 10.3% |
| |
|---|
| Median (11 companies) | -7.7% | 9.4% | 5.8% | 0.7% | 6.2% |
|---|
| Hop Fung Group Holdings Ltd ($2320) | | -27.0% | -2.3% | 6.9% | -2.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 29.6% | 29.8% | 32.9% | 31.3% | 29.2% |
| PNG Resources Holdings Ltd ($221) | 31.9% | 19.4% | 18.6% | 24.2% | 35.3% |
| Greenheart Group Ltd ($94) | 47.3% | 37.6% | 33.7% | 21.6% | 19.2% |
| Shandong Chenming Paper Holdings Ltd ($1812) | 15.5% | 15.2% | 18.0% | 19.4% | 26.6% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 16.8% | 16.6% | 16.5% | 19.0% | |
| |
|---|
| Median (11 companies) | 16.9% | 16.0% | 17.2% | 17.3% | 22.9% |
|---|
| Hop Fung Group Holdings Ltd ($2320) | 15.0% | 16.2% | 16.9% | 16.7% | 19.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 27.6% | 27.2% | 30.8% | 29.8% | 30.0% |
| Nine Dragons Paper Holdings Ltd ($2689) | 17.1% | 16.4% | 17.2% | 18.6% | 16.9% |
| Shandong Chenming Paper Holdings Ltd ($1812) | 11.6% | 11.4% | 13.2% | 14.5% | 20.4% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 13.8% | 14.3% | 12.7% | 14.5% | |
| PNG Resources Holdings Ltd ($221) | -68.2% | -6.1% | 9.6% | 12.2% | 26.5% |
| |
|---|
| Median (11 companies) | -8.0% | 7.4% | 10.7% | 3.8% | 10.3% |
|---|
| Hop Fung Group Holdings Ltd ($2320) | 9.7% | 10.3% | 10.3% | 10.2% | 11.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| PNG Resources Holdings Ltd ($221) | 294.9% | 133.1% | 35.6% | 53.0% | 44.8% |
| China Agroforestry Low-Carbon Holdings Ltd ($1069) | 0.1% | 0.2% | 11.5% | 26.7% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 28.7% | 14.4% | 18.8% | 16.3% | 18.5% |
| Nine Dragons Paper Holdings Ltd ($2689) | 34.3% | 16.8% | 15.5% | 8.9% | 5.9% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 10.4% | 14.8% | 9.9% | 8.7% | |
| |
|---|
| Median (11 companies) | 35.0% | 15.8% | 10.7% | 8.4% | 5.5% |
|---|
| Hop Fung Group Holdings Ltd ($2320) | 9.3% | 8.8% | 7.8% | 3.4% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Youyuan International Holdings Ltd ($2268) | 15.6% | 12.6% | 12.9% | 10.4% | 10.6% |
| PNG Resources Holdings Ltd ($221) | -3.6% | -1.2% | 5.8% | 8.3% | 19.9% |
| Nine Dragons Paper Holdings Ltd ($2689) | 7.5% | 6.5% | 6.1% | 5.9% | 5.3% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 7.5% | 6.8% | 5.1% | 5.5% | |
| Shandong Chenming Paper Holdings Ltd ($1812) | 2.4% | 1.9% | 3.3% | 3.0% | 4.5% |
| |
|---|
| Median (13 companies) | -2.5% | -1.2% | 2.3% | -2.7% | 2.9% |
|---|
| Hop Fung Group Holdings Ltd ($2320) | 3.7% | 1.7% | 1.4% | 1.6% | 2.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greenheart Group Ltd ($94) | | | 7.1x | 26.8x | 53.0x |
| Shandong Chenming Paper Holdings Ltd ($1812) | 9.0x | 10.4x | 9.0x | 10.9x | 12.4x |
| Samson Paper Holdings Ltd ($731) | 11.3x | 8.3x | 13.0x | 9.3x | 8.9x |
| Nine Dragons Paper Holdings Ltd ($2689) | 5.2x | 4.9x | 5.7x | 5.1x | 4.7x |
| Youyuan International Holdings Ltd ($2268) | 1.2x | 1.5x | 2.1x | 1.5x | 1.4x |
| |
|---|
| Median (6 companies) | 5.6x | 4.9x | 5.7x | 6.0x | 6.8x |
|---|
| Hop Fung Group Holdings Ltd ($2320) | 3.3x | 3.5x | 3.8x | 1.1x | 0.3x |
