Shandong Chenming Paper Holdings Ltd reports 102% Net Income growth and 5.9 pp EBITDA Margin growth from 14.5% to 20.4%
30/03/2016 • About Shandong Chenming Paper Holdings Ltd (
$1812) • By InTwits
Shandong Chenming Paper Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 20.4% in 2015 vs. 14.5% in 2014 vs. 11.6% in 2011
- Shandong Chenming Paper Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.3%. At the same time it's a lot of higher than industry average of 10.4%.
- CAPEX is quite volatile: 348 in 2015, 700 in 2014, 1,752 in 2013, 2,421 in 2012, 4,957 in 2011
- The company has potentially unprofitable business model: ROIC is at 4.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 12.4x while industry average is 10.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Shandong Chenming Paper Holdings Ltd ($1812) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 17,672 | 19,683 | 20,303 | 19,011 | 20,109 | 5.8% |
| Gross Profit | 2,741 | 2,989 | 3,651 | 3,688 | 5,344 | 44.9% |
| SG&A | 1,581 | 1,855 | 1,843 | 2,309 | 1,819 | -21.2% |
| EBITDA | 2,048 | 2,238 | 2,676 | 2,763 | 4,100 | 48.4% |
| Net Income | 608 | 221 | 711 | 505 | 1,021 | 102.1% |
Balance Sheet
|
|---|
| Cash | 3,128 | 2,344 | 727 | 5,476 | 2,121 | -61.3% |
| Short Term Debt | 13,906 | 15,530 | 15,251 | 23,934 | 43,802 | 83.0% |
| Long Term Debt | 7,620 | 10,189 | 9,492 | 11,576 | 8,958 | -22.6% |
Cash flow
|
|---|
| Capex | 5,080 | 2,836 | 3,815 | 3,093 | 3,716 | 20.1% |
Ratios
|
|---|
| Revenue growth | 3.3% | 11.4% | 3.2% | -6.4% | 5.8% | |
| EBITDA growth | -32.3% | 9.3% | 19.5% | 3.3% | 48.4% | |
| Gross Margin | 15.5% | 15.2% | 18.0% | 19.4% | 26.6% | 7.2% |
| EBITDA Margin | 11.6% | 11.4% | 13.2% | 14.5% | 20.4% | 5.9% |
| Net Income Margin | 3.4% | 1.1% | 3.5% | 2.7% | 5.1% | 2.4% |
| SG&A, % of revenue | 8.9% | 9.4% | 9.1% | 12.1% | 9.0% | -3.1% |
| CAPEX, % of revenue | 28.7% | 14.4% | 18.8% | 16.3% | 18.5% | 2.2% |
| ROIC | 2.4% | 1.9% | 3.3% | 3.0% | 4.5% | 1.5% |
| ROE | 4.5% | 1.6% | 5.1% | 3.6% | 6.6% | 3.0% |
| Net Debt/EBITDA | 9.0x | 10.4x | 9.0x | 10.9x | 12.4x | 1.5x |
Revenue and profitability
The company's Revenue increased on 5.8% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.9 pp from 14.5% to 20.4% in 2015.
Gross Margin increased on 7.2 pp from 19.4% to 26.6% in 2015. SG&A as a % of Revenue decreased on 3.1 pp from 12.1% to 9.0% in 2015.
Net Income marign increased on 2.4 pp from 2.7% to 5.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
Shandong Chenming Paper Holdings Ltd's CAPEX/Revenue was 18.5% in 2015. CAPEX/Revenue increased on 4.1 pp from 14.4% in 2012 to 18.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 17.8%.The company invested a large share of EBITDA (90.6%) to CAPEX.
Return on investment
The company operates at low ROIC (4.50%) and ROE (6.63%). ROIC increased slightly on 1.5 pp from 3.0% to 4.5% in 2015. ROE increased on 3.0 pp from 3.6% to 6.6% in 2015.
Leverage (Debt)
Debt level is 12.4x Net Debt / EBITDA and 12.9x Debt / EBITDA. Net Debt / EBITDA jumped on 1.5x from 10.9x to 12.4x in 2015. Debt surged on 48.6% in 2015 while cash dropped on 61.3% in 2015.
Appendix 1: Peers in Forest Products&Paper
Below we provide Shandong Chenming Paper Holdings Ltd benchmarking against other companies in Forest Products&Paper 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 |
|---|
| 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% |
| Hop Fung Group Holdings Ltd ($2320) | | -27.0% | -2.3% | 6.9% | -2.8% |
| Samson Paper Holdings Ltd ($731) | | 7.4% | -7.1% | 6.4% | 6.2% |
| |
|---|
| Median (11 companies) | -7.7% | 3.9% | 5.8% | 0.8% | 6.2% |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | | 11.4% | 3.2% | -6.4% | 5.8% |
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% |
| China Sunshine Paper Holdings Co Ltd ($2002) | 16.8% | 16.6% | 16.5% | 19.0% | |
| KuangChi Science Ltd ($439) | | | 20.3% | 17.3% | |
| |
|---|
| Median (11 companies) | 16.9% | 16.2% | 16.7% | 16.7% | 19.6% |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | 15.5% | 15.2% | 18.0% | 19.4% | 26.6% |
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% |
| 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% |
| Hop Fung Group Holdings Ltd ($2320) | 9.7% | 10.3% | 10.3% | 10.2% | 11.8% |
| |
|---|
| Median (11 companies) | -8.0% | 6.8% | 10.3% | 3.8% | 7.7% |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | 11.6% | 11.4% | 13.2% | 14.5% | 20.4% |
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% | |
| 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% | |
| Youyuan International Holdings Ltd ($2268) | 35.7% | 28.4% | 14.8% | 8.4% | 14.2% |
| |
|---|
| Median (11 companies) | 35.0% | 15.8% | 9.9% | 8.4% | 5.2% |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | 28.7% | 14.4% | 18.8% | 16.3% | 18.5% |
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% | |
| Samson Paper Holdings Ltd ($731) | 3.0% | 3.2% | 1.8% | 2.9% | 2.9% |
| |
|---|
| Median (13 companies) | -2.5% | -1.2% | 1.8% | -2.7% | 2.6% |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | 2.4% | 1.9% | 3.3% | 3.0% | 4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greenheart Group Ltd ($94) | | | 7.1x | 26.8x | 53.0x |
| 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 |
| Hop Fung Group Holdings Ltd ($2320) | 3.3x | 3.5x | 3.8x | 1.1x | 0.3x |
| |
|---|
| Median (6 companies) | 4.2x | 3.5x | 3.8x | 5.1x | 3.1x |
|---|
| Shandong Chenming Paper Holdings Ltd ($1812) | 9.0x | 10.4x | 9.0x | 10.9x | 12.4x |
