Shanghai Electric Group Co Ltd reports 32.2% EBITDA decline while 2.9% Revenue growth
30/03/2016 • About Shanghai Electric Group Co Ltd (
$2727) • By InTwits
Shanghai Electric Group Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Shanghai Electric Group Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 6.1%.
- CAPEX is quite volatile: 1,594 in 2015, 1,879 in 2014, 3,298 in 2013, 4,912 in 2012, 6,063 in 2011
- The company has potentially unprofitable business model: ROIC is at 4.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Shanghai Electric Group Co Ltd ($2727) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 71,461 | 76,591 | 78,795 | 76,785 | 78,976 | 2.9% |
| Gross Profit | 12,817 | 13,989 | 13,710 | 14,366 | 16,606 | 15.6% |
| SG&A | 6,490 | 6,957 | 7,678 | 10,536 | 8,326 | -21.0% |
| EBITDA | 5,561 | 6,685 | 5,962 | 6,661 | 4,518 | -32.2% |
| Net Income | 3,183 | 2,715 | 2,393 | 2,511 | 2,143 | -14.7% |
Balance Sheet
|
|---|
| Cash | 19,624 | 22,142 | 21,409 | 25,113 | 36,970 | 47.2% |
| Short Term Debt | 1,689 | 3,419 | 3,765 | 5,009 | 6,073 | 21.2% |
| Long Term Debt | 2,183 | 2,029 | 2,209 | 2,847 | 10,917 | 283.5% |
Cash flow
|
|---|
| Capex | 2,164 | 2,079 | 1,813 | 1,772 | 1,335 | -24.7% |
Ratios
|
|---|
| Revenue growth | 13.5% | 7.2% | 2.9% | -2.6% | 2.9% | |
| EBITDA growth | 26.1% | 20.2% | -10.8% | 11.7% | -32.2% | |
| Gross Margin | 17.9% | 18.3% | 17.4% | 18.7% | 21.0% | 2.3% |
| EBITDA Margin | 7.8% | 8.7% | 7.6% | 8.7% | 5.7% | -3.0% |
| Net Income Margin | 4.5% | 3.5% | 3.0% | 3.3% | 2.7% | -0.6% |
| SG&A, % of revenue | 9.1% | 9.1% | 9.7% | 13.7% | 10.5% | -3.2% |
| CAPEX, % of revenue | 3.0% | 2.7% | 2.3% | 2.3% | 1.7% | -0.6% |
| ROIC | 9.8% | 10.9% | 8.6% | 8.9% | 4.5% | -4.5% |
| ROE | 11.3% | 9.0% | 7.6% | 7.6% | 5.8% | -1.7% |
| Net Debt/EBITDA | -2.8x | -2.5x | -2.6x | -2.6x | -4.4x | -1.8x |
Revenue and profitability
The company's Revenue increased on 2.9% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 12.1 pp from 23.6% to 35.7% in 2015.
Gross Margin increased on 2.3 pp from 18.7% to 21.0% in 2015. SG&A as a % of Revenue decreased on 3.2 pp from 13.7% to 10.5% in 2015.
Net Income marign decreased slightly on 0.56 pp from 3.3% to 2.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
Shanghai Electric Group Co Ltd's CAPEX/Revenue was 1.7% in 2015. Shanghai Electric Group Co Ltd's CAPEX/Revenue decreased slightly on 1.0 pp from 2.7% in 2012 to 1.7% in 2015. For the last three years the average CAPEX/Revenue was 2.1%.
Return on investment
The company operates at low ROIC (4.45%) and ROE (5.83%). ROIC decreased on 4.5 pp from 8.9% to 4.5% in 2015. ROE decreased slightly on 1.7 pp from 7.6% to 5.8% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -4.4x and Debt / EBITDA is 3.8x. Net Debt / EBITDA dropped on 1.8x from -2.6x to -4.4x in 2015. Debt surged on 116% in 2015 while cash surged on 47.2% in 2015.
Appendix 1: Peers in Machinery-Diversified
Below we provide Shanghai Electric Group Co Ltd benchmarking against other companies in Machinery-Diversified 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 |
|---|
| Sun East Technology Holdings Ltd ($365) | | -25.1% | -10.7% | 39.3% | 6.4% |
| Shanghai Prime Machinery Co Ltd ($2345) | | 2.6% | -8.9% | 37.3% | 52.8% |
| Sinoref Holdings Ltd ($1020) | 1.5% | -0.2% | -42.2% | 29.2% | |
| North Asia Strategic Holdings Ltd ($8080) | | -52.2% | -29.1% | 23.7% | 42.6% |
| Huazhang Technology Holding Ltd ($1673) | | 131.6% | 9.5% | 22.9% | 23.5% |
| |
|---|
| Median (23 companies) | 19.3% | -6.8% | -4.2% | 1.1% | -5.6% |
|---|
| Shanghai Electric Group Co Ltd ($2727) | | 7.2% | 2.9% | -2.6% | 2.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 38.3% | 49.1% | 51.7% | 54.9% | 65.5% |
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 45.5% | 59.7% | 58.3% | 48.6% | 26.7% |
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | |
| Haitian International Holdings Ltd ($1882) | 29.7% | 30.1% | 31.6% | 32.4% | 33.0% |
| CHTC Fong's Industries Co Ltd ($641) | 26.5% | 24.4% | 30.0% | 32.3% | 31.2% |
| |
|---|
| Median (23 companies) | 24.2% | 24.4% | 22.6% | 20.0% | 20.9% |
|---|
| Shanghai Electric Group Co Ltd ($2727) | 17.9% | 18.3% | 17.4% | 18.7% | 21.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 31.1% | 46.8% | 48.7% | 46.6% | -134.1% |
| Jingwei Textile Machinery ($350) | 18.5% | 24.0% | 26.9% | 28.0% | 28.5% |
| Haitian International Holdings Ltd ($1882) | 20.5% | 19.7% | 20.7% | 21.9% | 22.8% |
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | |
| |
|---|
| Median (23 companies) | 9.7% | 10.9% | 8.7% | 8.5% | 5.7% |
|---|
| Shanghai Electric Group Co Ltd ($2727) | 7.8% | 8.7% | 7.6% | 8.7% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China High Precision Automation Group Ltd ($591) | 33.0% | 20.5% | 9.1% | 18.4% | 0.6% |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | 15.6% |
| LK Technology Holdings Ltd ($558) | 7.6% | 9.3% | 10.2% | 9.1% | 5.6% |
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 1.3% | 2.3% | 10.1% | 7.8% | 31.9% |
| First Tractor Co Ltd ($38) | 6.3% | 4.9% | 4.3% | 7.3% | 4.3% |
| |
|---|
| Median (23 companies) | 6.1% | 4.2% | 4.3% | 4.5% | 3.6% |
|---|
| Shanghai Electric Group Co Ltd ($2727) | 3.0% | 2.7% | 2.3% | 2.3% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | | 52.8% | 28.7% | 20.8% | -14.5% |
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | 16.3% |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | 14.9% |
| Huazhang Technology Holding Ltd ($1673) | | 29.6% | 16.2% | 16.3% | 16.2% |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | |
| |
|---|
| Median (23 companies) | 9.9% | 7.1% | 4.0% | 2.6% | 1.4% |
|---|
| Shanghai Electric Group Co Ltd ($2727) | 9.8% | 10.9% | 8.6% | 8.9% | 4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | 6.3x |
| Shanghai Prime Machinery Co Ltd ($2345) | -0.0x | -0.6x | 0.3x | 6.0x | 3.2x |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 1.9x | 3.0x | 11.4x | 5.6x | 129.4x |
| Honghua Group Ltd ($196) | 0.1x | 1.2x | 3.2x | 5.2x | 14.2x |
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x |
| |
|---|
| Median (19 companies) | -0.2x | -0.6x | 0.1x | -0.3x | 3.1x |
|---|
| Shanghai Electric Group Co Ltd ($2727) | -2.8x | -2.5x | -2.6x | -2.6x | -4.4x |
