Tiangong International Co Ltd reports 84.3% Net Income decline and 24.4% Revenue decline
30/03/2016 • About Tiangong International Co Ltd (
$826) • By InTwits
Tiangong International Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tiangong International Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.5%. At the same time it's a lot of higher than industry average of 4.5%.
- CAPEX is quite volatile: 414 in 2015, 359 in 2014, 704 in 2013, 1,626 in 2012, 1,528 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 6.9x while industry average is 6.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tiangong International Co Ltd ($826) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,112 | 3,118 | 3,397 | 4,536 | 3,429 | -24.4% |
| Gross Profit | 707 | 729 | 814 | 909 | 391 | -56.9% |
| SG&A | | 145 | 152 | 194 | 183 | -5.7% |
| EBITDA | 699 | 783 | 877 | 873 | 399 | -54.3% |
| Net Income | 365 | 445 | 470 | 463 | 73 | -84.3% |
Balance Sheet
|
|---|
| Cash | 103 | 150 | 88 | 181 | 323 | 78.4% |
| Short Term Debt | 1,516 | 1,886 | 2,359 | 2,343 | 2,581 | 10.2% |
| Long Term Debt | 427 | 202 | 367 | 633 | 486 | -23.2% |
Cash flow
|
|---|
| Capex | 348 | 459 | 451 | 699 | 444 | -36.5% |
Ratios
|
|---|
| Revenue growth | 32.5% | 0.2% | 8.9% | 33.5% | -24.4% | |
| EBITDA growth | 59.8% | 12.1% | 11.9% | -0.4% | -54.3% | |
| Gross Margin | 22.7% | 23.4% | 24.0% | 20.0% | 11.4% | -8.6% |
| EBITDA Margin | 22.5% | 25.1% | 25.8% | 19.3% | 11.6% | -7.6% |
| Net Income Margin | 11.7% | 14.3% | 13.8% | 10.2% | 2.1% | -8.1% |
| SG&A, % of revenue | | 4.7% | 4.5% | 4.3% | 5.3% | 1.1% |
| CAPEX, % of revenue | 11.2% | 14.7% | 13.3% | 15.4% | 12.9% | -2.5% |
| ROIC | 14.8% | 14.5% | 13.4% | 10.7% | 2.9% | -7.7% |
| ROE | 18.6% | 18.1% | 15.8% | 13.0% | 1.9% | -11.2% |
| Net Debt/EBITDA | 2.6x | 2.5x | 3.0x | 3.2x | 6.9x | 3.7x |
Revenue and profitability
The company's Revenue dropped on 24.4% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.3% to 11.6% in 2015.
Gross Margin decreased on 8.6 pp from 20.0% to 11.4% in 2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 4.3% to 5.3% in 2015.
Net Income marign decreased on 8.1 pp from 10.2% to 2.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 12.9% in 2015. CAPEX/Revenue decreased slightly on 1.8 pp from 14.7% in 2012 to 12.9% in 2015. It's average level of CAPEX/Revenue for the last three years was 13.9%.Battling declining revenue the company made large investments to CAPEX (111% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.94%) and ROE (1.86%). ROIC decreased on 7.7 pp from 10.7% to 2.9% in 2015. ROE dropped on 11.2 pp from 13.0% to 1.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.9x and Debt / EBITDA is 7.7x. Net Debt / EBITDA jumped on 3.7x from 3.2x to 6.9x in 2015. Debt increased on 3.1% in 2015 while cash jumped on 78.4% in 2015.
Appendix 1: Peers in Iron/Steel
Below you can find Tiangong International Co Ltd benchmarking vs. other companies in Iron/Steel 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 |
|---|
| CAA Resources Ltd ($2112) | | 99.6% | 103.2% | 38.0% | 261.2% |
| Newton Resources Ltd ($1231) | | | | -41.6% | 170.9% |
| Fosun International Ltd ($656) | | -8.9% | -1.4% | 21.0% | 27.6% |
| Wanguo International Mining Group Ltd ($3939) | | -1.0% | -11.0% | -16.2% | 0.7% |
| Da Ming International Holdings Ltd ($1090) | | -2.1% | 29.3% | 29.8% | -8.1% |
| |
|---|
| Median (16 companies) | 41.1% | -9.7% | -1.1% | -6.0% | -13.5% |
|---|
| Tiangong International Co Ltd ($826) | | 0.2% | 8.9% | 33.5% | -24.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newton Resources Ltd ($1231) | 63.3% | | -223.7% | 15.7% | 37.5% |
| Wanguo International Mining Group Ltd ($3939) | 51.1% | 47.4% | 50.7% | 39.6% | 29.2% |
| China Metal International Holdings Inc ($319) | 21.0% | 20.9% | 24.3% | 24.8% | 25.5% |
| China Hanking Holdings Ltd ($3788) | 66.1% | 53.6% | 54.4% | 35.1% | 23.8% |
| Fosun International Ltd ($656) | 18.6% | 18.0% | 20.3% | 23.7% | 22.4% |
| |
|---|
| Median (16 companies) | 18.6% | 14.8% | 12.7% | 11.3% | 16.3% |
|---|
| Tiangong International Co Ltd ($826) | 22.7% | 23.4% | 24.0% | 20.0% | 11.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanguo International Mining Group Ltd ($3939) | 46.5% | 39.7% | 36.2% | 31.3% | 26.7% |
| Fosun International Ltd ($656) | 15.8% | 16.7% | 23.0% | 20.9% | 22.2% |
| China Metal International Holdings Inc ($319) | 17.8% | 19.7% | 21.3% | 21.0% | 22.0% |
| Xingda International Holdings Ltd ($1899) | 21.6% | 17.3% | 22.2% | 19.1% | 13.6% |
| China Hanking Holdings Ltd ($3788) | 63.1% | 40.4% | 40.9% | 30.6% | 8.7% |
| |
|---|
| Median (16 companies) | 7.6% | 12.6% | 11.7% | 7.1% | 0.6% |
|---|
| Tiangong International Co Ltd ($826) | 22.5% | 25.1% | 25.8% | 19.3% | 11.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newton Resources Ltd ($1231) | 690.4% | | 926.9% | 1,395.7% | 197.0% |
| Vale SA ($6210) | 25.8% | 34.0% | 28.1% | 29.8% | 34.5% |
| China Hanking Holdings Ltd ($3788) | 24.5% | 38.0% | 35.7% | 20.2% | 30.5% |
| Pan Asia Mining Ltd ($8173) | 0.4% | 1.5% | 0.4% | 2.4% | 24.4% |
| China Vanadium Titano - Magnetite Mining Co Ltd ($893) | 14.2% | 8.9% | 10.5% | 20.4% | 24.1% |
| |
|---|
| Median (16 companies) | 7.3% | 8.3% | 10.5% | 6.4% | 8.0% |
|---|
| Tiangong International Co Ltd ($826) | 11.2% | 14.7% | 13.3% | 15.4% | 12.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Metal International Holdings Inc ($319) | 11.5% | 11.0% | 12.0% | 12.7% | 11.4% |
| Wanguo International Mining Group Ltd ($3939) | 74.9% | 38.4% | 24.4% | 15.0% | 11.1% |
| Golik Holdings Ltd ($1118) | 9.0% | 7.0% | 7.4% | 10.0% | 10.8% |
| CAA Resources Ltd ($2112) | 33.0% | 69.2% | 33.5% | 2.2% | 6.9% |
| Fosun International Ltd ($656) | 6.7% | 6.1% | 7.9% | 6.8% | 6.9% |
| |
|---|
| Median (16 companies) | 10.5% | 6.2% | 7.5% | 3.1% | -4.7% |
|---|
| Tiangong International Co Ltd ($826) | 14.8% | 14.5% | 13.4% | 10.7% | 2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fosun International Ltd ($656) | 4.6x | 4.4x | 4.8x | 5.5x | 4.4x |
| Maanshan Iron & Steel Co Ltd ($323) | 5.0x | 55.2x | 7.3x | 5.3x | |
| China Hanking Holdings Ltd ($3788) | 0.3x | 0.4x | 2.5x | 4.7x | 27.3x |
| China Oriental Group Co Ltd ($581) | 2.4x | 4.6x | 5.3x | 4.5x | |
| Angang Steel Co Ltd ($347) | 6.6x | 21.4x | 4.0x | 4.3x | 29.1x |
| |
|---|
| Median (13 companies) | 1.3x | 2.1x | 2.5x | 2.9x | 0.8x |
|---|
| Tiangong International Co Ltd ($826) | 2.6x | 2.5x | 3.0x | 3.2x | 6.9x |
