Weichai Power Co Ltd reports 72.2% Net Income decline and 7.4% Revenue decline
30/03/2016 • About Weichai Power Co Ltd (
$2338) • By InTwits
Weichai Power Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Weichai Power Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: 4,345 in 2015, 3,310 in 2014, 1,468 in 2013, 2,219 in 2012, 3,421 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.9%
- It operates with high leverage: Net Debt/EBITDA is 0.6x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Weichai Power Co Ltd ($2338) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 59,797 | 47,978 | 58,039 | 79,371 | 73,536 | -7.4% |
| Gross Profit | 12,991 | 9,203 | 11,751 | 16,752 | 16,776 | 0.1% |
| SG&A | 5,166 | 4,890 | 6,091 | 10,184 | 11,823 | 16.1% |
| EBITDA | 8,499 | 5,010 | 6,693 | 8,723 | 8,311 | -4.7% |
| Net Income | 5,597 | 2,991 | 3,571 | 5,002 | 1,391 | -72.2% |
Balance Sheet
|
|---|
| Cash | 13,317 | 14,099 | 16,597 | 24,434 | 21,014 | -14.0% |
| Short Term Debt | 8,207 | 8,339 | 8,285 | 19,268 | 10,899 | -43.4% |
| Long Term Debt | 3,040 | 9,036 | 12,640 | 14,834 | 15,480 | 4.4% |
Cash flow
|
|---|
| Capex | 3,421 | 2,219 | 1,468 | 3,310 | 4,345 | 31.3% |
Ratios
|
|---|
| Revenue growth | -4.6% | -19.8% | 21.0% | 36.8% | -7.4% | |
| EBITDA growth | -21.4% | -41.1% | 33.6% | 30.3% | -4.7% | |
| Gross Margin | 21.7% | 19.2% | 20.2% | 21.1% | 22.8% | 1.7% |
| EBITDA Margin | 14.2% | 10.4% | 11.5% | 11.0% | 11.3% | 0.3% |
| Net Income Margin | 9.4% | 6.2% | 6.2% | 6.3% | 1.9% | -4.4% |
| SG&A, % of revenue | 8.6% | 10.2% | 10.5% | 12.8% | 16.1% | 3.2% |
| CAPEX, % of revenue | 5.7% | 4.6% | 2.5% | 4.2% | 5.9% | 1.7% |
| ROIC | 20.1% | 7.6% | 8.9% | 7.1% | 3.9% | -3.2% |
| ROE | 27.0% | 12.5% | 13.6% | 16.6% | 4.3% | -12.3% |
| Net Debt/EBITDA | -0.2x | 0.7x | 0.6x | 1.1x | 0.6x | -0.5x |
Revenue and profitability
Weichai Power Co Ltd's Revenue decreased on 7.4% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.3 pp from 1.4% to 4.7% in FY2015.
Gross Margin increased slightly on 1.7 pp from 21.1% to 22.8% in 2015. SG&A as a % of Revenue increased on 3.2 pp from 12.8% to 16.1% in 2015.
Net Income marign decreased on 4.4 pp from 6.3% to 1.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
Weichai Power Co Ltd's CAPEX/Revenue was 5.9% in 2015. The company showed small growth in CAPEX/Revenue of 1.3 pp from 4.6% in 2012 to 5.9% in 2015. It's average CAPEX/Revenue for the last three years was 4.2%.Battling declining revenue Weichai Power Co Ltd invested a large share of EBITDA (52.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.93%) and ROE (4.34%). ROIC decreased on 3.2 pp from 7.1% to 3.9% in 2015. ROE dropped on 12.3 pp from 16.6% to 4.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 3.2x. Net Debt / EBITDA dropped on 0.5x from 1.1x to 0.6x in 2015. Debt dropped on 22.6% in 2015 while cash dropped on 14.0% in 2015.
Appendix 1: Peers in Auto Parts&Equipment
Below we provide Weichai Power Co Ltd benchmarking against other companies in Auto Parts&Equipment 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 |
|---|
| China Vehicle Components Technology Holdings Ltd ($1269) | | -10.4% | 27.1% | 31.0% | 30.9% |
| Nexteer Automotive Group Ltd ($1316) | | -3.6% | 10.1% | 24.8% | 12.8% |
| Minth Group Ltd ($425) | | 11.3% | 27.3% | 21.3% | 14.5% |
| Zhejiang Shibao Co Ltd ($1057) | | -12.2% | 23.1% | 20.2% | 3.2% |
| Huazhong In-Vehicle Holdings Co Ltd ($6830) | 16.1% | -1.1% | 27.3% | 14.4% | |
| |
|---|
| Median (16 companies) | 1.5% | -5.6% | 10.7% | 2.6% | 5.0% |
|---|
| Weichai Power Co Ltd ($2338) | | -19.8% | 21.0% | 36.8% | -7.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fuyao Glass Industry Group Co Ltd ($3606) | 36.2% | 37.4% | 41.0% | 41.5% | 41.5% |
| Minth Group Ltd ($425) | 35.0% | 33.1% | 33.0% | 31.2% | 31.7% |
| ZMFY Automobile Glass Services Ltd ($8135) | | 33.2% | 35.8% | 27.4% | 18.5% |
| Zhejiang Shibao Co Ltd ($1057) | 34.9% | 30.3% | 26.0% | 26.4% | 25.5% |
| Shuanghua Holdings Ltd ($1241) | 21.4% | 17.1% | 16.8% | 26.0% | |
| |
|---|
| Median (16 companies) | 26.0% | 20.8% | 20.3% | 22.3% | 20.3% |
|---|
| Weichai Power Co Ltd ($2338) | 21.7% | 19.2% | 20.2% | 21.1% | 22.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fuyao Glass Industry Group Co Ltd ($3606) | 26.9% | 28.5% | 28.7% | 29.2% | 27.7% |
| Minth Group Ltd ($425) | 25.9% | 25.6% | 24.2% | 23.1% | 24.5% |
| Xinyi Glass Holdings Ltd ($868) | 23.5% | 22.5% | 43.8% | 20.0% | 25.0% |
| Xiezhong International Holdings Ltd ($3663) | 22.9% | 20.7% | 17.2% | 16.0% | |
| Xinchen China Power Holdings Ltd ($1148) | 16.5% | 15.5% | 14.0% | 15.7% | 12.7% |
| |
|---|
| Median (16 companies) | 16.0% | 9.3% | 11.8% | 12.4% | 12.7% |
|---|
| Weichai Power Co Ltd ($2338) | 14.2% | 10.4% | 11.5% | 11.0% | 11.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Xinchen China Power Holdings Ltd ($1148) | 2.5% | 1.2% | 0.8% | 21.9% | 8.3% |
| Fuyao Glass Industry Group Co Ltd ($3606) | 11.5% | 14.6% | 16.5% | 21.1% | 23.9% |
| Minth Group Ltd ($425) | 12.3% | 14.8% | 16.1% | 18.7% | 15.4% |
| Xinyi Glass Holdings Ltd ($868) | 37.3% | 17.0% | 28.9% | 15.8% | 16.7% |
| Xiezhong International Holdings Ltd ($3663) | 15.4% | 22.9% | 24.9% | 12.0% | |
| |
|---|
| Median (16 companies) | 11.9% | 10.2% | 8.5% | 6.1% | 7.4% |
|---|
| Weichai Power Co Ltd ($2338) | 5.7% | 4.6% | 2.5% | 4.2% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fuyao Glass Industry Group Co Ltd ($3606) | 19.1% | 19.0% | 21.1% | 22.3% | 15.7% |
| Nexteer Automotive Group Ltd ($1316) | | 14.0% | 18.2% | 17.7% | 21.2% |
| Xinchen China Power Holdings Ltd ($1148) | 31.7% | 22.4% | 14.7% | 12.5% | 8.6% |
| Huazhong In-Vehicle Holdings Co Ltd ($6830) | 13.4% | 2.4% | 9.2% | 12.5% | |
| Minth Group Ltd ($425) | 13.1% | 11.9% | 12.1% | 11.8% | 13.4% |
| |
|---|
| Median (17 companies) | 13.1% | 6.3% | 8.5% | 5.8% | 3.3% |
|---|
| Weichai Power Co Ltd ($2338) | 20.1% | 7.6% | 8.9% | 7.1% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Vehicle Components Technology Holdings Ltd ($1269) | 2.4x | 9.4x | 5.8x | 5.3x | 2.0x |
| New Focus Auto Tech Holdings Ltd ($360) | 1.3x | | | 4.5x | |
| Xinyi Glass Holdings Ltd ($868) | 2.0x | 1.9x | 0.9x | 2.4x | 1.7x |
| Huazhong In-Vehicle Holdings Co Ltd ($6830) | 2.2x | 7.9x | 2.8x | 2.2x | |
| Xiezhong International Holdings Ltd ($3663) | 0.7x | 0.6x | 1.2x | 1.2x | |
| |
|---|
| Median (13 companies) | 1.3x | 0.9x | 1.1x | 1.0x | -0.3x |
|---|
| Weichai Power Co Ltd ($2338) | -0.2x | 0.7x | 0.6x | 1.1x | 0.6x |
