China Harmony Auto Holding Ltd reports 39.0% CAPEX decline while 4.2% Revenue growth
31/03/2016 • About China Harmony Auto Holding Ltd (
$3836) • By InTwits
China Harmony Auto Holding Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Harmony Auto Holding Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.0%. At the same time it's a lot of higher than industry average of 5.9%.
- CAPEX is quite volatile: 627 in 2015, 1,028 in 2014, 664 in 2013, 877 in 2012, 175 in 2011
- The company has business model with low profitability: ROIC is at 10.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Harmony Auto Holding Ltd ($3836) key annual financial indicators
| mln. | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,032 | 5,657 | 8,333 | 10,196 | 10,620 | 4.2% |
| Gross Profit | 417 | 663 | 997 | 1,089 | 1,122 | 3.0% |
| SG&A | 121 | 271 | 544 | 640 | 727 | 13.6% |
| EBITDA | 319 | 473 | 720 | 901 | 899 | -0.2% |
| Net Income | 220 | 351 | 404 | 544 | 563 | 3.5% |
Balance Sheet
|
|---|
| Cash | 179 | 343 | 784 | 831 | 2,666 | 221.0% |
| Short Term Debt | 852 | 1,766 | 2,621 | 2,898 | 2,238 | -22.8% |
| Long Term Debt | 0 | 290 | 48 | 102 | 21 | -79.1% |
Cash flow
|
|---|
| Capex | 175 | 877 | 664 | 1,028 | 627 | -39.0% |
Ratios
|
|---|
| Revenue growth | 68.3% | 86.6% | 47.3% | 22.4% | 4.2% | |
| EBITDA growth | 92.0% | 48.3% | 52.1% | 25.2% | -0.2% | |
| Gross Margin | 13.8% | 11.7% | 12.0% | 10.7% | 10.6% | -0.1% |
| EBITDA Margin | 10.5% | 8.4% | 8.6% | 8.8% | 8.5% | -0.4% |
| Net Income Margin | 7.3% | 6.2% | 4.8% | 5.3% | 5.3% | -0.0% |
| SG&A, % of revenue | 4.0% | 4.8% | 6.5% | 6.3% | 6.8% | 0.6% |
| CAPEX, % of revenue | 5.8% | 15.5% | 8.0% | 10.1% | 5.9% | -4.2% |
| ROIC | 23.1% | 18.3% | 15.8% | 13.8% | 10.0% | -3.8% |
| ROE | 37.0% | 48.7% | 28.8% | 22.0% | 13.1% | -8.9% |
| Net Debt/EBITDA | 2.1x | 3.6x | 2.6x | 2.4x | -0.5x | -2.9x |
Revenue and profitability
The company's Revenue increased on 4.2% in 2015. EBITDA Margin showed almost no change in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased slightly on 0.57 pp from 6.3% to 6.8% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 China Harmony Auto Holding Ltd had CAPEX/Revenue of 5.9%. China Harmony Auto Holding Ltd showed decline in CAPEX/Revenue of 9.6 pp from 15.5% in 2012 to 5.9% in 2015. It's average level of CAPEX/Revenue for the last three years was 8.0%.China Harmony Auto Holding Ltd maintained rich investment policy and has spent a big chunk of EBITDA (69.7%) to CAPEX.
Return on investment
The company operates at good ROE (13.15%) while ROIC is low (9.99%). ROIC decreased on 3.8 pp from 13.8% to 10.0% in 2015. ROE decreased on 8.9 pp from 22.0% to 13.1% in 2015.
Leverage (Debt)
Debt level is -0.5x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA dropped on 2.9x from 2.4x to -0.5x in 2015. Debt dropped on 24.7% in 2015 while cash jumped on 221% in 2015.
Appendix 1: Peers in Retail
Below you can find China Harmony Auto Holding Ltd benchmarking vs. other companies in Retail 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 |
|---|
| China Nuclear Industry 23 International Corp Ltd ($611) | | 1.4% | 85.6% | -42.1% | 419.8% |
| Noble House China Holdings Ltd ($8246) | | -5.0% | -20.2% | -24.8% | 117.2% |
| Vongroup Ltd ($318) | | -46.9% | 23.7% | -80.2% | 90.3% |
| Nanjing Sinolife United Co Ltd ($3332) | | 45.6% | 29.5% | 29.6% | 57.3% |
| Shanghai La Chapelle Fashion Co Ltd ($6116) | | 54.9% | 72.8% | 23.0% | 48.3% |
| |
|---|
| Median (115 companies) | 421.0% | 11.1% | 6.5% | 3.3% | -1.0% |
|---|
| China Harmony Auto Holding Ltd ($3836) | | 86.6% | 47.3% | 22.4% | 4.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Vongroup Ltd ($318) | | | | 95.1% | 99.1% |
| Modern Beauty Salon Holdings Ltd ($919) | 97.3% | 97.4% | 95.9% | 96.8% | 96.7% |
| Moiselle International Holdings Ltd ($130) | 81.4% | 81.2% | 83.8% | 80.6% | 83.2% |
| Embry Holdings Ltd ($1388) | 82.3% | 81.2% | 80.4% | 82.3% | 81.6% |
| Nanjing Sinolife United Co Ltd ($3332) | 80.6% | 86.5% | 89.3% | 90.9% | 80.6% |
| |
|---|
| Median (102 companies) | 39.4% | 37.2% | 36.4% | 35.5% | 34.8% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 13.8% | 11.7% | 12.0% | 10.7% | 10.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Energy Development Holdings Ltd ($228) | -44.2% | -58.1% | -72.3% | -84.0% | 1,070.6% |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | 55.4% |
| Nanjing Sinolife United Co Ltd ($3332) | 47.8% | 51.6% | 56.9% | 54.4% | 44.8% |
| Lifestyle International Holdings Ltd ($1212) | 49.6% | 47.5% | 47.0% | 44.7% | 43.4% |
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 6.0% | 5.6% | 58.3% | 41.4% |
| |
|---|
| Median (115 companies) | 13.4% | 10.7% | 7.3% | 9.0% | 7.1% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 10.5% | 8.4% | 8.6% | 8.8% | 8.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Culture Landmark Investment Ltd ($674) | 4.6% | 11.6% | 19.4% | 15.7% | 47.2% |
| Springland International Holdings Ltd ($1700) | 20.7% | 31.9% | 17.4% | 26.5% | 36.9% |
| Merry Garden Holdings Ltd ($1237) | 22.7% | 18.6% | 28.6% | 15.1% | 34.2% |
| China Energy Development Holdings Ltd ($228) | 1.4% | 1.6% | 0.2% | 0.0% | 27.4% |
| Golden Eagle Retail Group Ltd ($3308) | 30.6% | 28.5% | 9.4% | 26.7% | 25.4% |
| |
|---|
| Median (115 companies) | 3.9% | 4.1% | 3.6% | 3.7% | 3.1% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 5.8% | 15.5% | 8.0% | 10.1% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 48.1% | 50.7% | -4.6% | 81.3% | 71.8% |
| Starbucks Corp ($4337) | 36.4% | 36.4% | -6.0% | 52.8% | 51.4% |
| Sa Sa International Holdings Ltd ($178) | 45.7% | 53.5% | 52.7% | 49.0% | 39.8% |
| Noble House China Holdings Ltd ($8246) | 60.3% | 17.7% | -67.7% | -113.8% | 35.6% |
| Fairwood Holdings Ltd ($52) | 27.4% | 28.0% | 29.1% | 28.6% | 32.1% |
| |
|---|
| Median (115 companies) | 16.6% | 12.3% | 8.5% | 8.4% | 5.8% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 23.1% | 18.3% | 15.8% | 13.8% | 10.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.8x | 0.6x | 4.0x | 9.3x | 23.5x |
| Trinity Ltd ($891) | -0.6x | -0.2x | 0.2x | 0.6x | 18.2x |
| Parkson Retail Group Ltd ($3368) | 0.4x | 0.8x | 2.3x | 3.6x | 9.8x |
| Maoye International Holdings Ltd ($848) | 1.7x | 2.9x | 3.3x | 3.4x | 9.0x |
| Century Ginwa Retail Holdings Ltd ($162) | 6.5x | 2.0x | 2.5x | 4.8x | 7.3x |
| |
|---|
| Median (90 companies) | -0.8x | -0.5x | -0.8x | -0.2x | -0.5x |
|---|
| China Harmony Auto Holding Ltd ($3836) | 2.1x | 3.6x | 2.6x | 2.4x | -0.5x |
