Renheng Enterprise Holdings Ltd reports 88.9% Net Income decline and 3.4 pp EBITDA Margin decline from 20.7% to 17.3%
31/03/2016 • About Renheng Enterprise Holdings Ltd (
$3628) • By InTwits
Renheng Enterprise Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Renheng Enterprise Holdings Ltd is a company in decline: 2015 revenue growth was -28.8%, 5 years revenue CAGR was -5.4%
- EBITDA Margin is declining: 17.3% in 2015 vs. 20.7% in 2014 vs. 22.9% in 2011
- Renheng Enterprise Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 38.8%.
- CAPEX is quite volatile: 10.8 in 2015, 2.3 in 2014, 2.2 in 2013, 4.1 in 2012, 5.6 in 2011
- The company has potentially unprofitable business model: ROIC is at 4.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Renheng Enterprise Holdings Ltd ($3628) key annual financial indicators
| mln. | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 156.0 | 145.5 | 133.9 | 97.5 | 69.4 | -28.8% |
| Gross Profit | 56.8 | 64.5 | 60.0 | 44.2 | 33.9 | -23.4% |
| SG&A | | 24.5 | 29.9 | 23.8 | 26.3 | 10.7% |
| EBITDA | 35.7 | 35.9 | 31.9 | 20.2 | 12.0 | -40.6% |
| Net Income | 25.7 | 29.7 | 27.9 | 10.6 | 1.2 | -88.9% |
Balance Sheet
|
|---|
| Cash | 103.4 | 120.7 | 158.6 | 158.3 | 60.9 | -61.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 9.0 | 1.8 | -80.2% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.4 | 1.2 | 1.5 | 1.0 | 0.8 | -20.1% |
Ratios
|
|---|
| Revenue growth | 70.1% | -6.8% | -8.0% | -27.2% | -28.8% | |
| EBITDA growth | 24.7% | 0.6% | -11.1% | -36.8% | -40.6% | |
| Gross Margin | 36.4% | 44.3% | 44.8% | 45.4% | 48.9% | 3.5% |
| EBITDA Margin | 22.9% | 24.7% | 23.9% | 20.7% | 17.3% | -3.4% |
| Net Income Margin | 16.5% | 20.4% | 20.9% | 10.9% | 1.7% | -9.2% |
| SG&A, % of revenue | | 16.8% | 22.3% | 24.4% | 38.0% | 13.6% |
| CAPEX, % of revenue | 0.9% | 0.8% | 1.1% | 1.1% | 1.2% | 0.1% |
| ROIC | 23.7% | 17.0% | 12.8% | 6.9% | 4.8% | -2.1% |
| ROE | 18.7% | 15.2% | 12.2% | 4.2% | 0.6% | -3.6% |
| Net Debt/EBITDA | -2.9x | -3.4x | -5.0x | -7.4x | -4.9x | 2.5x |
Revenue and profitability
Renheng Enterprise Holdings Ltd's Revenue dropped on 28.8% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from -6.1% to -4.6% in 2015.
Gross Margin increased on 3.5 pp from 45.4% to 48.9% in 2015. SG&A as a % of Revenue jumped on 13.6 pp from 24.4% to 38.0% in 2015.
Net Income marign decreased on 9.2 pp from 10.9% to 1.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.2% in 2015. CAPEX/Revenue showed almost no change from 2012 to 2015. It's average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at low ROIC (4.81%) and ROE (0.62%). ROIC decreased on 2.1 pp from 6.9% to 4.8% in 2015. ROE decreased on 3.6 pp from 4.2% to 0.62% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -4.9x and Debt / EBITDA is 0.1x. Net Debt / EBITDA surged on 2.5x from -7.4x to -4.9x in 2015. Debt dropped on 80.2% in 2015 while cash dropped on 61.5% in 2015.
Appendix 1: Peers in Machinery-Diversified
Below we provide Renheng Enterprise Holdings 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 |
|---|
| Shanghai Prime Machinery Co Ltd ($2345) | | 2.6% | -8.9% | 37.3% | 52.8% |
| 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% |
| Sinoref Holdings Ltd ($1020) | | -0.2% | -42.2% | 29.2% | 19.9% |
| LK Technology Holdings Ltd ($558) | | 15.7% | -15.0% | 3.7% | 18.5% |
| |
|---|
| Median (21 companies) | 13.1% | -3.6% | -2.4% | 1.1% | -3.9% |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | | -6.8% | -8.0% | -27.2% | -28.8% |
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% |
| 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% |
| Good Friend International Holdings Inc ($2398) | 23.3% | 20.1% | 22.9% | 26.5% | 27.1% |
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 45.5% | 59.7% | 58.3% | 48.6% | 26.7% |
| |
|---|
| Median (21 companies) | 23.8% | 23.8% | 21.5% | 18.7% | 20.9% |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | 48.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 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% |
| Huazhang Technology Holding Ltd ($1673) | 3.1% | 11.6% | 11.2% | 12.5% | 11.3% |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | 9.9% |
| Shanghai Prime Machinery Co Ltd ($2345) | 9.6% | 7.8% | 8.9% | 7.7% | 9.2% |
| |
|---|
| Median (21 companies) | 9.6% | 8.7% | 8.6% | 8.5% | 5.7% |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | 17.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 1.3% | 2.3% | 10.1% | 7.8% | 31.9% |
| Honghua Group Ltd ($196) | 9.9% | 11.5% | 14.6% | 6.8% | 27.3% |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | 15.6% |
| Shenji Group Kunming Machine Tool Co Ltd ($300) | 9.2% | 9.5% | 6.7% | 5.0% | 8.3% |
| Haitian International Holdings Ltd ($1882) | 2.1% | 4.2% | 6.8% | 6.3% | 6.3% |
| |
|---|
| Median (21 companies) | 6.1% | 4.2% | 4.3% | 4.5% | 2.4% |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | 0.9% | 0.8% | 1.1% | 1.1% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | 16.3% |
| Huazhang Technology Holding Ltd ($1673) | | 29.6% | 16.2% | 16.3% | 16.2% |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | 14.9% |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | 5.9% |
| Shanghai Prime Machinery Co Ltd ($2345) | 5.4% | 2.5% | 2.8% | 2.5% | 5.8% |
| |
|---|
| Median (21 companies) | 9.8% | 7.1% | 4.0% | 2.6% | 1.4% |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | 23.7% | 17.0% | 12.8% | 6.9% | 4.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 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 |
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | 6.3x |
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x |
| Cosmos Machinery Enterprises Ltd ($118) | 1.3x | 2.2x | 1.7x | 2.1x | 3.9x |
| |
|---|
| Median (16 companies) | -0.2x | -0.6x | 0.1x | -0.3x | 3.1x |
|---|
| Renheng Enterprise Holdings Ltd ($3628) | -2.9x | -3.4x | -5.0x | -7.4x | -4.9x |
