China Shengmu Organic Milk Ltd demonstrated fast growth over the last few years. Will the growth continue?
06/04/2016 • About China Shengmu Organic Milk Ltd (
$1432) • By InTwits
China Shengmu Organic Milk Ltd is a fast-growing stock in Food industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
China Shengmu Organic Milk Ltd showed growth in the last financial year. The company's revenue surged on 45.4% in FY2015. The growth also happened in EBITDA of 29.5% for the same period.
In the longer period China Shengmu Organic Milk Ltd showed fast revenue growth of 64.2% from 2012 to 2015 annualy. EBITDA surged on 80.6% from 2012 to 2015 annualy.
China Shengmu Organic Milk Ltd ($1432) financials for the last 5 years
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 389 | 701 | 1,144 | 2,132 | 3,101 |
|---|
| Revenue growth, % | | 80.0% | 63.2% | 86.4% | 45.4% |
|---|
| Gross margin, % | 29.4% | 33.4% | 42.9% | 50.2% | 47.7% |
|---|
| SG&A, % | 3.66% | 5.06% | 8.50% | 10.8% | 12.0% |
|---|
| EBITDA | 228 | 221 | 438 | 1,003 | 1,299 |
|---|
| EBITDA growth, % | | -3.5% | 98.6% | 129.1% | 29.5% |
|---|
| EBITDA margin, % | 58.7% | 31.5% | 38.3% | 47.1% | 41.9% |
|---|
| Net Income | 223 | 196 | 327 | 711 | 801 |
|---|
| Net Income margin, % | 57.3% | 27.9% | 28.6% | 33.4% | 25.8% |
|---|
| |
| CAPEX | 132 | 247 | 442 | 763 | 507 |
|---|
| CAPEX/Revenue, % | 33.9% | 35.3% | 38.7% | 35.8% | 16.3% |
|---|
| Debt | 124 | 324 | 932 | 1,484 | 2,717 |
|---|
| Cash | 70 | 30 | 127 | 735 | 1,732 |
|---|
| Net Debt/EBITDA | 0.2x | 1.3x | 1.8x | 0.7x | 0.8x |
|---|
| |
| ROIC, % | | 16.4% | 19.6% | 22.5% | 17.3% |
|---|
| ROE, % | | 19.4% | 24.6% | 27.3% | 19.4% |
|---|
Profitability and return on investment
EBITDA margin declined noticeably from 47.1% in FY2014 to 41.9% in FY2015. In the last 3 years the company showed fast EBITDA margin growth of 10.4 pp from 31.5% in 2012 to 41.9% in 2015.
China Shengmu Organic Milk Ltd shows attractive ROIC at 17.3% for the last 12 months which assumes stable development model. During the last three years it increased slightly - it was 16.4% in FY2012. It's average level of ROIC for the last three years was 19.8%.
The company's Net Income margin dropped on 7.60 pp from 33.4% to 25.8% in 2015. In the last 3 years Net Income margin decreased on 2.10 pp from 27.9% in 2012 to 25.8% in 2015.
China Shengmu Organic Milk Ltd operates at ROE of 19.4%. For the last three years the average ROE was 23.7%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.In FY2015 the company had CAPEX/Revenue of 16.3%. The company showed big decline in CAPEX/Revenue of 18.9 pp from 35.3% in 2012 to 16.3% in 2015. It's average level of CAPEX/Revenue for the last three years was 30.3%.
Leverage (Debt)
Having such a fast growth profile the company keeps low debt level at 0.8x Net Debt/EBITDA. In the longer period China Shengmu Organic Milk Ltd's leverage dropped on 0.58x from 1.33x in 2012 to 0.76x in 2015.
Peers in Food
Below you can find China Shengmu Organic Milk Ltd benchmarking vs. other companies in Food 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Imperial Pacific International Holdings Ltd ($1076) | | -27.6% | -18.5% | 2.7% | 70.3% |
| Chinese Food and Beverage Group ($8272) | | 207.7% | 149.2% | 26.8% | 31.6% |
| Huisheng International Holdings Ltd ($1340) | | -2.4% | 5.6% | 8.7% | 25.9% |
| Honworld Group Ltd ($2226) | | 207.9% | 57.3% | 26.0% | 19.5% |
| China Huishan Dairy Holdings Co Ltd ($6863) | | 256.3% | 91.5% | 38.3% | 11.1% |
| |
|---|
| Median (37 companies) | 15.8% | 9.9% | 7.4% | 3.7% | -2.3% |
|---|
| China Shengmu Organic Milk Ltd ($1432) | | 80.0% | 63.2% | 86.4% | 45.4% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hung Fook Tong Group Holdings Ltd ($1446) | 57.0% | 60.7% | 60.0% | 58.7% | 60.7% |
| Honworld Group Ltd ($2226) | 42.2% | 57.2% | 59.0% | 57.8% | 56.4% |
| Yashili International Holdings Ltd ($1230) | 52.0% | 53.7% | 53.5% | 51.2% | 50.8% |
| Natural Dairy NZ Holdings Ltd ($462) | 16.3% | -13.7% | 27.5% | 48.8% | 49.6% |
| Christine International Holdings Ltd ($1210) | 51.3% | 50.2% | 49.7% | 47.2% | 47.2% |
| |
|---|
| Median (36 companies) | 17.7% | 16.5% | 19.6% | 19.9% | 23.8% |
|---|
| China Shengmu Organic Milk Ltd ($1432) | 29.4% | 33.4% | 42.9% | 50.2% | 47.7% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Shenguan Holdings Group Ltd ($829) | 57.2% | 58.7% | 59.2% | 54.5% | 43.6% |
| Honworld Group Ltd ($2226) | 28.4% | 44.4% | 42.1% | 42.0% | 42.9% |
| China Huishan Dairy Holdings Co Ltd ($6863) | 109.2% | 45.1% | 47.9% | 47.1% | 37.2% |
| YuanShengTai Dairy Farm Ltd ($1431) | 147.8% | 40.3% | 48.4% | 47.1% | 35.4% |
| Want Want China Holdings Ltd ($151) | 20.1% | 23.8% | 25.8% | 23.8% | 25.2% |
| |
|---|
| Median (36 companies) | 8.2% | 8.0% | 6.6% | 7.5% | 8.2% |
|---|
| China Shengmu Organic Milk Ltd ($1432) | 58.7% | 31.5% | 38.3% | 47.1% | 41.9% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 453.6% | 98.2% | 29.8% | 132.0% | 109.8% |
| Imperial Pacific International Holdings Ltd ($1076) | 0.0% | 0.0% | 0.0% | 15.6% | 88.5% |
| China Modern Dairy Holdings Ltd ($1117) | 58.9% | 50.6% | | 18.7% | 42.4% |
| Labixiaoxin Snacks Group Ltd ($1262) | 23.0% | 13.3% | 10.3% | 14.6% | 32.0% |
| YuanShengTai Dairy Farm Ltd ($1431) | 182.5% | 26.1% | 18.3% | 43.4% | 30.1% |
| |
|---|
| Median (35 companies) | 4.4% | 5.5% | 5.4% | 5.1% | 5.3% |
|---|
| China Shengmu Organic Milk Ltd ($1432) | 33.9% | 35.3% | 38.7% | 35.8% | 16.3% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Want Want China Holdings Ltd ($151) | 24.9% | 27.9% | 29.4% | 22.8% | 21.8% |
| Honworld Group Ltd ($2226) | 22.1% | 50.4% | 44.5% | 23.6% | 16.5% |
| WH Group Ltd ($288) | | 20.3% | 3.6% | 15.0% | 13.3% |
| Tenwow International Holdings Ltd ($1219) | 20.3% | 19.7% | 15.7% | 12.8% | 11.9% |
| Asia Cassava Resources Holdings Ltd ($841) | 13.8% | 4.2% | 5.9% | 13.6% | 11.6% |
| |
|---|
| Median (37 companies) | 11.4% | 7.8% | 6.0% | 5.6% | 5.6% |
|---|
| China Shengmu Organic Milk Ltd ($1432) | | 16.4% | 19.6% | 22.5% | 17.3% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Ausnutria Dairy Corp Ltd ($1717) | -3.5x | -1.4x | 0.8x | 1.7x | 27.9x |
| Beijing Jingkelong Co Ltd ($814) | 3.4x | 5.0x | 4.8x | 5.3x | 9.3x |
| First Pacific Co Ltd/Hong Kong ($142) | 1.3x | 1.8x | 3.8x | 4.5x | 5.6x |
| China Kangda Food Co Ltd ($834) | 2.1x | 2.8x | 2.5x | 2.3x | 5.4x |
| China Modern Dairy Holdings Ltd ($1117) | 1.3x | 3.7x | 5.2x | 4.1x | 5.3x |
| |
|---|
| Median (30 companies) | 0.4x | -0.4x | 0.8x | 0.8x | 1.3x |
|---|
| China Shengmu Organic Milk Ltd ($1432) | 0.2x | 1.3x | 1.8x | 0.7x | 0.8x |
