Longrun Tea Group Co Ltd reports 15.1% revenue decline in FY2016 and 1.6 pp EBITDA Margin growth from -6.9% to -5.4%
17/06/2016 • About Longrun Tea Group Co Ltd (
$2898) • By InTwits
Longrun Tea Group Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Longrun Tea Group Co Ltd is a company in decline: FY2016 revenue growth was -15.1%, 5 years revenue CAGR was -11.2%
- The company operates at negative EBITDA Margin: -5.4%
- Longrun Tea Group Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: 4.1 in FY2016, 8.7 in FY2015, 11.7 in FY2014, 44.0 in FY2013, 15.2 in FY2012
- The company has unprofitable business model: ROIC is at -6.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Longrun Tea Group Co Ltd ($2898) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 344.3 | 271.2 | 286.5 | 256.4 | 217.7 | -15.1% |
| Gross Profit | 154.3 | 115.7 | 112.3 | 99.5 | 75.8 | -23.8% |
| SG&A | | 138.3 | 170.9 | 136.6 | 91.6 | -33.0% |
| EBITDA | 73.2 | 1.8 | -40.3 | -17.7 | -11.7 | |
| Net Income | 36.0 | 6.4 | 14.9 | -203.9 | 2.4 | |
Balance Sheet
|
|---|
| Cash | 87.8 | 134.4 | 100.4 | 81.9 | 53.1 | -35.3% |
| Short Term Debt | 12.0 | 11.9 | 0.3 | 0.2 | 0.3 | 67.4% |
| Long Term Debt | 0.7 | 0.4 | 0.2 | 0.0 | 0.5 | |
Cash flow
|
|---|
| Capex | 15.2 | 44.0 | 11.7 | 8.7 | 4.1 | -52.5% |
Ratios
|
|---|
| Revenue growth | -12.8% | -21.2% | 5.6% | -10.5% | -15.1% | |
| EBITDA growth | -23.9% | -97.5% | -2,301.0% | -56.0% | -34.2% | |
| Gross Margin | 44.8% | 42.7% | 39.2% | 38.8% | 34.8% | -4.0% |
| EBITDA Margin | 21.3% | 0.7% | -14.1% | -6.9% | -5.4% | 1.6% |
| Net Income Margin | 10.5% | 2.4% | 5.2% | -79.5% | 1.1% | 80.6% |
| SG&A, % of revenue | | 51.0% | 59.6% | 53.3% | 42.1% | -11.2% |
| CAPEX, % of revenue | 4.4% | 16.2% | 4.1% | 3.4% | 1.9% | -1.5% |
| ROIC | 13.7% | -3.4% | -13.2% | -11.1% | -6.9% | 4.2% |
| ROE | 9.0% | 1.5% | 3.4% | -59.4% | 1.0% | 60.4% |
| Net Debt/EBITDA | -1.0x | -66.7x | | | | 0.0x |
Revenue and profitability
The company's Revenue dropped on 15.1%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.6 pp from -6.9% to -5.4% in FY2016.
Gross Margin decreased on 4.0 pp from 38.8% to 34.8% in FY2016. SG&A as a % of Revenue dropped on 11.2 pp from 53.3% to 42.1% in FY2016.
Net Income marign jumped on 80.6 pp from -79.5% to 1.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Longrun Tea Group Co Ltd had CAPEX/Revenue of 1.9%. The company showed big decline in CAPEX/Revenue of 14.3 pp from 16.2% in FY2013 to 1.9% in FY2016. It's average CAPEX/Revenue for the last three years was 3.1%.
Return on investment
The company operates at negative ROIC (-6.92%) and low but positive ROE (1.03%). ROIC increased on 4.2 pp from -11.1% to -6.9% in FY2016. ROE jumped on 60.4 pp from -59.4% to 1.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -6.2x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt jumped on 328% while cash dropped on 35.3%.
Appendix 1: Peers in Beverages
Below you can find Longrun Tea Group Co Ltd benchmarking vs. other companies in Beverages 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sino Distillery Group Ltd ($39) | -62.4% | -34.9% | -15.0% | 882.1% | |
| China Huiyuan Juice Group Ltd ($1886) | 4.1% | 13.1% | 2.0% | 23.7% | |
| Besunyen Holdings Co Ltd ($926) | -43.5% | 2.6% | 15.7% | 17.5% | |
| Vitasoy International Holdings Ltd ($345) | 11.6% | 9.0% | 10.9% | 12.4% | |
| Tibet 5100 Water Resources Holdings Ltd ($1115) | 7.7% | 15.4% | -1.8% | 7.7% | |
| |
|---|
| Median (14 companies) | 0.4% | -8.1% | 2.0% | -3.9% | |
|---|
| Longrun Tea Group Co Ltd ($2898) | | -21.2% | 5.6% | -10.5% | -15.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Besunyen Holdings Co Ltd ($926) | 82.5% | 83.3% | 84.3% | 89.7% | |
| Tenfu Cayman Holdings Co Ltd ($6868) | 64.1% | 61.2% | 62.2% | 61.4% | |
| Tibet 5100 Water Resources Holdings Ltd ($1115) | 81.4% | 73.2% | 62.7% | 60.3% | |
| Vitasoy International Holdings Ltd ($345) | 47.4% | 47.5% | 48.4% | 49.7% | |
| JLF Investment Co Ltd ($472) | 50.9% | 48.7% | 42.4% | 41.8% | |
| |
|---|
| Median (14 companies) | 44.5% | 34.7% | 34.7% | 37.2% | |
|---|
| Longrun Tea Group Co Ltd ($2898) | 44.8% | 42.7% | 39.2% | 38.8% | 34.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tibet 5100 Water Resources Holdings Ltd ($1115) | 73.3% | 73.2% | 69.2% | 52.8% | |
| China Tianyi Holdings Ltd ($756) | 28.4% | 26.1% | 29.7% | 23.0% | |
| Tenfu Cayman Holdings Co Ltd ($6868) | 27.5% | 25.3% | 26.1% | 22.5% | |
| China Huiyuan Juice Group Ltd ($1886) | 15.2% | 21.7% | 11.3% | 18.3% | |
| Yantai North Andre Juice Co ($2218) | 14.1% | 11.9% | 15.5% | 15.7% | |
| |
|---|
| Median (14 companies) | 15.2% | 10.5% | 11.3% | 11.6% | |
|---|
| Longrun Tea Group Co Ltd ($2898) | 21.3% | 0.7% | -14.1% | -6.9% | -5.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Culiangwang Beverages Holdings Ltd ($904) | 26.8% | 52.2% | 81.8% | 75.8% | |
| China Huiyuan Juice Group Ltd ($1886) | 11.7% | 7.4% | 10.5% | 14.9% | |
| Sino Distillery Group Ltd ($39) | 32.4% | 6.5% | 0.4% | 12.0% | |
| Vitasoy International Holdings Ltd ($345) | 11.1% | 4.2% | 5.1% | 11.1% | |
| JLF Investment Co Ltd ($472) | 17.7% | 9.1% | 9.4% | 9.5% | |
| |
|---|
| Median (14 companies) | 11.1% | 6.5% | 8.8% | 5.9% | |
|---|
| Longrun Tea Group Co Ltd ($2898) | 4.4% | 16.2% | 4.1% | 3.4% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vitasoy International Holdings Ltd ($345) | 20.8% | 20.6% | 21.7% | 23.5% | |
| Tenfu Cayman Holdings Co Ltd ($6868) | 19.4% | 17.9% | 15.7% | 11.0% | |
| Tibet 5100 Water Resources Holdings Ltd ($1115) | 23.3% | 20.3% | 14.9% | 11.0% | |
| Tsingtao Brewery Co Ltd ($168) | 13.4% | 12.0% | 12.2% | 6.7% | |
| Besunyen Holdings Co Ltd ($926) | -24.2% | -8.9% | 3.2% | 4.1% | |
| |
|---|
| Median (14 companies) | 9.6% | 3.7% | 3.2% | 3.2% | |
|---|
| Longrun Tea Group Co Ltd ($2898) | 13.7% | -3.4% | -13.2% | -11.1% | -6.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Huiyuan Juice Group Ltd ($1886) | 5.4x | 4.3x | 7.9x | 4.3x | |
| San Miguel Brewery Hong Kong Ltd ($236) | | 2.0x | 1.0x | 3.8x | |
| Yantai North Andre Juice Co ($2218) | 2.3x | 2.4x | 2.2x | 3.0x | |
| China Tianyi Holdings Ltd ($756) | -1.0x | -0.8x | 0.9x | 1.1x | |
| Tenfu Cayman Holdings Co Ltd ($6868) | -1.0x | -0.2x | 0.8x | 0.1x | |
| |
|---|
| Median (10 companies) | -0.7x | 1.9x | 0.9x | -0.0x | |
|---|
