China National Culture Group Ltd reports 177% Net Income growth in 2016 and 86.7% Revenue growth
23/06/2016 • About China National Culture Group Ltd (
$745) • By InTwits
China National Culture Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China National Culture Group Ltd doesn't have a profitable business model yet: FY2016 ROIC is -1.4%
- The company operates at negative EBITDA Margin: -14.6%
- China National Culture Group Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -18.7% for the sames years0
- China National Culture Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 7.2%.
- CAPEX is quite volatile: 0.20 in FY2016, 0.19 in FY2015, 0.12 in FY2014, 0.039 in FY2013, 0.35 in FY2012
- The company has unprofitable business model: ROIC is at -1.4%
- It operates with high leverage: Net Debt/EBITDA is 10.7x while industry average is 1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China National Culture Group Ltd ($745) key annual financial indicators
| mln. | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 28.754 | 6.677 | 2.951 | 20.429 | 38.135 | 86.7% |
| Gross Profit | 0.262 | 0.811 | 0.303 | 6.602 | 7.335 | 11.1% |
| SG&A | | | | 20.243 | 17.971 | -11.2% |
| EBITDA | -8.751 | -4.851 | -8.240 | 9.257 | -5.570 | -160.2% |
| Net Income | -41.150 | -89.881 | -203.701 | -159.994 | 123.250 | |
Balance Sheet
|
|---|
| Cash | 11.614 | 2.501 | 2.183 | 46.424 | 238.292 | 413.3% |
| Short Term Debt | 3.456 | 0.400 | 0.000 | 43.877 | 0.000 | -100.0% |
| Long Term Debt | 228.070 | 213.880 | 214.506 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.350 | 0.039 | 0.123 | 0.191 | 0.200 | 4.7% |
Ratios
|
|---|
| Revenue growth | -39.1% | -76.8% | -55.8% | 592.3% | 86.7% | |
| EBITDA growth | -73.6% | -44.6% | 69.9% | -212.3% | -160.2% | |
| Gross Margin | 0.9% | 12.1% | 10.3% | 32.3% | 19.2% | -13.1% |
| EBITDA Margin | -30.4% | -72.7% | -279.2% | 45.3% | -14.6% | -59.9% |
| Net Income Margin | -143.1% | -1,346.1% | -6,902.8% | -783.2% | 323.2% | 1,106.4% |
| SG&A, % of revenue | | | | 99.1% | 47.1% | -52.0% |
| CAPEX, % of revenue | 1.2% | 0.6% | 4.2% | 0.9% | 0.5% | -0.4% |
| ROIC | -2.4% | -1.0% | -1.7% | 2.4% | -1.4% | -3.8% |
| ROE | | | | | 20.4% | 20.4% |
| Net Debt/EBITDA | | | | -0.3x | | 0.3x |
Revenue and profitability
The company's Revenue surged on 86.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 44.8 pp from 44.2% to 89.0% in FY2016.
Gross Margin dropped on 13.1 pp from 32.3% to 19.2% in FY2016. SG&A as a % of Revenue dropped on 52.0 pp from 99.1% to 47.1% in FY2016.
Net Income marign jumped on 1,106 pp from -783% to 323% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 China National Culture Group Ltd had CAPEX/Revenue of 0.52%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.9%.
Return on investment
The company operates at negative ROIC (-1.40%) and low but positive ROE (20.42%). ROIC decreased on 3.8 pp from 2.4% to -1.4% in FY2016.
Leverage (Debt)
The company paid down all the debt in FY2016. Cash jumped on 413%.
Appendix 1: Peers in Engineering&Construction
Below we provide China National Culture Group Ltd benchmarking against other companies in Engineering&Construction 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CNQC International Holdings Ltd ($1240) | 21.6% | 91.0% | 103.7% | 807.4% | |
| Vision Fame International Holding Ltd ($1315) | -9.9% | 45.9% | -10.5% | 105.6% | |
| Sino Credit Holdings Ltd ($628) | -13.8% | | | 97.4% | |
| Grand Ming Group Holdings Ltd ($1271) | | -26.9% | -37.4% | 74.8% | 14.3% |
| Freetech Road Recycling Technology Holdings Ltd ($6888) | 72.8% | 29.4% | -37.9% | 57.9% | |
| |
|---|
| Median (41 companies) | 12.7% | 24.5% | 21.3% | 10.1% | 1.5% |
|---|
| China National Culture Group Ltd ($745) | | -76.8% | -55.8% | 592.3% | 86.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 66.4% | 62.1% | 62.4% | 61.1% | |
| Huayu Expressway Group Ltd ($1823) | 43.6% | 65.6% | 64.0% | 58.9% | |
| Broad Greenstate International Co Ltd ($1253) | 20.1% | 28.7% | 35.8% | 36.7% | |
| Kingbo Strike Ltd ($1421) | 32.4% | 44.4% | 40.3% | 30.7% | |
| Freetech Road Recycling Technology Holdings Ltd ($6888) | 54.1% | 54.3% | 41.5% | 30.1% | |
| |
|---|
| Median (36 companies) | 17.0% | 16.1% | 15.4% | 15.3% | 11.4% |
|---|
| China National Culture Group Ltd ($745) | 0.9% | 12.1% | 10.3% | 32.3% | 19.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huayu Expressway Group Ltd ($1823) | 46.2% | 73.8% | 77.1% | 76.2% | |
| HNA Infrastructure Company Ltd ($357) | 62.8% | 63.7% | 62.8% | 61.7% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 31.2% | 20.6% | 36.2% | 60.9% | |
| Beijing Capital International Airport Co Ltd ($694) | 53.4% | 52.9% | 50.3% | 51.6% | |
| Chevalier International Holdings Ltd ($25) | 10.4% | 11.9% | 12.8% | 37.5% | |
| |
|---|
| Median (41 companies) | 10.0% | 9.7% | 9.1% | 7.6% | 3.1% |
|---|
| China National Culture Group Ltd ($745) | -30.4% | -72.7% | -279.2% | 45.3% | -14.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 36.8% | 5.7% | 85.4% | 155.4% | |
| Grand Ming Group Holdings Ltd ($1271) | 0.0% | 16.1% | 8.7% | 33.8% | 14.0% |
| Beijing Capital International Airport Co Ltd ($694) | 3.5% | 6.6% | 7.2% | 28.2% | |
| Louis XIII Holdings Ltd ($577) | 1.2% | 29.5% | 9.3% | 16.1% | 47.3% |
| PYI Corp Ltd ($498) | 3.7% | 4.2% | 24.5% | 13.1% | 19.7% |
| |
|---|
| Median (41 companies) | 2.4% | 3.9% | 1.7% | 2.0% | 2.4% |
|---|
| China National Culture Group Ltd ($745) | 1.2% | 0.6% | 4.2% | 0.9% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Chun Sing Engineering Holdings Ltd ($2277) | | 98.3% | 54.9% | 43.7% | |
| Ngai Shun Holdings Ltd ($1246) | 68.8% | 77.2% | 45.2% | 31.0% | |
| Broad Greenstate International Co Ltd ($1253) | 33.2% | 85.1% | 51.2% | 26.0% | |
| China Saite Group Co Ltd ($153) | 64.0% | 53.2% | 35.3% | 24.5% | |
| CNQC International Holdings Ltd ($1240) | 12.2% | 22.3% | 40.4% | 21.8% | |
| |
|---|
| Median (43 companies) | 6.5% | 5.7% | 4.3% | 5.4% | 3.1% |
|---|
| China National Culture Group Ltd ($745) | -2.4% | -1.0% | -1.7% | 2.4% | -1.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Deson Development International Holdings ($262) | 3.8x | 4.9x | 13.7x | 47.0x | |
| Hsin Chong Construction Group Ltd ($404) | 1.8x | 8.0x | 10.2x | 41.7x | |
| China Resources and Transportation Group Ltd ($269) | | | 66.7x | 29.7x | |
| CNC Holdings Ltd ($8356) | | 22.0x | 21.9x | 24.3x | 2.7x |
| Louis XIII Holdings Ltd ($577) | 0.8x | -12.5x | -23.2x | 19.1x | |
| |
|---|
| Median (35 companies) | 0.9x | 0.3x | 0.4x | 2.2x | 0.8x |
|---|
| China National Culture Group Ltd ($745) | | | | -0.3x | |
