China Huishan Dairy Holdings Co Ltd reports 60.6% CAPEX decline while 15.4% Revenue growth
29/06/2016 • About China Huishan Dairy Holdings Co Ltd (
$6863) • By InTwits
China Huishan Dairy Holdings Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 36.0% in FY2016 vs. 37.2% in FY2015 vs. 45.1% in FY2012
- China Huishan Dairy Holdings Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 81.5%. At the same time it's a lot of higher than industry average of 10.4%.
- CAPEX is quite volatile: 1,697 in FY2016, 4,309 in FY2015, 4,661 in FY2014, 762 in FY2013, 1,309 in FY2012
- The company has potentially unprofitable business model: ROIC is at 6.0%
- It operates with high leverage: Net Debt/EBITDA is 6.5x while industry average is -0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Huishan Dairy Holdings Co Ltd ($6863) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,333 | 2,552 | 3,530 | 3,923 | 4,527 | 15.4% |
| Gross Profit | 92 | 442 | 709 | 889 | 940 | 5.8% |
| SG&A | 54 | 197 | 714 | 1,013 | 1,132 | 11.7% |
| EBITDA | 601 | 1,223 | 1,662 | 1,460 | 1,630 | 11.6% |
| Net Income | 450 | 945 | 1,249 | 869 | 662 | -23.8% |
Balance Sheet
|
|---|
| Cash | 513 | 826 | 5,063 | 2,614 | 2,185 | -16.4% |
| Short Term Debt | 564 | 909 | 1,641 | 2,887 | 7,131 | 147.0% |
| Long Term Debt | 1,917 | 2,103 | 4,679 | 5,200 | 5,729 | 10.2% |
Cash flow
|
|---|
| Capex | 1,309 | 762 | 4,661 | 4,309 | 1,697 | -60.6% |
Ratios
|
|---|
| Revenue growth | 256.3% | 91.5% | 38.3% | 11.1% | 15.4% | |
| EBITDA growth | 47.0% | 103.6% | 35.9% | -12.1% | 11.6% | |
| Gross Margin | 6.9% | 17.3% | 20.1% | 22.7% | 20.8% | -1.9% |
| EBITDA Margin | 45.1% | 47.9% | 47.1% | 37.2% | 36.0% | -1.2% |
| Net Income Margin | 33.7% | 37.0% | 35.4% | 22.1% | 14.6% | -7.5% |
| SG&A, % of revenue | 4.1% | 7.7% | 20.2% | 25.8% | 25.0% | -0.8% |
| CAPEX, % of revenue | 98.2% | 29.8% | 132.0% | 109.8% | 37.5% | -72.3% |
| ROIC | 18.5% | 18.9% | 10.6% | 6.0% | 6.0% | 0.0% |
| ROE | 70.8% | 27.9% | 13.1% | 6.4% | 5.1% | -1.4% |
| Net Debt/EBITDA | 3.3x | 1.8x | 0.8x | 3.7x | 6.5x | 2.8x |
Revenue and profitability
The company's Revenue surged on 15.4%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 37.2% to 36.0% in FY2016.
Gross Margin decreased slightly on 1.9 pp from 22.7% to 20.8% in FY2016. SG&A as a % of Revenue decreased slightly on 0.83 pp from 25.8% to 25.0% in FY2016.
Net Income marign decreased on 7.5 pp from 22.1% to 14.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
China Huishan Dairy Holdings Co Ltd's CAPEX/Revenue was 37.5% in FY2016. China Huishan Dairy Holdings Co Ltd's CAPEX/Revenue increased on 7.7 pp from 29.8% in FY2013 to 37.5% in FY2016. It's average level of CAPEX/Revenue for the last three years was 93.1%.To secure this fast growth China Huishan Dairy Holdings Co Ltd made large investments to CAPEX (104% of EBITDA).
Return on investment
The company operates at low ROIC (5.98%) and ROE (5.05%). ROIC showed almost no change in FY2016. ROE decreased slightly on 1.4 pp from 6.4% to 5.1% in FY2016.
Leverage (Debt)
Debt level is 6.5x Net Debt / EBITDA and 7.9x Debt / EBITDA. Net Debt / EBITDA surged on 2.8x from 3.7x to 6.5x in FY2016. Debt surged on 59.0% while cash dropped on 16.4%.
Management team
China Huishan Dairy Holdings Co Ltd's CEO Yang Kai has spent 5 years at the company. The company's CFO So Wing Hoi has spent 6 years at the company.
Appendix 1: Peers in Food
Below you can find China Huishan Dairy Holdings Co 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, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Imperial Pacific International Holdings Ltd ($1076) | -27.6% | -18.5% | 2.7% | 70.3% | |
| China Shengmu Organic Milk Ltd ($1432) | 80.0% | 63.2% | 86.4% | 45.4% | |
| 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% | |
| Jiashili Group Ltd ($1285) | 14.9% | 15.1% | 12.3% | 19.8% | |
| |
|---|
| Median (42 companies) | 10.3% | 8.4% | 5.1% | -3.7% | -16.8% |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | | 91.5% | 38.3% | 11.1% | 15.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hung Fook Tong Group Holdings Ltd ($1446) | 60.7% | 60.0% | 58.7% | 60.7% | |
| Honworld Group Ltd ($2226) | 57.2% | 59.0% | 57.8% | 56.4% | |
| Yashili International Holdings Ltd ($1230) | 53.7% | 53.5% | 51.2% | 50.8% | |
| Natural Dairy NZ Holdings Ltd ($462) | -13.7% | 27.5% | 48.8% | 49.6% | |
| China Shengmu Organic Milk Ltd ($1432) | 33.4% | 42.9% | 50.2% | 47.7% | |
| |
|---|
| Median (41 companies) | 16.8% | 20.3% | 22.2% | 23.7% | 15.4% |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 6.9% | 17.3% | 20.1% | 22.7% | 20.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shenguan Holdings Group Ltd ($829) | 58.7% | 59.2% | 54.5% | 43.6% | |
| Honworld Group Ltd ($2226) | 44.4% | 42.1% | 42.0% | 42.9% | |
| China Shengmu Organic Milk Ltd ($1432) | 31.5% | 38.3% | 47.1% | 41.9% | |
| YuanShengTai Dairy Farm Ltd ($1431) | 40.3% | 48.4% | 47.1% | 35.4% | |
| Want Want China Holdings Ltd ($151) | 23.8% | 25.8% | 23.8% | 25.2% | |
| |
|---|
| Median (41 companies) | 8.0% | 6.8% | 7.7% | 8.0% | 0.8% |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 45.1% | 47.9% | 47.1% | 37.2% | 36.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Imperial Pacific International Holdings Ltd ($1076) | 0.0% | 0.0% | 15.6% | 88.5% | |
| China Modern Dairy Holdings Ltd ($1117) | 50.6% | | 18.7% | 42.4% | |
| Labixiaoxin Snacks Group Ltd ($1262) | 13.3% | 10.3% | 14.6% | 32.0% | |
| YuanShengTai Dairy Farm Ltd ($1431) | 26.1% | 18.3% | 43.4% | 30.1% | |
| China Kangda Food Co Ltd ($834) | 5.1% | 5.4% | 4.3% | 24.1% | |
| |
|---|
| Median (40 companies) | 5.1% | 5.3% | 5.1% | 4.3% | 0.1% |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 98.2% | 29.8% | 132.0% | 109.8% | 37.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Major Holdings Ltd ($8209) | | 23.1% | 13.8% | 22.3% | 7.8% |
| Jiashili Group Ltd ($1285) | 45.6% | 51.8% | 27.8% | 22.2% | |
| Want Want China Holdings Ltd ($151) | 27.9% | 29.4% | 22.8% | 21.8% | |
| China Shengmu Organic Milk Ltd ($1432) | 16.4% | 19.6% | 22.5% | 17.3% | |
| Honworld Group Ltd ($2226) | 50.4% | 44.5% | 23.6% | 16.5% | |
| |
|---|
| Median (43 companies) | 7.8% | 7.0% | 7.2% | 5.6% | 0.9% |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 18.5% | 18.9% | 10.6% | 6.0% | 6.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ausnutria Dairy Corp Ltd ($1717) | -1.4x | 0.8x | 1.7x | 27.9x | |
| Beijing Jingkelong Co Ltd ($814) | 5.0x | 4.8x | 5.3x | 9.3x | |
| First Pacific Co Ltd/Hong Kong ($142) | 1.8x | 3.8x | 4.5x | 5.6x | |
| China Kangda Food Co Ltd ($834) | 2.8x | 2.5x | 2.3x | 5.4x | |
| China Modern Dairy Holdings Ltd ($1117) | 3.7x | 5.2x | 4.1x | 5.3x | |
| |
|---|
| Median (32 companies) | -0.3x | 0.7x | 0.7x | 1.1x | 2.3x |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 3.3x | 1.8x | 0.8x | 3.7x | 6.5x |
