Lam Soon Hong Kong Ltd reports 48.4% EBITDA growth and 2.0 pp EBITDA Margin growth from 4.9% to 6.9%
31/08/2016 • About Lam Soon Hong Kong Ltd (
$411) • By InTwits
Lam Soon Hong Kong Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lam Soon Hong Kong Ltd is a growth stock: FY2016 revenue growth was 5.8%, 5 year revenue CAGR was 13.4% at FY2016 ROIC 13.6%
- EBITDA Margin is quite volatile: 6.9% in FY2016, 4.9% in FY2015, 5.6% in FY2014, 5.1% in FY2013, 0.5% in FY2012
- Lam Soon Hong Kong Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 9.6%.
- CAPEX is quite volatile: 34.0 in FY2016, 71.7 in FY2015, 37.8 in FY2014, 59.4 in FY2013, 109 in FY2012
- The company has highly profitable business model: ROIC is at 13.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lam Soon Hong Kong Ltd ($411) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,889 | 3,618 | 4,117 | 4,449 | 4,708 | 5.8% |
| Gross Profit | 390 | 576 | 682 | 774 | 926 | 19.7% |
| SG&A | 430 | 453 | 521 | 623 | 682 | 9.6% |
| EBITDA | 15 | 186 | 229 | 220 | 326 | 48.4% |
| Net Income | -36 | 131 | 141 | 114 | 202 | 76.5% |
Balance Sheet
|
|---|
| Cash | 451 | 490 | 643 | 800 | 584 | -27.1% |
| Short Term Debt | 347 | 269 | 269 | 269 | 0 | -100.0% |
| Long Term Debt | 0 | 0 | 85 | 68 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 109 | 59 | 38 | 72 | 34 | -52.5% |
Ratios
|
|---|
| Revenue growth | 15.1% | 25.2% | 13.8% | 8.1% | 5.8% | |
| EBITDA growth | -88.9% | 1,138.9% | 23.0% | -3.8% | 48.4% | |
| Gross Margin | 13.5% | 15.9% | 16.6% | 17.4% | 19.7% | 2.3% |
| EBITDA Margin | 0.5% | 5.1% | 5.6% | 4.9% | 6.9% | 2.0% |
| Net Income Margin | -1.2% | 3.6% | 3.4% | 2.6% | 4.3% | 1.7% |
| SG&A, % of revenue | 14.9% | 12.5% | 12.6% | 14.0% | 14.5% | 0.5% |
| CAPEX, % of revenue | 3.8% | 1.6% | 0.9% | 1.6% | 0.7% | -0.9% |
| ROIC | -2.4% | 6.9% | 8.7% | 7.7% | 13.6% | 5.9% |
| ROE | -2.5% | 8.9% | 8.9% | 7.0% | 11.9% | 4.9% |
| Net Debt/EBITDA | -6.9x | -1.2x | -1.3x | -2.1x | -1.8x | 0.3x |
Revenue and profitability
Lam Soon Hong Kong Ltd's Revenue increased on 5.8%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 2.0 pp from 4.9% to 6.9% in FY2016.
Gross Margin increased on 2.3 pp from 17.4% to 19.7% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 1.7 pp from 2.6% to 4.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.72% in FY2016. The company showed small CAPEX/Revenue decline of 0.92 pp from 1.6% in FY2013 to 0.72% in FY2016. Average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at good ROIC (13.55%) while ROE is low (11.88%). ROIC increased on 5.9 pp from 7.7% to 13.6% in FY2016. ROE increased on 4.9 pp from 7.0% to 11.9% in FY2016.
Leverage (Debt)
The company paid down all the debt in FY2016. Cash dropped on 27.1%.
Appendix 1: Peers in Food
Below we provide Lam Soon Hong Kong Ltd benchmarking against other companies in Food 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 |
|---|
| 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) | 10.2% | 8.4% | 5.1% | -3.7% | -16.6% |
|---|
| Lam Soon Hong Kong Ltd ($411) | | 25.2% | 13.8% | 8.1% | 5.8% |
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% | 20.8% |
|---|
| Lam Soon Hong Kong Ltd ($411) | 13.5% | 15.9% | 16.6% | 17.4% | 19.7% |
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% | |
| China Huishan Dairy Holdings Co Ltd ($6863) | 45.1% | 47.9% | 47.1% | 37.2% | 36.0% |
| YuanShengTai Dairy Farm Ltd ($1431) | 40.3% | 48.4% | 47.1% | 35.4% | |
| |
|---|
| Median (41 companies) | 8.1% | 7.1% | 7.9% | 8.5% | 4.6% |
|---|
| Lam Soon Hong Kong Ltd ($411) | 0.5% | 5.1% | 5.6% | 4.9% | 6.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 98.2% | 29.8% | 132.0% | 109.8% | 37.5% |
| 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% | |
| |
|---|
| Median (40 companies) | 5.9% | 5.6% | 5.1% | 4.9% | 0.4% |
|---|
| Lam Soon Hong Kong Ltd ($411) | 3.8% | 1.6% | 0.9% | 1.6% | 0.7% |
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) | 8.4% | 7.3% | 7.2% | 5.6% | 2.2% |
|---|
| Lam Soon Hong Kong Ltd ($411) | -2.4% | 6.9% | 8.7% | 7.7% | 13.6% |
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) | 0.1x | 0.8x | 0.8x | 1.2x | 2.3x |
|---|
| Lam Soon Hong Kong Ltd ($411) | -6.9x | -1.2x | -1.3x | -2.1x | -1.8x |
