Ngai Hing Hong Co Ltd reports 33.0% EBITDA decline in 2016 and 0.75 pp EBITDA Margin decline from 2.7% to 1.9%
27/09/2016 • About Ngai Hing Hong Co Ltd (
$1047) • By InTwits
Ngai Hing Hong Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ngai Hing Hong Co Ltd is a company in decline: FY2016 revenue growth was -7.0%, 5 years revenue CAGR was -2.3%
- EBITDA Margin is relatively stable: 1.9% in FY2016 vs. 2.7% in FY2015 vs. 1.0% in FY2012
- Ngai Hing Hong Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has potentially unprofitable business model: ROIC is at 1.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 7.1x while industry average is 7.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ngai Hing Hong Co Ltd ($1047) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,640 | 1,869 | 1,757 | 1,620 | 1,506 | -7.0% |
| Gross Profit | 142 | 184 | 192 | 199 | 188 | -5.8% |
| SG&A | | 157 | 171 | 179 | 105 | -41.5% |
| EBITDA | 17 | 44 | 36 | 44 | 29 | -33.0% |
| Net Income | 1 | 22 | 3 | 25 | -26 | -205.0% |
Balance Sheet
|
|---|
| Cash | 93 | 112 | 97 | 88 | 74 | -16.2% |
| Short Term Debt | 294 | 345 | 295 | 317 | 281 | -11.5% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 9 | 11 | 9 | 13 | 7 | -45.9% |
Ratios
|
|---|
| Revenue growth | -2.8% | 13.9% | -6.0% | -7.8% | -7.0% | |
| EBITDA growth | -67.0% | 157.8% | -18.2% | 20.3% | -33.0% | |
| Gross Margin | 8.6% | 9.8% | 10.9% | 12.3% | 12.5% | 0.2% |
| EBITDA Margin | 1.0% | 2.4% | 2.1% | 2.7% | 1.9% | -0.8% |
| Net Income Margin | 0.1% | 1.2% | 0.2% | 1.6% | -1.8% | -3.3% |
| SG&A, % of revenue | | 8.4% | 9.7% | 11.1% | 7.0% | -4.1% |
| CAPEX, % of revenue | 0.5% | 0.6% | 0.5% | 0.8% | 0.5% | -0.3% |
| ROIC | -0.1% | 3.2% | 2.3% | 3.1% | 1.3% | -1.8% |
| ROE | 0.3% | 4.8% | 0.7% | 5.2% | -5.7% | -10.9% |
| Net Debt/EBITDA | 11.7x | 5.3x | 5.4x | 5.3x | 7.1x | 1.8x |
Revenue and profitability
The company's Revenue decreased on 7.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.0 pp from 0.18% to 2.2% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue decreased on 4.1 pp from 11.1% to 7.0% in FY2016.
Net Income marign decreased on 3.3 pp from 1.6% to -1.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Ngai Hing Hong Co Ltd's CAPEX/Revenue was 0.47% in FY2016. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 0.61%.
Return on investment
The company operates at low but positive ROIC (1.27%) and negative ROE (-5.68%). ROIC decreased slightly on 1.8 pp from 3.1% to 1.3% in FY2016. ROE dropped on 10.9 pp from 5.2% to -5.7% in FY2016.
Leverage (Debt)
Debt level is 7.1x Net Debt / EBITDA and 9.6x Debt / EBITDA. Net Debt / EBITDA jumped on 1.8x from 5.3x to 7.1x in FY2016. Debt dropped on 11.5% while cash dropped on 16.2%.
Appendix 1: Peers in Chemicals
Below we provide Ngai Hing Hong Co Ltd benchmarking against other companies in Chemicals 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 |
|---|
| Bestway International Holdings Ltd ($718) | | -62.1% | 330.3% | 238.4% | 14,591.4% |
| China First Chemical Holdings Ltd ($2121) | 6.2% | -6.8% | -18.0% | 72.5% | |
| Strong Petrochemical Holdings Ltd ($852) | 40.8% | 87.9% | -60.8% | 42.3% | |
| Ko Yo Chemical Group Ltd ($827) | -5.6% | -0.6% | 2.3% | 40.8% | |
| China Sanjiang Fine Chemicals Co Ltd ($2198) | 16.0% | 63.5% | -7.7% | 36.6% | |
| |
|---|
| Median (31 companies) | 2.4% | 8.5% | 2.2% | -1.2% | 7,291.1% |
|---|
| Ngai Hing Hong Co Ltd ($1047) | | 13.9% | -6.0% | -7.8% | -7.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huabao International Holdings Ltd ($336) | 70.5% | 69.1% | 70.8% | 69.9% | 68.9% |
| China Flavors & Fragrances Co Ltd ($3318) | 46.8% | 48.6% | 47.8% | 48.9% | |
| Bestway International Holdings Ltd ($718) | 5.1% | 4.6% | 8.6% | 40.4% | 7.1% |
| Bracell Ltd ($1768) | 30.5% | 37.3% | 37.3% | 38.4% | |
| Shaanxi Northwest New Technology Industry Co Ltd ($8258) | 28.7% | 30.9% | 30.0% | 37.9% | |
| |
|---|
| Median (31 companies) | 20.8% | 18.7% | 18.4% | 18.8% | 38.0% |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 8.6% | 9.8% | 10.9% | 12.3% | 12.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huabao International Holdings Ltd ($336) | 63.8% | 59.1% | 60.0% | 58.3% | 51.2% |
| Bracell Ltd ($1768) | 22.3% | 30.8% | 38.2% | 35.9% | |
| Yingde Gases Group Co Ltd ($2168) | 29.4% | 29.8% | 32.3% | 33.4% | |
| Tiande Chemical Holdings Ltd ($609) | 25.5% | 27.3% | 25.1% | 27.8% | |
| Century Sunshine Group Holdings Ltd ($509) | 24.2% | 28.1% | 27.6% | 26.1% | |
| |
|---|
| Median (31 companies) | 14.5% | 13.6% | 12.5% | 12.5% | 28.1% |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 1.0% | 2.4% | 2.1% | 2.7% | 1.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Landing International Development Ltd ($582) | 7.2% | 29.6% | 419.5% | 247.4% | |
| China Zenith Chemical Group Ltd ($362) | 147.3% | 55.7% | 67.4% | 152.2% | |
| Smartac Group China Holdings Ltd ($395) | 14.0% | 4.7% | 49.3% | 52.4% | |
| China Flavors & Fragrances Co Ltd ($3318) | 15.8% | 20.1% | 42.4% | 35.8% | |
| Ko Yo Chemical Group Ltd ($827) | 45.2% | 43.2% | 20.7% | 27.5% | |
| |
|---|
| Median (31 companies) | 8.4% | 8.9% | 5.8% | 8.1% | 2.3% |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 0.5% | 0.6% | 0.5% | 0.8% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huabao International Holdings Ltd ($336) | 28.7% | 25.2% | 26.2% | 23.3% | 17.1% |
| Tiande Chemical Holdings Ltd ($609) | 26.2% | 29.4% | 20.7% | 20.6% | |
| Sinopec Shanghai Petrochemical Co Ltd ($338) | -6.9% | 8.1% | -2.4% | 16.5% | |
| Century Sunshine Group Holdings Ltd ($509) | 11.3% | 15.9% | 16.4% | 13.3% | |
| Infinity Chemical Holdings Co Ltd ($640) | 11.1% | 10.2% | 8.8% | 12.7% | |
| |
|---|
| Median (31 companies) | 7.3% | 8.3% | 5.9% | 5.4% | 10.6% |
|---|
| Ngai Hing Hong Co Ltd ($1047) | -0.1% | 3.2% | 2.3% | 3.1% | 1.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ko Yo Chemical Group Ltd ($827) | 8.8x | 22.0x | | 141.5x | |
| China Sanjiang Fine Chemicals Co Ltd ($2198) | 2.2x | 4.6x | 18.1x | 13.5x | |
| Sinofert Holdings Ltd ($297) | 2.9x | 32.4x | 5.0x | 8.4x | |
| China XLX Fertiliser Ltd ($1866) | 2.6x | 5.1x | 5.8x | 5.1x | |
| Strong Petrochemical Holdings Ltd ($852) | 7.2x | 4.0x | | 3.9x | |
| |
|---|
| Median (26 companies) | 1.0x | 2.0x | 1.3x | 1.7x | 2.7x |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 11.7x | 5.3x | 5.4x | 5.3x | 7.1x |
