China Environmental Resources Group Ltd CAPEX surged on 8,506% and Revenue jumped on 389%
28/09/2016 • About China Environmental Resources Group Ltd (
$1130) • By InTwits
China Environmental Resources Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Environmental Resources Group Ltd doesn't have a profitable business model yet: FY2016 ROIC is -4.4%
- The company operates at negative EBITDA Margin: -239.6%
- China Environmental Resources 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 -165.8% for the sames years0
- China Environmental Resources Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 67.2%. At the same time it's a lot of higher than industry average of 27.4%.
- CAPEX is quite volatile: 40.1 in FY2016, 0.47 in FY2015, 0.84 in FY2014, 0 in FY2013, 3.1 in FY2012
- The company has unprofitable business model: ROIC is at -4.4%
- It operates with high leverage: Net Debt/EBITDA is 7.0x while industry average is -0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Environmental Resources Group Ltd ($1130) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 28.838 | 31.014 | 9.955 | 2.733 | 13.365 | 389.0% |
| Gross Profit | 4.967 | 3.497 | 7.333 | 0.933 | 5.145 | 451.4% |
| SG&A | | 27.194 | | 41.415 | 49.301 | 19.0% |
| EBITDA | -27.930 | -16.917 | -32.539 | -33.062 | -32.025 | |
| Net Income | -269.834 | -42.132 | -69.161 | -68.901 | -106.609 | |
Balance Sheet
|
|---|
| Cash | 0.724 | 29.492 | 64.157 | 127.622 | 151.359 | 18.6% |
| Short Term Debt | 0.047 | 0.046 | 0.047 | 0.000 | 0.000 | |
| Long Term Debt | 0.142 | 0.096 | 0.049 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 3.076 | 0.000 | 0.839 | 0.466 | 40.105 | 8,506.2% |
Ratios
|
|---|
| Revenue growth | -91.3% | 7.5% | -67.9% | -72.5% | 389.0% | |
| EBITDA growth | 207.0% | -39.4% | 92.3% | 1.6% | -3.1% | |
| Gross Margin | 17.2% | 11.3% | 73.7% | 34.1% | 38.5% | 4.4% |
| EBITDA Margin | -96.9% | -54.5% | -326.9% | -1,209.7% | -239.6% | 970.1% |
| Net Income Margin | -935.7% | -135.8% | -694.7% | -2,521.1% | -797.7% | 1,723.4% |
| SG&A, % of revenue | | 87.7% | | 1,515.4% | 368.9% | -1,146.5% |
| CAPEX, % of revenue | 10.7% | 0.0% | 8.4% | 17.1% | 300.1% | 283.0% |
| ROIC | -4.4% | -2.5% | -3.9% | -3.8% | -4.4% | -0.6% |
| ROE | -33.8% | -6.0% | -8.9% | -8.5% | -13.4% | -4.9% |
Revenue and profitability
China Environmental Resources Group Ltd's Revenue surged on 389%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 91.4 pp from -514% to -423% in FY2016.
Gross Margin increased on 4.4 pp from 34.1% to 38.5% in FY2016. SG&A as a % of Revenue dropped on 1,146 pp from 1,515% to 369% in FY2016.
Net Income marign surged on 1,723 pp from -2,521% to -798% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 300%. The company showed fast CAPEX/Revenue growth300 pp from 0% in FY2013 to 300% in FY2016. It's average CAPEX/Revenue for the last three years was 109%.
Return on investment
The company operates at negative ROIC (-4.41%) and ROE (-13.38%). ROIC decreased slightly on 0.56 pp from -3.8% to -4.4% in FY2016. ROE decreased on 4.9 pp from -8.5% to -13.4% in FY2016.
Leverage (Debt)
The company has no debt. Cash jumped on 18.6%.
Appendix 1: Peers in Environmental Control
Below we provide China Environmental Resources Group Ltd benchmarking against other companies in Environmental Control 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 |
|---|
| Sky Forever Supply Chain Management Group Ltd ($8047) | | 446.4% | -62.3% | 12,494.5% | 1.5% |
| Pan Asia Environmental Protection Group Ltd ($556) | -13.7% | 43.1% | -1.8% | 85.0% | |
| CT Environmental Group Ltd ($1363) | -18.7% | 23.1% | 112.9% | 75.4% | |
| ELL Environmental Holdings Ltd ($1395) | 5.3% | 38.8% | 30.9% | 70.8% | |
| Ozner Water International Holding Ltd ($2014) | 183.9% | 38.5% | 27.2% | 45.7% | |
| |
|---|
| Median (24 companies) | 3.7% | 18.9% | 23.6% | 4.0% | 41.1% |
|---|
| China Environmental Resources Group Ltd ($1130) | | 7.5% | -67.9% | -72.5% | 389.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| EverChina International Holdings Co Ltd ($202) | 51.8% | 53.4% | 95.3% | 95.4% | 93.5% |
| Ozner Water International Holding Ltd ($2014) | 64.5% | 67.8% | 65.4% | 58.9% | |
| CT Environmental Group Ltd ($1363) | 65.8% | 63.1% | 56.4% | 49.9% | |
| Kangda International Environmental Co Ltd ($6136) | 44.2% | 38.3% | 40.0% | 47.6% | |
| China Water Affairs Group Ltd ($855) | 44.0% | 43.1% | 41.8% | 47.3% | 47.1% |
| |
|---|
| Median (23 companies) | 39.0% | 30.6% | 31.3% | 32.7% | 8.2% |
|---|
| China Environmental Resources Group Ltd ($1130) | 17.2% | 11.3% | 73.7% | 34.1% | 38.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CT Environmental Group Ltd ($1363) | 63.6% | 62.8% | 58.7% | 64.6% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 57.5% | 56.6% | 57.8% | 57.9% | |
| China Everbright International Ltd ($257) | 44.6% | 40.7% | 43.6% | 44.1% | |
| China Water Affairs Group Ltd ($855) | 38.2% | 38.1% | 37.1% | 40.3% | 40.2% |
| Kangda International Environmental Co Ltd ($6136) | 37.1% | 33.6% | 32.4% | 36.6% | |
| |
|---|
| Median (24 companies) | 17.9% | 11.7% | 5.1% | 16.2% | -15.6% |
|---|
| China Environmental Resources Group Ltd ($1130) | -96.9% | -54.5% | -326.9% | -1,209.7% | -239.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Chaoyue Group Ltd ($147) | | 18.1% | 9.2% | 100.9% | 1.4% |
| Ozner Water International Holding Ltd ($2014) | 94.9% | 102.2% | 148.5% | 90.9% | |
| Integrated Waste Solutions Group Holdings Ltd ($923) | 13.2% | 10.6% | 41.7% | 88.1% | 36.5% |
| Green Energy Group Ltd ($979) | 169.0% | 270.8% | 41.9% | 59.0% | |
| CT Environmental Group Ltd ($1363) | 65.0% | 27.1% | 51.4% | 40.5% | |
| |
|---|
| Median (23 companies) | 12.9% | 13.0% | 8.0% | 3.2% | 2.6% |
|---|
| China Environmental Resources Group Ltd ($1130) | 10.7% | 0.0% | 8.4% | 17.1% | 300.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CT Environmental Group Ltd ($1363) | 25.9% | 20.5% | 20.8% | 20.1% | |
| China Everbright International Ltd ($257) | 10.4% | 11.2% | 10.5% | 10.8% | |
| Sound Global Ltd ($967) | 12.8% | 11.5% | 10.8% | 9.3% | |
| Baguio Green Group Ltd ($1397) | 20.1% | 29.2% | 9.6% | 9.0% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 7.1% | 6.8% | 7.8% | 8.8% | |
| |
|---|
| Median (24 companies) | 3.9% | 6.8% | 4.9% | 5.2% | -9.2% |
|---|
| China Environmental Resources Group Ltd ($1130) | -4.4% | -2.5% | -3.9% | -3.8% | -4.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kangda International Environmental Co Ltd ($6136) | 4.4x | 5.1x | 4.8x | 5.2x | |
| China Water Affairs Group Ltd ($855) | 2.6x | 2.7x | 3.2x | 3.4x | 3.0x |
| Dynagreen Environmental Protection Group Co Ltd ($1330) | 3.2x | | | 3.2x | |
| Sound Global Ltd ($967) | -0.1x | 0.3x | 1.9x | 2.8x | |
| China Everbright International Ltd ($257) | 2.1x | 0.5x | 1.5x | 2.6x | |
| |
|---|
| Median (16 companies) | 2.3x | 0.3x | 1.2x | 1.5x | 3.0x |
|---|
