China Zenith Chemical Group Ltd CAPEX surged on 36.5% and Revenue increased on 8.6%
30/09/2016 • About China Zenith Chemical Group Ltd (
$362) • By InTwits
China Zenith Chemical Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Zenith Chemical Group Ltd doesn't have a profitable business model yet: FY2016 ROIC is -7.1%
- The company operates at negative EBITDA Margin: -84.6%
- China Zenith Chemical Group Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -90.0%0
- China Zenith Chemical Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 122.8%. At the same time it's a lot of higher than industry average of 23.1%.
- CAPEX is quite volatile: 131 in FY2016, 95.7 in FY2015, 110 in FY2014, 166 in FY2013, 315 in FY2012
- The company has unprofitable business model: ROIC is at -7.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Zenith Chemical Group Ltd ($362) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 213.8 | 297.4 | 163.5 | 62.9 | 68.3 | 8.6% |
| Gross Profit | 4.4 | -29.9 | -27.5 | 2.2 | 21.1 | 841.8% |
| SG&A | | 124.4 | 129.3 | 118.1 | 104.6 | -11.4% |
| EBITDA | -179.8 | -178.0 | -160.3 | -149.7 | -57.8 | |
| Net Income | -390.1 | -310.7 | -559.5 | -248.5 | -421.6 | |
Balance Sheet
|
|---|
| Cash | 5.3 | 17.0 | 85.6 | 41.4 | 39.3 | -5.0% |
| Short Term Debt | 354.4 | 268.6 | 216.9 | 167.2 | 100.3 | -40.0% |
| Long Term Debt | 38.8 | 36.5 | 258.2 | 323.2 | 446.3 | 38.1% |
Cash flow
|
|---|
| Capex | 315.0 | 165.6 | 110.1 | 95.7 | 130.7 | 36.5% |
Ratios
|
|---|
| Revenue growth | -84.9% | 39.1% | -45.0% | -61.5% | 8.6% | |
| EBITDA growth | -165.1% | -1.0% | -9.9% | -6.6% | -61.4% | |
| Gross Margin | 2.1% | -10.1% | -16.9% | 3.6% | 30.9% | 27.3% |
| EBITDA Margin | -84.1% | -59.8% | -98.1% | -238.0% | -84.6% | 153.4% |
| Net Income Margin | -182.5% | -104.4% | -342.3% | -395.0% | -617.3% | -222.3% |
| SG&A, % of revenue | | 41.8% | 79.1% | 187.7% | 153.2% | -34.5% |
| CAPEX, % of revenue | 147.3% | 55.7% | 67.4% | 152.2% | 191.4% | 39.2% |
| ROIC | -7.7% | -8.7% | -9.6% | -9.6% | -7.1% | 2.5% |
| ROE | -12.7% | -10.8% | -21.6% | -11.2% | -22.1% | -10.8% |
Revenue and profitability
China Zenith Chemical Group Ltd's Revenue increased on 8.6%. 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 jumped on 27.3 pp from 3.6% to 30.9% in FY2016. SG&A as a % of Revenue dropped on 34.5 pp from 188% to 153% in FY2016.
Net Income marign dropped on 222 pp from -395% to -617% in FY2016.
Capital expenditures (CAPEX) and working capital investments
China Zenith Chemical Group Ltd's CAPEX/Revenue was 191% in FY2016. CAPEX/Revenue jumped on 136 pp from 55.7% in FY2013 to 191% in FY2016. Average CAPEX/Revenue for the last three years was 137%.
Return on investment
The company operates at negative ROIC (-7.09%) and ROE (-22.07%). ROIC increased on 2.5 pp from -9.6% to -7.1% in FY2016. ROE dropped on 10.8 pp from -11.2% to -22.1% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -6.5x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt jumped on 11.5% while cash decreased on 5.0%.
Appendix 1: Peers in Chemicals
Below you can find China Zenith Chemical Group Ltd benchmarking vs. other companies in Chemicals 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 |
|---|
| 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) | 2.7% | 8.5% | 2.2% | -1.2% | -7.0% |
|---|
| China Zenith Chemical Group Ltd ($362) | | 39.1% | -45.0% | -61.5% | 8.6% |
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% | 12.5% |
|---|
| China Zenith Chemical Group Ltd ($362) | 2.1% | -10.1% | -16.9% | 3.6% | 30.9% |
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% | 5.0% |
|---|
| China Zenith Chemical Group Ltd ($362) | -84.1% | -59.8% | -98.1% | -238.0% | -84.6% |
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% | |
| 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% | |
| China Nonferrous Metals Co Ltd ($8306) | 0.5% | 5.2% | 5.9% | 24.3% | |
| |
|---|
| Median (31 companies) | 6.8% | 8.5% | 5.4% | 6.3% | 1.1% |
|---|
| China Zenith Chemical Group Ltd ($362) | 147.3% | 55.7% | 67.4% | 152.2% | 191.4% |
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% | 4.2% |
|---|
| China Zenith Chemical Group Ltd ($362) | -7.7% | -8.7% | -9.6% | -9.6% | -7.1% |
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 | |
| Ngai Hing Hong Co Ltd ($1047) | 11.7x | 5.3x | 5.4x | 5.3x | 7.1x |
| China XLX Fertiliser Ltd ($1866) | 2.6x | 5.1x | 5.8x | 5.1x | |
| |
|---|
| Median (27 companies) | 1.2x | 2.1x | 1.4x | 1.7x | 7.0x |
|---|
