Lee & Man Chemical Co Ltd reports 19.8% Net Income decline in 2016 while 6.3% Revenue growth
28/02/2017 • About Lee & Man Chemical Co Ltd (
$746) • By InTwits
Lee & Man Chemical Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has business model with average profitability: ROIC is at 10.4%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is -3.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lee & Man Chemical Co Ltd ($746) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,521 | 1,329 | 1,560 | 1,706 | 1,814 | 6.3% |
| Gross Profit | 522 | 474 | 654 | 675 | 658 | -2.5% |
| SG&A | 165 | 165 | 209 | 214 | 260 | 21.5% |
| EBITDA | 462 | 417 | 599 | 641 | 671 | 4.7% |
| Net Income | 362 | 309 | 330 | 270 | 216 | -19.8% |
Balance Sheet
|
|---|
| Cash | 1,520 | 1,062 | 597 | 253 | 228 | -9.7% |
| Short Term Debt | 219 | 581 | 710 | 611 | 445 | -27.3% |
| Long Term Debt | 1,198 | 1,090 | 1,229 | 1,250 | 1,524 | 21.9% |
Cash flow
|
|---|
| Capex | 88 | 679 | 526 | 389 | | -100.0% |
Ratios
|
|---|
| Revenue growth | -15.9% | -12.6% | 17.4% | 9.3% | 6.3% | |
| EBITDA growth | -40.3% | -9.9% | 43.9% | 6.9% | 4.7% | |
| Gross Margin | 34.3% | 35.7% | 41.9% | 39.6% | 36.3% | -3.3% |
| EBITDA Margin | 30.4% | 31.3% | 38.4% | 37.6% | 37.0% | -0.6% |
| Net Income Margin | 23.8% | 23.2% | 21.2% | 15.8% | 11.9% | -3.9% |
| SG&A, % of revenue | 10.9% | 12.4% | 13.4% | 12.5% | 14.3% | 1.8% |
| CAPEX, % of revenue | 5.8% | 51.1% | 33.7% | 22.8% | | -22.8% |
| ROIC | 11.7% | 8.2% | 10.9% | 10.7% | 10.4% | -0.3% |
| ROE | 20.4% | 15.3% | 14.9% | 11.6% | 9.2% | -2.4% |
| Net Debt/EBITDA | -0.2x | 1.5x | 2.2x | 2.5x | 2.6x | 0.1x |
Revenue and profitability
The company's Revenue increased on 6.3%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.58 pp from 37.6% to 37.0% in FY2016.
Gross Margin decreased on 3.3 pp from 39.6% to 36.3% in FY2016. SG&A as a % of Revenue increased slightly on 1.8 pp from 12.5% to 14.3% in FY2016.
Net Income marign decreased on 3.9 pp from 15.8% to 11.9% in FY2016.
Return on investment
The company operates at low ROIC (10.40%) and ROE (9.22%). ROIC showed almost no change in FY2016. ROE decreased on 2.4 pp from 11.6% to 9.2% in FY2016.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 2.5x to 2.6x in FY2016. Debt increased on 5.8% while cash decreased on 9.7%.
Appendix 1: Peers in Miscellaneous Manufactur
Below you can find Lee & Man Chemical Co Ltd benchmarking vs. other companies in Miscellaneous Manufactur 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 |
|---|
| Karrie International Hldgs ($1050) | | 0.1% | -11.3% | 27.4% | 11.8% |
| Sunny Optical Technology Group Co Ltd ($2382) | 59.5% | 45.9% | 45.0% | 26.9% | |
| TK Group Holdings Ltd ($2283) | 40.2% | 9.3% | 11.8% | 20.0% | |
| AMCO United Holding Ltd ($2970) | | 10.8% | 53.9% | 16.8% | 31.1% |
| Yusei Holdings Ltd ($96) | 18.4% | -9.3% | 6.7% | 15.6% | |
| |
|---|
| Median (25 companies) | -1.7% | 0.1% | 6.7% | -5.6% | 11.8% |
|---|
| Lee & Man Chemical Co Ltd ($746) | | -12.6% | 17.4% | 9.3% | 6.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Man Sang International Ltd ($938) | 42.4% | 32.8% | 60.3% | 78.6% | 56.4% |
| Time Watch Investments Ltd ($2033) | 60.2% | 60.6% | 65.0% | 68.1% | 68.5% |
| China Environmental Energy Investment Ltd ($986) | 14.0% | 1.2% | 9.0% | 49.2% | 40.4% |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 33.2% | 35.1% | 37.4% | 38.7% | |
| Launch Tech Co Ltd ($2488) | 27.4% | 33.6% | 33.6% | 38.3% | |
| |
|---|
| Median (24 companies) | 19.7% | 19.7% | 23.4% | 22.4% | 17.8% |
|---|
| Lee & Man Chemical Co Ltd ($746) | 34.3% | 35.7% | 41.9% | 39.6% | 36.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Man Sang International Ltd ($938) | 24.9% | 15.4% | 37.0% | 33.8% | 40.4% |
| IPE Group Ltd ($929) | 25.6% | 22.5% | 29.5% | 29.1% | |
| DeTeam Co Ltd ($65) | 8.0% | 3.9% | -1.3% | 24.3% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 18.4% | 19.8% | 20.6% | 24.2% | |
| Time Watch Investments Ltd ($2033) | 17.6% | 16.8% | 19.4% | 20.5% | 16.4% |
| |
|---|
| Median (25 companies) | 7.9% | 7.8% | 7.4% | 6.1% | 4.7% |
|---|
| Lee & Man Chemical Co Ltd ($746) | 30.4% | 31.3% | 38.4% | 37.6% | 37.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Environmental Energy Investment Ltd ($986) | 6.1% | 0.4% | 17.9% | 47.6% | 6.2% |
| DeTeam Co Ltd ($65) | 6.7% | 47.0% | 5.6% | 33.1% | |
| China International Marine Containers Group Co Ltd ($2039) | 3.9% | 12.1% | 18.5% | 21.2% | |
| IPE Group Ltd ($929) | 6.3% | 13.3% | 12.3% | 13.3% | |
| Yusei Holdings Ltd ($96) | 3.3% | 4.2% | 3.8% | 9.3% | |
| |
|---|
| Median (25 companies) | 4.6% | 4.2% | 3.8% | 4.3% | 3.7% |
|---|
| Lee & Man Chemical Co Ltd ($746) | 5.8% | 51.1% | 33.7% | 22.8% | |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Time Watch Investments Ltd ($2033) | 34.5% | 27.1% | 27.8% | 27.9% | 18.6% |
| TK Group Holdings Ltd ($2283) | 36.8% | 31.1% | 29.4% | 27.6% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 16.9% | 17.7% | 20.0% | 21.1% | |
| Sunny Optical Technology Group Co Ltd ($2382) | 19.7% | 17.8% | 16.5% | 19.4% | |
| Yusei Holdings Ltd ($96) | 4.2% | 7.0% | 13.6% | 14.1% | |
| |
|---|
| Median (25 companies) | 3.2% | 3.6% | 3.9% | 1.5% | 5.3% |
|---|
| Lee & Man Chemical Co Ltd ($746) | 11.7% | 8.2% | 10.9% | 10.7% | 10.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Continental Holdings Ltd ($513) | | 20.1x | 92.9x | 4,203.6x | |
| South China China Ltd ($413) | | 37.5x | 2,842.3x | 27.3x | |
| Launch Tech Co Ltd ($2488) | 7.6x | 2.4x | 3.9x | 14.5x | |
| China International Marine Containers Group Co Ltd ($2039) | 4.0x | 4.7x | 5.8x | 9.8x | |
| VS International Group Ltd ($1002) | 5.1x | 6.5x | 4.4x | 3.3x | 4.6x |
| |
|---|
| Median (22 companies) | -0.2x | -0.2x | -0.2x | 0.1x | -0.9x |
|---|
| Lee & Man Chemical Co Ltd ($746) | -0.2x | 1.5x | 2.2x | 2.5x | 2.6x |
