Midas Holdings Ltd reports 76.3% Net Income growth in 2016 and 7.6 pp EBITDA Margin growth from 22.0% to 29.6%
28/02/2017 • About Midas Holdings Ltd (
$1021) • By InTwits
Midas Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Midas Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 43.9%. At the same time it's a lot of higher than industry average of 29.0%.
- CAPEX is quite volatile: 294 in FY2016, 473 in FY2015, 624 in FY2014, 862 in FY2013, 401 in FY2012
- The company has potentially unprofitable business model: ROIC is at 2.7%
- It operates with high leverage: Net Debt/EBITDA is 8.1x while industry average is 4.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Midas Holdings Ltd ($1021) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 870 | 1,148 | 1,318 | 1,512 | 1,486 | -1.8% |
| Gross Profit | 251 | 281 | 350 | 407 | 441 | 8.4% |
| SG&A | 140 | 172 | 209 | 246 | 262 | 6.5% |
| EBITDA | 239 | 255 | 312 | 332 | 439 | 32.2% |
| Net Income | 28 | 48 | 56 | 57 | 101 | 76.3% |
Balance Sheet
|
|---|
| Cash | 547 | 1,046 | 1,210 | 1,162 | 1,083 | -6.8% |
| Short Term Debt | 1,105 | 2,197 | 1,787 | 2,073 | 2,841 | 37.0% |
| Long Term Debt | 473 | 516 | 2,131 | 1,750 | 1,810 | 3.4% |
Cash flow
|
|---|
| Capex | 401 | 862 | 624 | 473 | 294 | -37.8% |
Ratios
|
|---|
| Revenue growth | -19.5% | 32.0% | 14.8% | 14.7% | -1.8% | |
| EBITDA growth | -28.0% | 6.7% | 22.6% | 6.4% | 32.2% | |
| Gross Margin | 28.9% | 24.5% | 26.6% | 26.9% | 29.7% | 2.8% |
| EBITDA Margin | 27.4% | 22.2% | 23.7% | 22.0% | 29.6% | 7.6% |
| Net Income Margin | 3.2% | 4.2% | 4.3% | 3.8% | 6.8% | 3.0% |
| SG&A, % of revenue | 16.1% | 15.0% | 15.9% | 16.3% | 17.6% | 1.4% |
| CAPEX, % of revenue | 46.2% | 75.1% | 47.3% | 31.3% | 19.8% | -11.5% |
| ROIC | 2.6% | 2.2% | 2.3% | 2.5% | 2.7% | 0.2% |
| ROE | 0.9% | 1.6% | 1.9% | 1.9% | 2.9% | 1.0% |
| Net Debt/EBITDA | 4.3x | 6.5x | 8.7x | 8.0x | 8.1x | 0.1x |
Revenue and profitability
Midas Holdings Ltd's Revenue decreased slightly on 1.8%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.6 pp from 22.0% to 29.6% in FY2016.
Gross Margin increased on 2.8 pp from 26.9% to 29.7% in FY2016. SG&A as a % of Revenue increased slightly on 1.4 pp from 16.3% to 17.6% in FY2016.
Net Income marign increased on 3.0 pp from 3.8% to 6.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Midas Holdings Ltd had CAPEX/Revenue of 19.8%. The company showed big decline in CAPEX/Revenue of 55.3 pp from 75.1% in FY2013 to 19.8% in FY2016. For the last three years the average CAPEX/Revenue was 32.8%.The company invested a big chunk of EBITDA (67.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.68%) and ROE (2.88%). ROIC showed almost no change in FY2016. ROE increased slightly on 0.99 pp from 1.9% to 2.9% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 8.1x and Debt / EBITDA is 10.6x. Net Debt / EBITDA surged on 0.1x from 8.0x to 8.1x in FY2016. Debt jumped on 21.6% while cash decreased on 6.8%.
Appendix 1: Peers in Mining
Below you can find Midas Holdings Ltd benchmarking vs. other companies in Mining 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 |
|---|
| Mongolia Energy Corp Ltd ($276) | | 89.7% | -95.8% | 2,361.6% | 1,178.3% |
| Real Gold Mining Ltd ($246) | -44.0% | -68.0% | -26.2% | 106.2% | |
| REX Global Entertainment Holdings Ltd ($164) | | 81.6% | -15.5% | 96.4% | 30.4% |
| Hengxing Gold Holding Co Ltd ($2303) | | | 3,467.3% | 78.0% | |
| Zijin Mining Group Co Ltd ($2899) | 21.6% | 2.5% | 18.1% | 26.9% | |
| |
|---|
| Median (47 companies) | 6.9% | -1.7% | -5.9% | -20.8% | 5.0% |
|---|
| Midas Holdings Ltd ($1021) | | 32.0% | 14.8% | 14.7% | -1.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sino Prosper Group Holdings Ltd ($766) | 2.5% | 5.1% | 39.6% | 93.0% | 87.4% |
| REX Global Entertainment Holdings Ltd ($164) | -15.8% | -7.8% | -0.8% | 88.6% | 87.3% |
| China Billion Resources Ltd ($274) | 71.4% | 47.2% | 73.4% | 79.7% | |
| Sun International Resources Ltd ($8029) | 83.2% | 73.1% | 64.8% | 69.4% | 58.8% |
| Grand T G Gold Holdings Ltd ($8299) | | | | 57.3% | 59.0% |
| |
|---|
| Median (49 companies) | 14.4% | 13.8% | 15.4% | 14.3% | 34.0% |
|---|
| Midas Holdings Ltd ($1021) | 28.9% | 24.5% | 26.6% | 26.9% | 29.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| G-Resources Group Ltd ($1051) | | 54.5% | 53.4% | 58.3% | |
| Grand T G Gold Holdings Ltd ($8299) | | | | 53.7% | 58.9% |
| China Precious Metal Resources Holdings Co Ltd ($1194) | 70.0% | 64.6% | 59.6% | 51.3% | |
| Timeless Software Ltd ($8028) | -113.1% | 24.7% | -13.7% | 46.1% | 28.0% |
| Hengxing Gold Holding Co Ltd ($2303) | | -766.2% | 24.5% | 43.9% | |
| |
|---|
| Median (49 companies) | 4.9% | 7.8% | 5.2% | 5.1% | -17.2% |
|---|
| Midas Holdings Ltd ($1021) | 27.4% | 22.2% | 23.7% | 22.0% | 29.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mongolia Energy Corp Ltd ($276) | 8,006.5% | 1,061.7% | 30,555.4% | 1,973.0% | 20.9% |
| Kaz Minerals ($847) | 36.6% | 136.5% | 168.8% | 168.7% | 41.9% |
| Chinalco Mining Corp International ($3668) | | | | 115.6% | |
| China Dynamics Holdings Ltd ($476) | 1.8% | 0.0% | 1.0% | 113.8% | 5.7% |
| MMG Ltd ($1208) | 25.7% | 22.6% | 41.9% | 100.4% | |
| |
|---|
| Median (48 companies) | 17.2% | 16.8% | 15.8% | 12.1% | 4.9% |
|---|
| Midas Holdings Ltd ($1021) | 46.2% | 75.1% | 47.3% | 31.3% | 19.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CGN Mining Co Ltd ($1164) | 2.6% | 3.3% | 7.9% | 16.7% | |
| United Co RUSAL PLC ($486) | 0.3% | -9.0% | 6.3% | 12.3% | |
| Xingfa Aluminium Holdings Ltd ($98) | 7.6% | 8.8% | 11.7% | 11.8% | |
| Timeless Software Ltd ($8028) | -29.1% | 7.3% | -4.6% | 11.6% | 3.9% |
| China Hongqiao Group Ltd ($1378) | 24.8% | 17.0% | 14.1% | 10.6% | |
| |
|---|
| Median (50 companies) | 0.9% | 2.7% | -0.1% | -1.1% | -1.3% |
|---|
| Midas Holdings Ltd ($1021) | 2.6% | 2.2% | 2.3% | 2.5% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Daye Non-Ferrous Metals Mining Ltd ($661) | 9.2x | 9.7x | 9.2x | 31.5x | |
| Chinalco Mining Corp International ($3668) | | | | 25.0x | |
| MMG Ltd ($1208) | 2.1x | 2.0x | 10.2x | 20.2x | |
| Kaz Minerals ($847) | 2.4x | 2.9x | 5.5x | 18.7x | 8.8x |
| China Precious Metal Resources Holdings Co Ltd ($1194) | 1.5x | 4.1x | 6.4x | 13.5x | |
| |
|---|
| Median (29 companies) | 1.7x | 1.8x | 4.4x | 3.4x | 4.0x |
|---|
| Midas Holdings Ltd ($1021) | 4.3x | 6.5x | 8.7x | 8.0x | 8.1x |
