MMG Ltd Net Debt / EBITDA dropped on 9.9x from 20.2x to 10.4x in 2016 and Debt showed almost no change
08/03/2017 • About MMG Ltd (
$1208) • By InTwits
MMG Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MMG Ltd doesn't have a profitable business model yet: FY2016 ROIC is 1.9%
- MMG Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 44.3%. At the same time it's a lot of higher than industry average of 27.5%.
- CAPEX is quite volatile: 771 in FY2016, 1,959 in FY2015, 1,038 in FY2014, 558 in FY2013, 642 in FY2012
- The company has potentially unprofitable business model: ROIC is at 1.9%
- It operates with high leverage: Net Debt/EBITDA is 10.4x 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.
MMG Ltd ($1208) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,499 | 2,470 | 2,480 | 1,951 | 2,489 | 27.6% |
| Gross Profit | 808 | 730 | 743 | 280 | 592 | 111.8% |
| SG&A | 207 | 190 | 227 | 189 | 148 | -21.6% |
| EBITDA | 735 | 738 | 779 | 477 | 937 | 96.3% |
| Net Income | 209 | 103 | 104 | -1,027 | -153 | |
Balance Sheet
|
|---|
| Cash | 96 | 137 | 251 | 598 | 553 | -7.6% |
| Short Term Debt | 371 | 351 | 117 | 277 | 737 | 166.2% |
| Long Term Debt | 1,265 | 1,271 | 8,092 | 9,986 | 9,516 | -4.7% |
Cash flow
|
|---|
| Capex | 642 | 558 | 1,038 | 1,959 | 771 | -60.6% |
Ratios
|
|---|
| Revenue growth | 12.2% | -1.2% | 0.4% | -21.3% | 27.6% | |
| EBITDA growth | -30.7% | 0.5% | 5.6% | -38.8% | 96.3% | |
| Gross Margin | 32.3% | 29.6% | 29.9% | 14.3% | 23.8% | 9.5% |
| EBITDA Margin | 29.4% | 29.9% | 31.4% | 24.5% | 37.7% | 13.2% |
| Net Income Margin | 8.4% | 4.2% | 4.2% | -52.6% | -6.1% | 46.5% |
| SG&A, % of revenue | 8.3% | 7.7% | 9.1% | 9.7% | 5.9% | -3.7% |
| CAPEX, % of revenue | 25.7% | 22.6% | 41.9% | 100.4% | 31.0% | -69.4% |
| ROIC | 14.0% | 7.5% | 3.1% | -8.7% | 1.9% | 10.6% |
| ROE | 14.1% | 6.6% | 6.3% | -87.3% | -18.0% | 69.3% |
| Net Debt/EBITDA | 2.1x | 2.0x | 10.2x | 20.2x | 10.4x | -9.9x |
Revenue and profitability
The company's Revenue jumped on 27.6%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 13.2 pp from 24.5% to 37.7% in FY2016.
Gross Margin increased on 9.5 pp from 14.3% to 23.8% in FY2016. SG&A as a % of Revenue decreased on 3.7 pp from 9.7% to 5.9% in FY2016.
Net Income marign surged on 46.5 pp from -52.6% to -6.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 31.0% in FY2016. CAPEX/Revenue increased on 8.4 pp from 22.6% in FY2013 to 31.0% in FY2016. It's average CAPEX/Revenue for the last three years was 57.7%.MMG Ltd invested a big chunk of EBITDA (82.3%) to CAPEX to fuel its growth.
Return on investment
The company operates at low but positive ROIC (1.94%) and negative ROE (-18.00%). ROIC jumped on 10.6 pp from -8.7% to 1.9% in FY2016. ROE surged on 69.3 pp from -87.3% to -18.0% in FY2016.
Leverage (Debt)
Debt level is 10.4x Net Debt / EBITDA and 10.9x Debt / EBITDA. Net Debt / EBITDA dropped on 9.9x from 20.2x to 10.4x in FY2016. Debt showed almost no change in FY2016 while cash decreased on 7.6%.
Management team
The company's CEO is Jiao Jian. Jiao Jian has 1 year tenure at the company. The company's CFO is Ross A Carroll. Ross A Carroll has 2 years tenure at the company.
Appendix 1: Peers in Mining
Below we provide MMG Ltd benchmarking against other companies in Mining 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 |
|---|
| 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) | 6.7% | 0.1% | -5.9% | -14.0% | 3.8% |
|---|
| MMG Ltd ($1208) | | -1.2% | 0.4% | -21.3% | 27.6% |
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% | 16.7% | 29.7% |
|---|
| MMG Ltd ($1208) | 32.3% | 29.6% | 29.9% | 14.3% | 23.8% |
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% | -7.1% |
|---|
| MMG Ltd ($1208) | 29.4% | 29.9% | 31.4% | 24.5% | 37.7% |
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% |
| North Mining Shares Co Ltd ($433) | 21.7% | 13.0% | 58.9% | 96.7% | |
| |
|---|
| Median (48 companies) | 17.2% | 16.8% | 15.8% | 12.1% | 5.7% |
|---|
| MMG Ltd ($1208) | 25.7% | 22.6% | 41.9% | 100.4% | 31.0% |
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% | 2.3% | -0.1% | -0.6% | 0.2% |
|---|
| MMG Ltd ($1208) | 14.0% | 7.5% | 3.1% | -8.7% | 1.9% |
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 | |
| 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 | |
| Lingbao Gold Co Ltd ($3330) | 5.3x | | 8.3x | 12.7x | |
| |
|---|
| Median (29 companies) | 1.7x | 1.8x | 4.4x | 3.4x | 4.9x |
|---|
| MMG Ltd ($1208) | 2.1x | 2.0x | 10.2x | 20.2x | 10.4x |
