Shandong Xinhua Pharmaceutical Co Ltd reports 34.3% CAPEX growth and 11.1% Revenue growth
14/03/2017 • About Shandong Xinhua Pharmaceutical Co Ltd (
$719) • By InTwits
Shandong Xinhua Pharmaceutical Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Shandong Xinhua Pharmaceutical Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.3%. At the same time it's in pair with industry average of 9.7%.
- CAPEX is quite volatile: 227 in 2016, 169 in 2015, 135 in 2014, 91.1 in 2013, 574 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.0%
- It operates with high leverage: Net Debt/EBITDA is 2.7x while industry average is -1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Shandong Xinhua Pharmaceutical Co Ltd ($719) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,932 | 3,339 | 3,533 | 3,567 | 3,965 | 11.1% |
| Gross Profit | 504 | 578 | 721 | 807 | 951 | 17.9% |
| SG&A | 472 | 530 | 599 | 657 | 740 | 12.7% |
| EBITDA | 236 | 318 | 420 | 383 | 443 | 15.7% |
| Net Income | 22 | 38 | 50 | 83 | 122 | 47.2% |
Balance Sheet
|
|---|
| Cash | 376 | 311 | 281 | 476 | 493 | 3.5% |
| Short Term Debt | 493 | 501 | 839 | 1,331 | 1,509 | 13.4% |
| Long Term Debt | 718 | 889 | 636 | 430 | 165 | -61.7% |
Cash flow
|
|---|
| Capex | 574 | 91 | 135 | 169 | 227 | 34.3% |
Ratios
|
|---|
| Revenue growth | 0.5% | 13.9% | 5.8% | 1.0% | 11.1% | |
| EBITDA growth | -22.8% | 34.7% | 32.0% | -9.0% | 15.7% | |
| Gross Margin | 17.2% | 17.3% | 20.4% | 22.6% | 24.0% | 1.4% |
| EBITDA Margin | 8.1% | 9.5% | 11.9% | 10.7% | 11.2% | 0.4% |
| Net Income Margin | 0.8% | 1.1% | 1.4% | 2.3% | 3.1% | 0.8% |
| SG&A, % of revenue | 16.1% | 15.9% | 17.0% | 18.4% | 18.7% | 0.3% |
| CAPEX, % of revenue | 19.6% | 2.7% | 3.8% | 4.7% | 5.7% | 1.0% |
| ROIC | 2.5% | 4.0% | 6.5% | 4.3% | 5.0% | 0.8% |
| ROE | 1.3% | 2.1% | 2.7% | 4.5% | 6.3% | 1.8% |
| Net Debt/EBITDA | 3.5x | 3.4x | 2.8x | 3.4x | 2.7x | -0.7x |
Revenue and profitability
Shandong Xinhua Pharmaceutical Co Ltd's Revenue surged on 11.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 88.4 pp from -34.6% to 53.8% in FY2016.
Gross Margin increased slightly on 1.4 pp from 22.6% to 24.0% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased slightly on 0.76 pp from 2.3% to 3.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
Shandong Xinhua Pharmaceutical Co Ltd's CAPEX/Revenue was 5.7% in 2016. The company showed CAPEX/Revenue growth of 3.0 pp from 2.7% in 2013 to 5.7% in 2016. It's average CAPEX/Revenue for the last three years was 4.8%.The company invested a big chunk of EBITDA (51.3%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (5.02%) and ROE (6.31%). ROIC increased slightly on 0.76 pp from 4.3% to 5.0% in 2016. ROE increased slightly on 1.8 pp from 4.5% to 6.3% in 2016.
Leverage (Debt)
Debt level is 2.7x Net Debt / EBITDA and 3.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 3.4x to 2.7x in 2016. Debt decreased on 5.0% while cash increased on 3.5%.
Appendix 1: Peers in Pharmaceuticals
Below you can find Shandong Xinhua Pharmaceutical Co Ltd benchmarking vs. other companies in Pharmaceuticals 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 |
|---|
| China Health Group Inc ($8225) | 58.5% | -48.0% | -60.1% | 244.1% | |
| Wai Yuen Tong Medicine Holdings Ltd ($897) | | 45.9% | -10.5% | 105.6% | 40.9% |
| Oriental Unicorn Agricultural Group Ltd ($8120) | 30.2% | -78.1% | 16.8% | 100.8% | |
| China Traditional Chinese Medicine Co Ltd ($570) | 22.3% | 35.2% | 90.0% | 40.0% | |
| RM Group Holdings Ltd ($8185) | | 4.6% | -16.0% | 34.2% | -16.6% |
| |
|---|
| Median (41 companies) | 17.6% | 11.8% | 15.3% | 4.0% | 11.1% |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | | 13.9% | 5.8% | 1.0% | 11.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Luye Pharma Group Ltd ($2186) | 83.5% | 83.6% | 81.0% | 81.4% | |
| Consun Pharmaceutical Group Ltd ($1681) | 75.7% | 79.1% | 78.3% | 80.7% | |
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 82.0% | 81.5% | 80.9% | 79.9% | |
| RM Group Holdings Ltd ($8185) | 79.6% | 78.8% | 76.6% | 77.7% | 77.4% |
| Sino Biopharmaceutical Ltd ($1177) | 78.5% | 77.5% | 76.4% | 77.7% | 79.2% |
| |
|---|
| Median (40 companies) | 42.5% | 41.1% | 52.2% | 50.0% | 57.4% |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 17.2% | 17.3% | 20.4% | 22.6% | 24.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 193.8% | 205,840.0% | -15,344.8% | 49,650.0% | 26.0% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 38.8% | 65.4% | 70.9% | 93.3% | |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 60.6% | 21.0% | 28.8% | 61.1% | |
| U-Home Group Holdings Ltd ($2327) | 9.8% | -16.6% | -46.7% | 51.7% | |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 41.3% | 45.4% | 47.5% | 49.1% | 50.9% |
| |
|---|
| Median (41 companies) | 20.7% | 20.6% | 21.4% | 21.0% | 10.1% |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 8.1% | 9.5% | 11.9% | 10.7% | 11.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hao Wen Holdings Ltd ($8019) | 30.0% | 2.3% | 38.2% | 44.8% | |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 0.9% | 1.4% | 7.6% | 40.5% | |
| Lee's Pharmaceutical Holdings Ltd ($950) | 18.6% | 20.9% | 7.1% | 26.1% | |
| Tianda Pharmaceuticals Ltd ($455) | 6.0% | 3.9% | 10.5% | 24.4% | 22.9% |
| Lijun International Pharmaceutical Holding Co Ltd ($2005) | 16.8% | 52.4% | 39.6% | 18.7% | |
| |
|---|
| Median (40 companies) | 8.2% | 9.7% | 7.6% | 4.5% | 2.8% |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 19.6% | 2.7% | 3.8% | 4.7% | 5.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 26.2% | 26.8% | 26.5% | 26.2% | 24.3% |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 25.3% | 27.5% | 23.8% | 25.9% | 25.1% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 13.7% | 18.3% | 22.0% | 25.4% | |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 12.6% | 14.0% | 17.8% | 23.5% | |
| Lee's Pharmaceutical Holdings Ltd ($950) | 26.1% | 22.0% | 22.4% | 22.7% | |
| |
|---|
| Median (42 companies) | 12.3% | 9.3% | 11.1% | 10.9% | 2.5% |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 2.5% | 4.0% | 6.5% | 4.3% | 5.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 2.3x | 3.7x | | 22.2x | -5.1x |
| U-Home Group Holdings Ltd ($2327) | 10.1x | | | 9.9x | |
| Lansen Pharmaceutical Holdings Ltd ($503) | 1.7x | 2.8x | 3.4x | 4.7x | |
| China Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 5.4x | 4.0x | 3.4x | 4.3x | |
| United Laboratories International Holdings Ltd/The ($3933) | 6.5x | 4.6x | 4.2x | 4.0x | |
| |
|---|
| Median (34 companies) | -0.4x | -0.5x | -0.7x | -0.6x | -2.9x |
|---|
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 3.5x | 3.4x | 2.8x | 3.4x | 2.7x |
