Hong Kong & China Gas Co Ltd Net Debt / EBITDA surged on 0.4x from 2.3x to 2.7x in 2016 while Revenue decreased on 3.5%
16/03/2017 • About Hong Kong & China Gas Co Ltd (
$3) • By InTwits
Hong Kong & China Gas 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 low profitability: ROIC is at 7.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.7x while industry average is 2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong & China Gas Co Ltd ($3) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 24,923 | 28,246 | 31,615 | 29,591 | 28,557 | -3.5% |
| EBITDA | 7,473 | 8,356 | 9,232 | 9,083 | 9,344 | 2.9% |
| Net Income | 7,712 | 6,854 | 7,211 | 7,413 | 7,451 | 0.5% |
Balance Sheet
|
|---|
| Cash | 11,925 | 7,560 | 12,055 | 11,926 | 8,076 | -32.3% |
| Short Term Debt | 6,491 | 6,222 | 7,050 | 9,712 | 5,952 | -38.7% |
| Long Term Debt | 25,230 | 24,401 | 24,484 | 23,363 | 27,296 | 16.8% |
Cash flow
|
|---|
| Capex | 5,906 | 5,294 | 6,365 | 6,356 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 11.1% | 13.3% | 11.9% | -6.4% | -3.5% | |
| EBITDA growth | 7.0% | 11.8% | 10.5% | -1.6% | 2.9% | |
| EBITDA Margin | 30.0% | 29.6% | 29.2% | 30.7% | 32.7% | 2.0% |
| Net Income Margin | 30.9% | 24.3% | 22.8% | 25.0% | 26.1% | 1.0% |
| CAPEX, % of revenue | 23.7% | 18.7% | 20.1% | 21.5% | | -21.5% |
| ROIC | 7.3% | 7.4% | 7.5% | 6.9% | 7.0% | 0.1% |
| ROE | 17.8% | 14.4% | 13.9% | 13.8% | 13.8% | -0.1% |
| Net Debt/EBITDA | 2.6x | 2.8x | 2.1x | 2.3x | 2.7x | 0.4x |
Revenue and profitability
The company's Revenue decreased on 3.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.0 pp from 30.7% to 32.7% in FY2016.
Net Income marign increased slightly on 1.0 pp from 25.0% to 26.1% in FY2016.
Return on investment
The company operates at good ROE (13.75%) while ROIC is low (7.03%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Debt level is 2.7x Net Debt / EBITDA and 3.6x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 2.3x to 2.7x in FY2016. Debt increased slightly on 0.52% while cash dropped on 32.3%.
Appendix 1: Peers in Gas
Below you can find Hong Kong & China Gas Co Ltd benchmarking vs. other companies in Gas 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 |
|---|
| Beijing Enterprises Holdings Ltd ($392) | 16.7% | 19.1% | 13.2% | 25.5% | |
| China Gas Holdings Ltd ($384) | | -5.2% | 44.8% | 21.8% | -8.0% |
| ENN Energy Holdings Ltd ($2688) | 19.6% | 27.4% | 26.7% | 10.2% | |
| China Resources Gas Group Ltd ($1193) | -4.1% | 63.6% | 28.8% | 8.3% | |
| Suchuang Gas Corp Ltd ($1430) | 10.3% | 26.9% | 18.4% | 1.3% | |
| |
|---|
| Median (9 companies) | 14.0% | 28.5% | 18.4% | 1.3% | -7.5% |
|---|
| Hong Kong & China Gas Co Ltd ($3) | | 13.3% | 11.9% | -6.4% | -3.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Resources Gas Group Ltd ($1193) | 31.2% | 34.2% | 30.3% | 31.5% | |
| Suchuang Gas Corp Ltd ($1430) | 28.9% | 30.1% | 24.2% | 25.2% | |
| ENN Energy Holdings Ltd ($2688) | 26.9% | 23.8% | 20.9% | 21.4% | |
| Binhai Investment Co Ltd ($2886) | 20.1% | 20.6% | 18.3% | 21.3% | |
| China Gas Holdings Ltd ($384) | 19.0% | 21.0% | 20.3% | 20.4% | 24.1% |
| |
|---|
| Median (8 companies) | 21.6% | 21.8% | 19.3% | 20.8% | 17.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Suchuang Gas Corp Ltd ($1430) | 30.2% | 30.5% | 24.9% | 24.0% | |
| Binhai Investment Co Ltd ($2886) | 14.8% | 17.0% | 15.2% | 20.7% | |
| Towngas China Co Ltd ($1083) | 19.9% | 18.9% | 18.8% | 19.2% | 23.9% |
| China Resources Gas Group Ltd ($1193) | 16.2% | 17.4% | 17.7% | 19.0% | |
| China Gas Holdings Ltd ($384) | 15.2% | 16.5% | 16.6% | 16.8% | 20.3% |
| |
|---|
| Median (10 companies) | 18.0% | 17.2% | 16.6% | 16.7% | -11.2% |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 30.0% | 29.6% | 29.2% | 30.7% | 32.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Towngas China Co Ltd ($1083) | 31.3% | 25.7% | 26.2% | 26.4% | |
| Binhai Investment Co Ltd ($2886) | 26.9% | 18.0% | 15.5% | 16.7% | |
| China Resources Gas Group Ltd ($1193) | 20.6% | 18.5% | 12.4% | 12.3% | |
| China Gas Holdings Ltd ($384) | 9.4% | 13.7% | 12.3% | 12.3% | 10.2% |
| China Oil & Gas Group Ltd ($603) | 15.0% | 18.3% | 15.4% | 11.1% | |
| |
|---|
| Median (10 companies) | 18.3% | 14.9% | 12.3% | 9.6% | 6.5% |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 23.7% | 18.7% | 20.1% | 21.5% | |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Suchuang Gas Corp Ltd ($1430) | 13.6% | 19.4% | 23.9% | 20.8% | |
| Binhai Investment Co Ltd ($2886) | 12.2% | 12.2% | 10.9% | 14.7% | |
| ENN Energy Holdings Ltd ($2688) | 14.3% | 11.7% | 16.4% | 13.6% | |
| China Resources Gas Group Ltd ($1193) | 6.9% | 10.4% | 11.4% | 12.5% | |
| China Gas Holdings Ltd ($384) | 8.4% | 8.6% | 10.6% | 10.6% | 11.2% |
| |
|---|
| Median (10 companies) | 8.0% | 11.0% | 9.1% | 8.3% | -9.7% |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 7.3% | 7.4% | 7.5% | 6.9% | 7.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Oil & Gas Group Ltd ($603) | -0.0x | 1.0x | 2.8x | 6.0x | |
| Towngas China Co Ltd ($1083) | 3.5x | 3.7x | 4.1x | 4.5x | 3.8x |
| Beijing Enterprises Holdings Ltd ($392) | 3.1x | 2.6x | 4.7x | 3.6x | |
| China Gas Holdings Ltd ($384) | 3.7x | 3.7x | 3.1x | 2.9x | 2.8x |
| Binhai Investment Co Ltd ($2886) | 3.4x | 2.8x | 3.5x | 2.8x | |
| |
|---|
| Median (9 companies) | 3.1x | 1.9x | 2.9x | 2.8x | 3.3x |
|---|
| Hong Kong & China Gas Co Ltd ($3) | 2.6x | 2.8x | 2.1x | 2.3x | 2.7x |
