China Shenhua Energy Co Ltd reports 54.3% Net Income growth and 6.9% Revenue growth
17/03/2017 • About China Shenhua Energy Co Ltd (
$1088) • By InTwits
China Shenhua Energy Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Shenhua Energy Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.2%. At the same time it's in pair with industry average of 24.8%.
- CAPEX is quite volatile: 2,147 in 2016, 2,063 in 2015, 1,831 in 2014, 2,439 in 2013, 151 in 2012
- The company has business model with low profitability: ROIC is at 9.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Shenhua Energy Co Ltd ($1088) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 254,575 | 283,797 | 253,081 | 171,236 | 183,127 | 6.9% |
| Gross Profit | 79,898 | 81,366 | 74,972 | 60,809 | 58,284 | -4.2% |
| SG&A | 9,160 | 10,118 | 9,629 | 17,507 | 9,033 | -48.4% |
| EBITDA | 90,602 | 89,715 | 86,436 | 58,112 | 70,762 | 21.8% |
| Net Income | 49,708 | 45,079 | 39,301 | 16,144 | 24,910 | 54.3% |
Balance Sheet
|
|---|
| Cash | 51,637 | 38,332 | 35,962 | 43,239 | 41,188 | -4.7% |
| Short Term Debt | 28,103 | 48,485 | 28,435 | 20,283 | 32,203 | 58.8% |
| Long Term Debt | 39,624 | 42,042 | 69,552 | 88,785 | 73,778 | -16.9% |
Cash flow
|
|---|
| Capex | 54,629 | 51,665 | 45,151 | 29,876 | 29,058 | -2.7% |
Ratios
|
|---|
| Revenue growth | 24.3% | 11.5% | -10.8% | -32.3% | 6.9% | |
| EBITDA growth | 7.2% | -1.0% | -3.7% | -32.8% | 21.8% | |
| Gross Margin | 31.4% | 28.7% | 29.6% | 35.5% | 31.8% | -3.7% |
| EBITDA Margin | 35.6% | 31.6% | 34.2% | 33.9% | 38.6% | 4.7% |
| Net Income Margin | 19.5% | 15.9% | 15.5% | 9.4% | 13.6% | 4.2% |
| SG&A, % of revenue | 3.6% | 3.6% | 3.8% | 10.2% | 4.9% | -5.3% |
| CAPEX, % of revenue | 21.5% | 18.2% | 17.8% | 17.4% | 15.9% | -1.6% |
| ROIC | 19.5% | 17.4% | 14.6% | 7.7% | 9.4% | 1.7% |
| ROE | 20.3% | 16.7% | 13.6% | 5.4% | 8.1% | 2.7% |
| Net Debt/EBITDA | 0.2x | 0.6x | 0.7x | 1.1x | 0.9x | -0.2x |
China Shenhua Energy Co Ltd ($1088) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 39,402 | 39,321 | 44,455 | 58,324 | | | | |
| Net Income | 4,741 | 6,086 | 7,479 | 6,262 | | | | |
Balance Sheet
|
|---|
| Cash | 51,949 | 66,189 | 82,213 | 41,188 | | | | |
| Short Term Debt | 12,647 | 12,550 | 34,713 | 32,203 | | | | |
| Long Term Debt | 93,371 | 95,671 | 75,848 | 73,778 | | | | |
Ratios
|
|---|
| Gross Margin | 31.7% | 34.5% | 39.6% | 27.4% | | | | |
| Net Income Margin | 12.0% | 15.5% | 16.8% | 10.7% | | | | |
Revenue and profitability
The company's Revenue increased on 6.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.77 pp from 9.8% to 10.5% in 2016.
Gross Margin decreased on 3.7 pp from 35.5% to 31.8% in 2016. SG&A as a % of Revenue decreased on 5.3 pp from 10.2% to 4.9% in 2016.
Net Income marign increased on 4.2 pp from 9.4% to 13.6% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 15.9%. CAPEX/Revenue decreased on 2.3 pp from 18.2% in 2013 to 15.9% in 2016. It's average level of CAPEX/Revenue for the last three years was 17.1%.
Return on investment
The company operates at low ROIC (9.44%) and ROE (8.10%). ROIC increased slightly on 1.7 pp from 7.7% to 9.4% in 2016. ROE increased on 2.7 pp from 5.4% to 8.1% in 2016.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 1.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 1.1x to 0.9x in 2016. Debt decreased on 2.8% while cash decreased on 4.7%.
Management team
Zhang Yuzhuo is a China Shenhua Energy Co Ltd's CEO. Zhang Yuzhuo has spent 4 years at the company. Zhang Kehui is a The company's CFO. Zhang Kehui has spent 11 years at the company.
Appendix 1: Peers in Coal
Below we provide China Shenhua Energy Co Ltd benchmarking against other companies in Coal 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 |
|---|
| Sino Resources Group Ltd ($223) | | -44.8% | 14.7% | 354.5% | 0.4% |
| Asia Coal Ltd ($835) | | -15.3% | 43.2% | 133.6% | -60.1% |
| Dowell Property Holdings Ltd ($668) | -19.2% | -55.7% | -35.8% | 83.2% | |
| Capital Finance Holdings Ltd ($8239) | | -5.2% | -5.5% | 70.6% | -27.2% |
| Up Energy Development Group Ltd ($307) | | | | 60.5% | |
| |
|---|
| Median (23 companies) | -12.6% | -8.6% | -9.8% | -22.9% | -22.7% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital Finance Holdings Ltd ($8239) | 6.4% | 7.2% | 8.7% | 98.2% | |
| Nan Nan Resources Enterprise Ltd ($1229) | 23.9% | 17.6% | 18.1% | 44.3% | 41.0% |
| Agritrade Resources Ltd ($1131) | 22.9% | 29.4% | 31.8% | 30.0% | 30.9% |
| Shougang Fushan Resources Group Ltd ($639) | 63.5% | 50.9% | 40.1% | 24.5% | |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 35.2% | 33.7% | 27.4% | 19.2% | |
| |
|---|
| Median (22 companies) | 19.9% | 17.3% | 9.4% | 2.9% | 7.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital Finance Holdings Ltd ($8239) | -27.2% | -23.7% | -56.2% | 71.5% | |
| Nan Nan Resources Enterprise Ltd ($1229) | 19.1% | 14.1% | -0.2% | 40.5% | 24.1% |
| Agritrade Resources Ltd ($1131) | 41.6% | 37.3% | 33.4% | 31.1% | 56.3% |
| Feishang Anthracite Resources Ltd ($1738) | -13.1% | -32.9% | 19.0% | 15.9% | |
| Kinetic Mines and Energy Ltd ($1277) | -277.0% | -51.9% | 29.3% | 15.8% | |
| |
|---|
| Median (23 companies) | -1.1% | -4.3% | -8.6% | -18.0% | -20.9% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Siberian Mining Group Co Ltd ($1142) | 4.6% | 78.8% | 217.3% | 279.7% | 23.0% |
| Feishang Anthracite Resources Ltd ($1738) | 244.9% | 159.7% | 80.9% | 90.2% | |
| Up Energy Development Group Ltd ($307) | | | 279.5% | 75.2% | |
| King Stone Energy Group Ltd ($663) | 58.5% | 135.3% | 205.7% | 69.3% | |
| SouthGobi Resources Ltd ($1878) | 124.8% | 20.2% | 11.5% | 52.6% | |
| |
|---|
| Median (21 companies) | 13.7% | 26.0% | 20.5% | 19.3% | 7.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital Finance Holdings Ltd ($8239) | -25.1% | -14.9% | -26.9% | 21.0% | |
| Nan Nan Resources Enterprise Ltd ($1229) | 6.4% | 1.6% | -1.2% | 10.0% | 1.5% |
| Agritrade Resources Ltd ($1131) | 2.7% | 5.8% | 6.4% | 6.9% | 9.4% |
| Kinetic Mines and Energy Ltd ($1277) | -6.6% | -5.7% | 8.5% | 3.2% | |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 28.5% | 15.2% | 8.5% | 2.0% | |
| |
|---|
| Median (23 companies) | -2.6% | -2.1% | -5.2% | -5.7% | -7.8% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Feishang Anthracite Resources Ltd ($1738) | | | 24.3x | 32.6x | |
| China Coal Energy Co Ltd ($1898) | 1.9x | 4.9x | 9.7x | 14.4x | |
| Inner Mongolia Yitai Coal Co Ltd ($3948) | 0.4x | 1.7x | 3.5x | 9.8x | |
| Yanzhou Coal Mining Co Ltd ($1171) | 2.9x | 6.2x | 4.9x | 9.0x | |
| Kinetic Mines and Energy Ltd ($1277) | | | 4.5x | 5.9x | |
| |
|---|
| Median (8 companies) | 2.9x | 4.7x | 4.7x | 7.5x | -0.5x |
|---|
