Hengan International Group Co Ltd reports 9.5% Net Income growth while 2.7% Revenue decline
21/03/2017 • About Hengan International Group Co Ltd (
$1044) • By InTwits
Hengan International Group Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has highly profitable business model: ROIC is at 15.4%
- It operates with high leverage: Net Debt/EBITDA is 0.2x while industry average is -0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hengan International Group Co Ltd ($1044) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 15,068 | 16,793 | 18,935 | 19,820 | 19,277 | -2.7% |
| Gross Profit | 6,764 | 7,577 | 8,731 | 9,436 | 9,404 | -0.3% |
| SG&A | 3,253 | 4,033 | 4,919 | 4,822 | 5,204 | 7.9% |
| EBITDA | 4,129 | 4,251 | 4,791 | 5,552 | 5,284 | -4.8% |
| Net Income | 2,862 | 2,949 | 3,111 | 3,284 | 3,597 | 9.5% |
Balance Sheet
|
|---|
| Cash | 3,422 | 7,725 | 7,978 | 5,040 | 14,875 | 195.2% |
| Short Term Debt | 5,985 | 10,329 | 12,140 | 14,341 | 11,919 | -16.9% |
| Long Term Debt | 3,047 | 4,829 | 4,315 | 0 | 3,997 | |
Cash flow
|
|---|
| Capex | 2,008 | 1,115 | 1,319 | 913 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 6.4% | 11.4% | 12.8% | 4.7% | -2.7% | |
| EBITDA growth | 40.1% | 3.0% | 12.7% | 15.9% | -4.8% | |
| Gross Margin | 44.9% | 45.1% | 46.1% | 47.6% | 48.8% | 1.2% |
| EBITDA Margin | 27.4% | 25.3% | 25.3% | 28.0% | 27.4% | -0.6% |
| Net Income Margin | 19.0% | 17.6% | 16.4% | 16.6% | 18.7% | 2.1% |
| SG&A, % of revenue | 21.6% | 24.0% | 26.0% | 24.3% | 27.0% | 2.7% |
| CAPEX, % of revenue | 13.3% | 6.6% | 7.0% | 4.6% | | -4.6% |
| ROIC | 19.5% | 14.9% | 14.0% | 16.4% | 15.4% | -1.0% |
| ROE | 26.6% | 24.3% | 22.9% | 23.1% | 24.5% | 1.4% |
| Net Debt/EBITDA | 1.4x | 1.7x | 1.8x | 1.7x | 0.2x | -1.5x |
Revenue and profitability
Hengan International Group Co Ltd's Revenue decreased on 2.7%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 0.60 pp from 28.0% to 27.4% in FY2016.
Gross Margin increased slightly on 1.2 pp from 47.6% to 48.8% in FY2016. SG&A as a % of Revenue increased on 2.7 pp from 24.3% to 27.0% in FY2016.
Net Income marign increased on 2.1 pp from 16.6% to 18.7% in FY2016.
Return on investment
The company operates at high and attractive ROE (24.54%) while ROIC is a bit lower (15.42%). ROIC decreased slightly on 0.97 pp from 16.4% to 15.4% in FY2016. ROE increased slightly on 1.4 pp from 23.1% to 24.5% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 3.0x. Net Debt / EBITDA dropped on 1.5x from 1.7x to 0.2x in FY2016. Debt surged on 11.0% while cash jumped on 195%.
Management team
Hengan International Group Co Ltd's CEO Hui Lin Chit has spent 33 years at the company. Hengan International Group Co Ltd's CFO is Xu Da Zuo. Xu Da Zuo has 2 years tenure at the company.
Appendix 1: Peers in Healthcare-Products
Below you can find Hengan International Group Co Ltd benchmarking vs. other companies in Healthcare-Products 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 |
|---|
| Vitop Bioenergy Holdings Ltd ($1178) | | -3.2% | -27.3% | 92.4% | 281.7% |
| Beijing Chunlizhengda Medical Instruments Co Ltd ($1858) | 22.2% | 12.8% | 21.8% | 32.0% | |
| China Medical System Holdings Ltd ($867) | 30.8% | 26.5% | 31.0% | 20.7% | |
| Shandong Weigao Group Medical Polymer Co Ltd ($1066) | 16.0% | 25.1% | 14.4% | 12.1% | |
| BBI Life Sciences Corp ($1035) | 16.4% | 18.0% | 15.1% | 11.5% | |
| |
|---|
| Median (16 companies) | 19.3% | 15.4% | 11.0% | 5.7% | -11.2% |
|---|
| Hengan International Group Co Ltd ($1044) | | 11.4% | 12.8% | 4.7% | -2.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lifetech Scientific Corp ($1302) | 80.1% | 81.6% | 81.4% | 81.1% | |
| PW Medtech Group Ltd ($1358) | 66.0% | 67.9% | 72.8% | 75.1% | |
| Golden Meditech Holdings Ltd ($801) | 69.1% | 69.8% | 70.2% | 72.8% | 45.8% |
| Beijing Chunlizhengda Medical Instruments Co Ltd ($1858) | 71.6% | 72.1% | 73.8% | 68.6% | |
| Microport Scientific Corp ($853) | 83.6% | 81.0% | 68.5% | 67.2% | |
| |
|---|
| Median (16 companies) | 55.2% | 52.9% | 50.6% | 50.7% | 21.7% |
|---|
| Hengan International Group Co Ltd ($1044) | 44.9% | 45.1% | 46.1% | 47.6% | 48.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| PW Medtech Group Ltd ($1358) | 44.2% | 30.6% | 41.6% | 48.6% | |
| Lifetech Scientific Corp ($1302) | 31.6% | 24.5% | 23.4% | 33.1% | |
| China Medical System Holdings Ltd ($867) | 34.5% | 32.4% | 39.4% | 32.3% | |
| Shandong Weigao Group Medical Polymer Co Ltd ($1066) | 28.5% | 28.0% | 29.0% | 27.8% | |
| BBI Life Sciences Corp ($1035) | 25.7% | 26.0% | 12.4% | 25.5% | |
| |
|---|
| Median (16 companies) | 22.0% | 22.2% | 12.9% | 9.4% | -38.3% |
|---|
| Hengan International Group Co Ltd ($1044) | 27.4% | 25.3% | 25.3% | 28.0% | 27.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lifetech Scientific Corp ($1302) | 0.0% | 16.5% | 0.0% | 70.0% | |
| PW Medtech Group Ltd ($1358) | 14.8% | 22.3% | 30.2% | 42.1% | |
| Arts Optical International Hldgs ($1120) | 14.0% | 4.5% | 14.0% | 29.9% | |
| Golden Meditech Holdings Ltd ($801) | 12.7% | 51.2% | 27.3% | 26.1% | 56.4% |
| BBI Life Sciences Corp ($1035) | 23.6% | 6.7% | 6.4% | 20.0% | |
| |
|---|
| Median (16 companies) | 5.2% | 6.3% | 5.7% | 7.4% | 1.7% |
|---|
| Hengan International Group Co Ltd ($1044) | 13.3% | 6.6% | 7.0% | 4.6% | |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lifetech Scientific Corp ($1302) | 17.5% | 15.9% | 21.2% | 32.9% | |
| China Medical System Holdings Ltd ($867) | 19.4% | 20.2% | 27.4% | 20.5% | |
| Beijing Chunlizhengda Medical Instruments Co Ltd ($1858) | 22.2% | 20.9% | 21.0% | 12.1% | |
| Shandong Weigao Group Medical Polymer Co Ltd ($1066) | 10.5% | 11.7% | 12.8% | 11.8% | |
| PW Medtech Group Ltd ($1358) | 30.7% | 9.2% | 10.0% | 10.7% | |
| |
|---|
| Median (16 companies) | 8.5% | 7.4% | 5.0% | 2.5% | -4.1% |
|---|
| Hengan International Group Co Ltd ($1044) | 19.5% | 14.9% | 14.0% | 16.4% | 15.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Microport Scientific Corp ($853) | -1.0x | -2.8x | | 4.3x | |
| Techcomp Holdings Ltd ($1298) | 4.3x | 3.6x | 2.7x | 3.0x | |
| China Medical System Holdings Ltd ($867) | -0.4x | -0.2x | 0.2x | -0.0x | |
| PW Medtech Group Ltd ($1358) | -1.2x | -7.5x | -0.3x | -1.1x | |
| Lifetech Scientific Corp ($1302) | -3.5x | -2.8x | -2.7x | -1.1x | |
| |
|---|
| Median (11 companies) | -1.2x | -1.6x | -1.5x | -1.6x | 0.9x |
|---|
| Hengan International Group Co Ltd ($1044) | 1.4x | 1.7x | 1.8x | 1.7x | 0.2x |
