China Railway Group Ltd Debt increased on 8.2% and EBITDA increased on 2.3%
30/03/2017 • About China Railway Group Ltd (
$390) • By InTwits
China Railway Group Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 4.2% in 2016 vs. 4.3% in 2015 vs. 4.5% in 2012
- China Railway Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 24.8%.
- The company has potentially unprofitable business model: ROIC is at 5.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Railway Group Ltd ($390) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 465,625 | 540,394 | 590,166 | 599,942 | 635,355 | 5.9% |
| Gross Profit | 35,561 | 40,340 | 48,515 | 48,686 | 50,742 | 4.2% |
| SG&A | 17,257 | 16,722 | 19,529 | 19,851 | 18,192 | -8.4% |
| EBITDA | 20,962 | 24,204 | 25,659 | 25,824 | 26,416 | 2.3% |
| Net Income | 7,390 | 9,374 | 10,360 | 12,258 | 12,509 | 2.0% |
Balance Sheet
|
|---|
| Cash | 67,738 | 75,658 | 68,679 | 93,304 | 114,473 | 22.7% |
| Short Term Debt | 74,394 | 82,855 | 90,015 | 85,555 | 105,749 | 23.6% |
| Long Term Debt | 88,632 | 104,352 | 95,345 | 96,705 | 91,403 | -5.5% |
Cash flow
|
|---|
| Capex | 8,050 | 8,327 | 8,050 | 8,052 | 12,789 | 58.8% |
Ratios
|
|---|
| Revenue growth | 5.3% | 16.1% | 9.2% | 1.7% | 5.9% | |
| EBITDA growth | 10.1% | 15.5% | 6.0% | 0.6% | 2.3% | |
| Gross Margin | 7.6% | 7.5% | 8.2% | 8.1% | 8.0% | -0.1% |
| EBITDA Margin | 4.5% | 4.5% | 4.3% | 4.3% | 4.2% | -0.1% |
| Net Income Margin | 1.6% | 1.7% | 1.8% | 2.0% | 2.0% | -0.1% |
| SG&A, % of revenue | 3.7% | 3.1% | 3.3% | 3.3% | 2.9% | -0.4% |
| CAPEX, % of revenue | 1.7% | 1.5% | 1.4% | 1.3% | 2.0% | 0.7% |
| ROIC | 6.4% | 6.6% | 6.5% | 5.8% | 5.3% | -0.6% |
| ROE | 9.9% | 11.4% | 11.3% | 10.9% | 9.5% | -1.4% |
| Net Debt/EBITDA | 4.5x | 4.6x | 4.5x | 3.4x | 3.1x | -0.3x |
China Railway Group Ltd ($390) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 124,017 | 145,682 | 169,196 | 196,460 | | | | |
| Net Income | 2,274 | 3,188 | 3,783 | 3,264 | | | | |
Balance Sheet
|
|---|
| Cash | 83,635 | 76,581 | 88,468 | 114,473 | | | | |
| Short Term Debt | 99,882 | 101,072 | 102,751 | 105,749 | | | | |
| Long Term Debt | 95,546 | 91,460 | 94,350 | 91,403 | | | | |
Ratios
|
|---|
| Gross Margin | 8.1% | 8.3% | 8.8% | 7.0% | | | | |
| Net Income Margin | 1.8% | 2.2% | 2.2% | 1.7% | | | | |
Revenue and profitability
The company's Revenue increased on 5.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.67 pp from 16.3% to 17.0% in 2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 2.0%. The company's CAPEX/Revenue showed almost no change from 2013 to 2016. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at low ROIC (5.26%) and ROE (9.50%). ROIC decreased slightly on 0.58 pp from 5.8% to 5.3% in 2016. ROE decreased slightly on 1.4 pp from 10.9% to 9.5% in 2016.
Leverage (Debt)
Debt level is 3.1x Net Debt / EBITDA and 7.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 3.4x to 3.1x in 2016. Debt increased on 8.2% while cash surged on 22.7%.
Appendix 1: Peers in Engineering&Construction
Below we provide China Railway Group Ltd benchmarking against other companies in Engineering&Construction 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 |
|---|
| CNQC International Holdings Ltd ($1240) | 21.6% | 91.0% | 103.7% | 807.4% | |
| China National Culture Group Ltd ($745) | | -76.8% | -55.8% | 592.3% | 86.7% |
| Vision Fame International Holding Ltd ($1315) | | 45.9% | -10.5% | 105.6% | 40.9% |
| Sino Credit Holdings Ltd ($628) | | | | 97.4% | -40.3% |
| Grand Ming Group Holdings Ltd ($1271) | | -26.9% | -37.4% | 74.8% | 14.3% |
| |
|---|
| Median (46 companies) | 20.7% | 24.8% | 20.8% | 10.3% | 6.4% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 66.4% | 62.1% | 62.4% | 61.1% | |
| Huayu Expressway Group Ltd ($1823) | 43.6% | 65.6% | 64.0% | 58.9% | |
| Broad Greenstate International Co Ltd ($1253) | 20.1% | 28.7% | 35.8% | 36.7% | 37.4% |
| Sam Woo Construction Group Ltd ($3822) | 33.2% | 27.3% | 33.6% | 36.0% | 19.8% |
| Glory Flame Holdings Ltd ($8059) | 27.2% | 36.8% | 34.8% | 33.9% | |
| |
|---|
| Median (41 companies) | 17.5% | 16.9% | 16.1% | 16.3% | 12.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huayu Expressway Group Ltd ($1823) | 46.2% | 73.8% | 77.1% | 76.2% | |
| HNA Infrastructure Company Ltd ($357) | 62.8% | 63.7% | 62.8% | 61.7% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 31.2% | 20.6% | 36.2% | 60.9% | 38.4% |
| Beijing Capital International Airport Co Ltd ($694) | 53.4% | 52.9% | 50.3% | 51.6% | 50.9% |
| China National Culture Group Ltd ($745) | -30.4% | -72.7% | -279.2% | 45.3% | -14.6% |
| |
|---|
| Median (46 companies) | 10.0% | 11.2% | 9.7% | 9.0% | 5.3% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 36.8% | 5.7% | 85.4% | 155.4% | |
| Grand Ming Group Holdings Ltd ($1271) | 0.0% | 16.1% | 8.7% | 33.8% | 14.0% |
| Beijing Capital International Airport Co Ltd ($694) | 3.5% | 6.6% | 7.2% | 28.2% | |
| NEW Concepts Holdings Ltd ($2221) | 1.7% | 1.2% | 3.1% | 20.5% | 0.3% |
| Louis XIII Holdings Ltd ($577) | 1.2% | 29.5% | 9.3% | 16.1% | 47.3% |
| |
|---|
| Median (46 companies) | 2.3% | 3.3% | 1.8% | 2.1% | 2.4% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| In Construction Holdings Ltd ($1500) | | 52.8% | 37.0% | 49.4% | 40.4% |
| Chun Sing Engineering Holdings Ltd ($2277) | | 98.3% | 54.9% | 43.7% | 21.6% |
| NEW Concepts Holdings Ltd ($2221) | | 51.0% | 78.8% | 39.0% | 23.3% |
| Sam Woo Construction Group Ltd ($3822) | | 28.2% | 28.7% | 33.5% | 18.3% |
| Ngai Shun Holdings Ltd ($1246) | 68.8% | 77.2% | 45.2% | 31.0% | -2.9% |
| |
|---|
| Median (48 companies) | 6.1% | 6.1% | 5.4% | 5.6% | 2.5% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Deson Development International Holdings ($262) | 3.8x | 4.9x | 13.7x | 47.0x | |
| Hsin Chong Construction Group Ltd ($404) | 1.8x | 8.0x | 10.2x | 41.7x | |
| China Resources and Transportation Group Ltd ($269) | | | 66.7x | 29.7x | |
| CNC Holdings Ltd ($8356) | | 22.0x | 21.9x | 24.3x | 2.7x |
| Louis XIII Holdings Ltd ($577) | 0.8x | -12.5x | -23.2x | 19.1x | |
| |
|---|
| Median (40 companies) | 0.8x | 0.3x | 0.2x | 0.7x | 0.9x |
|---|
