China Agri-Industries Holdings Ltd Debt dropped on 35.7% while Revenue jumped on 12.6%
28/03/2018 • About China Agri-Industries Holdings Ltd (
$606) • By InTwits
China Agri-Industries Holdings Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Agri-Industries Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 1,818 in 2017, 1,432 in 2016, 1,594 in 2015, 1,879 in 2014, 3,298 in 2013
- The company has potentially unprofitable business model: ROIC is at 3.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Agri-Industries Holdings Ltd ($606) key annual financial indicators
| mln. HKD | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 94,543 | 93,239 | 82,548 | 78,049 | 87,856 | 12.6% |
| Gross Profit | 5,703 | 4,329 | 4,286 | 4,909 | 6,379 | 30.0% |
| SG&A | 5,130 | 5,289 | 4,845 | 3,810 | 4,653 | 22.1% |
| EBITDA | 2,569 | 1,613 | 2,523 | 3,317 | 3,292 | -0.7% |
| Net Income | 1,568 | -775 | -333 | 1,419 | 3,042 | 114.4% |
Balance Sheet
|
|---|
| Cash | 13,944 | 12,551 | 5,439 | 7,586 | 10,572 | 39.4% |
| Short Term Debt | 30,233 | 33,754 | 25,848 | 29,046 | 19,530 | -32.8% |
| Long Term Debt | 3,157 | 1,047 | 1,794 | 1,596 | 174 | -89.1% |
Cash flow
|
|---|
| Capex | 3,298 | 1,879 | 1,594 | 1,432 | 1,818 | 26.9% |
Ratios
|
|---|
| Revenue growth | 3.5% | -1.4% | -11.5% | -5.4% | 12.6% | |
| EBITDA growth | -24.1% | -37.2% | 56.4% | 31.5% | -0.7% | |
| Gross Margin | 6.0% | 4.6% | 5.2% | 6.3% | 7.3% | 1.0% |
| EBITDA Margin | 2.7% | 1.7% | 3.1% | 4.2% | 3.7% | -0.5% |
| Net Income Margin | 1.7% | -0.8% | -0.4% | 1.8% | 3.5% | 1.6% |
| SG&A, % of revenue | 5.4% | 5.7% | 5.9% | 4.9% | 5.3% | 0.4% |
| CAPEX, % of revenue | 3.5% | 2.0% | 1.9% | 1.8% | 2.1% | 0.2% |
| ROIC | 1.8% | -0.1% | 1.3% | 2.9% | 3.0% | 0.1% |
| ROE | 5.6% | -2.7% | -1.2% | 5.4% | 10.8% | 5.4% |
| Net Debt/EBITDA | 7.6x | 13.8x | 8.8x | 7.0x | 2.8x | -4.2x |
Revenue and profitability
The company's Revenue surged on 12.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Gross Margin increased slightly on 0.97 pp from 6.3% to 7.3% in 2017. SG&A as a % of Revenue showed almost no change in 2017.
Net Income marign increased slightly on 1.6 pp from 1.8% to 3.5% in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.1% in 2017. The company's CAPEX/Revenue showed almost no change from 2014 to 2017. It's average level of CAPEX/Revenue for the last three years was 1.9%.To maintain this fast growth the company invested a large share of EBITDA (55.2%) to CAPEX.
Return on investment
The company operates at low ROIC (2.99%) and ROE (10.85%). ROIC showed almost no change in 2017. ROE increased on 5.4 pp from 5.4% to 10.8% in 2017.
Leverage (Debt)
Debt level is 2.8x Net Debt / EBITDA and 6.0x Debt / EBITDA. Net Debt / EBITDA dropped on 4.2x from 7.0x to 2.8x in 2017. Debt dropped on 35.7% while cash jumped on 39.4%.
Valuation
The company's trades at EV/EBITDA 8.0x and P/E 5.7x.
Appendix 1: Peers in Agriculture
Below we provide China Agri-Industries Holdings Ltd benchmarking against other companies in Agriculture 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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CP Pokphand Co Ltd ($43) | 9.2% | 1.7% | -6.9% | 3.0% | |
| Chaoda Modern Agriculture Holdings Ltd ($682) | -27.8% | -36.0% | -9.8% | -15.0% | |
| |
|---|
| Median (2 companies) | 4.1% | -18.2% | -4.7% | -6.0% | |
|---|
| China Agri-Industries Holdings Ltd ($606) | | -1.4% | -11.5% | -5.4% | 12.6% |
Top companies by Gross margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CP Pokphand Co Ltd ($43) | 12.7% | 15.5% | 17.6% | 17.7% | |
| Chaoda Modern Agriculture Holdings Ltd ($682) | -6.2% | -18.6% | -29.1% | -45.8% | |
| |
|---|
| Median (2 companies) | 19.3% | -1.5% | 10.5% | -14.1% | |
|---|
| China Agri-Industries Holdings Ltd ($606) | 6.0% | 4.6% | 5.2% | 6.3% | 7.3% |
Top companies by EBITDA margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CP Pokphand Co Ltd ($43) | 6.1% | 8.0% | 9.9% | 10.1% | |
| Chaoda Modern Agriculture Holdings Ltd ($682) | -101.7% | -79.4% | -458.9% | -321.5% | |
| |
|---|
| Median (2 companies) | 0.2% | -30.2% | 9.5% | -155.7% | |
|---|
| China Agri-Industries Holdings Ltd ($606) | 2.7% | 1.7% | 3.1% | 4.2% | 3.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Chaoda Modern Agriculture Holdings Ltd ($682) | 10.9% | 19.2% | 12.4% | 8.6% | |
| |
|---|
| Median (1 company) | 13.6% | 11.8% | 12.8% | 8.6% | |
|---|
| China Agri-Industries Holdings Ltd ($606) | 3.5% | 2.0% | 1.9% | 1.8% | 2.1% |
Top companies by ROIC, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CP Pokphand Co Ltd ($43) | 13.5% | 15.2% | 16.7% | 16.2% | |
| Chaoda Modern Agriculture Holdings Ltd ($682) | -16.8% | -11.6% | -56.2% | -62.7% | |
| |
|---|
| Median (2 companies) | -1.6% | -0.1% | 2.4% | -23.3% | |
|---|
| China Agri-Industries Holdings Ltd ($606) | 1.8% | -0.1% | 1.3% | 2.9% | 3.0% |
Top companies by Net Debt / EBITDA
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CP Pokphand Co Ltd ($43) | 1.8x | 1.9x | 1.6x | 2.2x | |
| |
|---|
| Median (1 company) | 1.5x | 1.9x | 5.2x | 2.2x | |
|---|
| China Agri-Industries Holdings Ltd ($606) | 7.6x | 13.8x | 8.8x | 7.0x | 2.8x |
