Metallurgical Corp of China Ltd reports 19.6% EBITDA growth in 2017 and almost no change in EBITDA Margin of 5.9%
29/03/2018 • About Metallurgical Corp of China Ltd (
$1618) • By InTwits
Metallurgical Corp of China Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 5.9% in 2017 vs. 5.5% in 2016 vs. 6.3% in 2013
- Metallurgical Corp of China Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 4.2%.
- CAPEX is quite volatile: 10,244 in 2017, 10,681 in 2016, 7,490 in 2015, 18,649 in 2014, 14,700 in 2013
- 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.
Metallurgical Corp of China Ltd ($1618) key annual financial indicators
| mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 202,241 | 210,073 | 211,727 | 216,269 | 241,891 | 11.8% |
| Gross Profit | 21,068 | 22,189 | 22,909 | 24,900 | 29,839 | 19.8% |
| SG&A | 12,887 | 7,608 | 7,903 | 7,969 | 8,944 | 12.2% |
| EBITDA | 12,773 | 11,551 | 9,734 | 11,844 | 14,166 | 19.6% |
| Net Income | 2,981 | 3,965 | 4,802 | 5,376 | 6,061 | 12.8% |
Balance Sheet
|
|---|
| Cash | 31,243 | 28,571 | 28,736 | 44,768 | 36,464 | -18.5% |
| Short Term Debt | 74,343 | 60,235 | 86,019 | 82,030 | 79,803 | -2.7% |
| Long Term Debt | 42,224 | 43,669 | 30,760 | 32,024 | 30,835 | -3.7% |
Cash flow
|
|---|
| Capex | 2,902 | 2,760 | 3,357 | 3,115 | 4,079 | 31.0% |
Ratios
|
|---|
| Revenue growth | -6.5% | 3.9% | 0.8% | 2.1% | 11.8% | |
| EBITDA growth | 68.6% | -9.6% | -15.7% | 21.7% | 19.6% | |
| Gross Margin | 10.4% | 10.6% | 10.8% | 11.5% | 12.3% | 0.8% |
| EBITDA Margin | 6.3% | 5.5% | 4.6% | 5.5% | 5.9% | 0.4% |
| Net Income Margin | 1.5% | 1.9% | 2.3% | 2.5% | 2.5% | 0.0% |
| SG&A, % of revenue | 6.4% | 3.6% | 3.7% | 3.7% | 3.7% | 0.0% |
| CAPEX, % of revenue | 1.4% | 1.3% | 1.6% | 1.4% | 1.7% | 0.2% |
| ROIC | 5.5% | 4.8% | 3.6% | 4.3% | 5.3% | 0.9% |
| ROE | 7.0% | 8.6% | 8.9% | 8.0% | 8.4% | 0.4% |
| Net Debt/EBITDA | 6.7x | 6.5x | 9.0x | 5.9x | 5.2x | -0.6x |
Metallurgical Corp of China Ltd ($1618) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 43,842 | 56,280 | 49,497 | 92,272 | 5.3% | 7.2% | 9.3% | 20.0% |
| Net Income | 1,442 | 1,233 | 874 | 2,513 | 5.6% | 17.3% | -7.1% | 24.5% |
Balance Sheet
|
|---|
| Cash | 37,741 | 35,420 | 35,388 | 36,464 | 15.0% | 15.3% | 22.1% | -18.5% |
| Short Term Debt | 86,658 | 80,546 | 77,831 | 79,803 | 23.2% | -20.5% | -7.1% | -2.7% |
| Long Term Debt | 37,574 | 41,582 | 42,619 | 30,835 | 0.7% | 21.8% | 24.3% | -3.7% |
Ratios
|
|---|
| Gross Margin | 11.3% | 12.8% | 12.3% | 12.6% | 1.6% | 0.0% | 1.7% | 0.4% |
| Net Income Margin | 3.3% | 2.2% | 1.8% | 2.7% | 0.0% | 0.2% | -0.3% | 0.1% |
Revenue and profitability
Metallurgical Corp of China Ltd's Revenue surged on 11.8%. Revenue growth showed acceleration in 17Q4 - it increased 20.0% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 10.5% to 9.4% in 2017.
Gross Margin increased slightly on 0.82 pp from 11.5% to 12.3% in 2017. SG&A as a % of Revenue showed almost no change in 2017.
Net Income marign showed almost no change in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.7% in 2017. Metallurgical Corp of China Ltd showed almost no change in CAPEX/Revenue from 2014 to 2017. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at low ROIC (5.25%) and ROE (8.44%). ROIC increased slightly on 0.91 pp from 4.3% to 5.3% in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Debt level is 5.2x Net Debt / EBITDA and 7.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 5.9x to 5.2x in 2017. Debt decreased on 3.0% while cash dropped on 18.5%.
Appendix 1: Peers in Engineering&Construction
Below you can find Metallurgical Corp of China Ltd benchmarking vs. other companies in Engineering&Construction 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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| China National Culture Group Ltd ($745) | -76.8% | -55.8% | 592.3% | 86.7% | |
| Kingbo Strike Ltd ($1421) | 19.5% | 21.3% | -47.7% | 81.8% | |
| NEW Concepts Holdings Ltd ($2221) | 20.7% | 100.9% | 68.6% | 80.8% | |
| Richly Field China Development Ltd ($313) | -45.0% | 464.2% | -65.7% | 77.2% | |
| Glory Flame Holdings Ltd ($8059) | 30.8% | 20.2% | 1.0% | 42.9% | |
| |
|---|
| Median (35 companies) | 24.8% | 20.8% | 10.3% | 6.4% | |
|---|
Top companies by Gross margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Broad Greenstate International Co Ltd ($1253) | 28.7% | 35.8% | 36.7% | 37.4% | |
| PYI Corp Ltd ($498) | 5.1% | 16.3% | 24.1% | 31.1% | |
| In Construction Holdings Ltd ($1500) | 21.9% | 21.6% | 29.5% | 26.3% | |
| Tysan Holdings Ltd ($687) | 11.7% | 18.4% | 17.8% | 22.8% | |
| Chevalier International Holdings Ltd ($25) | 26.3% | 25.9% | 24.2% | 21.9% | |
| |
|---|
| Median (27 companies) | 16.9% | 16.1% | 16.3% | 12.9% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Beijing Capital International Airport Co Ltd ($694) | 52.9% | 50.3% | 51.6% | 50.9% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 20.6% | 36.2% | 60.9% | 38.4% | |
| Sino Credit Holdings Ltd ($628) | | 16.0% | -5.1% | 34.9% | |
| Broad Greenstate International Co Ltd ($1253) | 24.4% | 28.8% | 31.0% | 30.9% | |
| In Construction Holdings Ltd ($1500) | 20.4% | 19.1% | 25.9% | 23.3% | |
| |
|---|
| Median (31 companies) | 11.2% | 9.7% | 9.0% | 5.3% | |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Louis XIII Holdings Ltd ($577) | 29.5% | 9.3% | 16.1% | 47.3% | |
| Sino Credit Holdings Ltd ($628) | | 4.7% | 8.8% | 46.8% | |
| Richly Field China Development Ltd ($313) | 6.7% | 1.1% | 7.6% | 30.5% | |
| PYI Corp Ltd ($498) | 4.2% | 24.5% | 13.1% | 19.7% | |
| Grand Ming Group Holdings Ltd ($1271) | 16.1% | 8.7% | 33.8% | 14.0% | |
| |
|---|
| Median (26 companies) | 3.3% | 1.8% | 2.1% | 2.4% | |
|---|
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| In Construction Holdings Ltd ($1500) | 52.8% | 37.0% | 49.4% | 40.4% | |
| NEW Concepts Holdings Ltd ($2221) | 51.0% | 78.8% | 39.0% | 23.3% | |
| Chun Sing Engineering Holdings Ltd ($2277) | 98.3% | 54.9% | 43.7% | 21.6% | |
| Broad Greenstate International Co Ltd ($1253) | 85.1% | 51.2% | 26.0% | 20.9% | |
| Tysan Holdings Ltd ($687) | 10.6% | 14.0% | 21.0% | 20.7% | |
| |
|---|
| Median (37 companies) | 6.1% | 5.4% | 5.6% | 2.5% | |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Ngai Shun Holdings Ltd ($1246) | -0.6x | -0.8x | -2.1x | 257.8x | |
| Shun Cheong Holdings ($650) | 9.2x | | 7.6x | 67.0x | |
| KFM Kingdom Holdings Ltd ($3816) | -0.1x | 0.5x | 0.4x | 53.8x | |
| Chun Wo Development Holdings Ltd ($711) | 8.1x | 12.6x | 15.9x | 10.5x | |
| Grand Ming Group Holdings Ltd ($1271) | 6.3x | 4.1x | 5.9x | 5.8x | |
| |
|---|
| Median (24 companies) | 0.3x | 0.2x | 0.7x | 0.9x | |
|---|
