Shanghai Electric Group Co Ltd revenue dropped on 10.1% and EBITDA Margin showed almost no change
29/03/2018 • About Shanghai Electric Group Co Ltd (
$2727) • By InTwits
Shanghai Electric Group Co Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Shanghai Electric Group Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. 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 4.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Shanghai Electric Group Co Ltd ($2727) key annual financial indicators
| mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 78,795 | 76,785 | 78,976 | 88,507 | 79,544 | -10.1% |
| Gross Profit | 13,710 | 14,366 | 16,606 | 16,850 | 15,842 | -6.0% |
| SG&A | 7,678 | 10,536 | 8,326 | 13,035 | 13,701 | 5.1% |
| EBITDA | 5,962 | 6,661 | 4,518 | 7,013 | 6,503 | -7.3% |
| Net Income | 2,393 | 2,511 | 2,143 | 2,355 | 2,627 | 11.6% |
Balance Sheet
|
|---|
| Cash | 21,409 | 25,113 | 36,970 | 30,395 | 21,904 | -27.9% |
| Short Term Debt | 3,765 | 5,009 | 6,073 | 3,081 | 4,824 | 56.6% |
| Long Term Debt | 2,209 | 2,847 | 10,917 | 14,519 | 14,202 | -2.2% |
Cash flow
|
|---|
| Capex | 1,813 | 1,772 | 1,335 | 1,811 | 2,964 | 63.6% |
Ratios
|
|---|
| Revenue growth | 2.9% | -2.6% | 2.9% | 12.1% | -10.1% | |
| EBITDA growth | -10.8% | 11.7% | -32.2% | 55.2% | -7.3% | |
| Gross Margin | 17.4% | 18.7% | 21.0% | 19.0% | 19.9% | 0.9% |
| EBITDA Margin | 7.6% | 8.7% | 5.7% | 7.9% | 8.2% | 0.3% |
| Net Income Margin | 3.0% | 3.3% | 2.7% | 2.7% | 3.3% | 0.6% |
| SG&A, % of revenue | 9.7% | 13.7% | 10.5% | 14.7% | 17.2% | 2.5% |
| CAPEX, % of revenue | 2.3% | 2.3% | 1.7% | 2.0% | 3.7% | 1.7% |
| ROIC | 8.6% | 8.9% | 4.5% | 6.8% | 4.9% | -1.9% |
| ROE | 7.6% | 7.6% | 5.8% | 5.4% | 5.1% | -0.3% |
| Net Debt/EBITDA | -2.6x | -2.6x | -4.4x | -1.8x | -0.4x | 1.4x |
Shanghai Electric Group Co Ltd ($2727) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 15,262 | 25,670 | 17,321 | 25,824 | -0.6% | 20.5% | -16.5% | -15.2% |
| Net Income | 536 | 1,026 | 315 | 986 | 6.3% | 37.8% | -56.0% | 128.4% |
Balance Sheet
|
|---|
| Cash | 37,329 | 30,222 | 32,536 | 33,391 | 9.5% | 9.8% | -14.8% | -18.4% |
| Short Term Debt | 10,460 | 9,625 | 12,713 | 11,968 | 76.2% | 27.8% | 63.2% | 27.1% |
| Long Term Debt | 10,835 | 10,920 | 13,542 | 14,203 | -2.2% | -4.3% | 15.5% | -2.2% |
Ratios
|
|---|
| Gross Margin | 22.8% | 20.9% | 22.1% | 23.6% | 3.3% | 0.8% | 0.7% | 0.8% |
| Net Income Margin | 3.5% | 4.0% | 1.8% | 3.8% | 0.2% | 0.5% | -1.6% | 2.4% |
Revenue and profitability
Shanghai Electric Group Co Ltd's Revenue dropped on 10.1%. Revenue decline showed acceleration in 17Q4 - it was 15.2% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Gross Margin increased slightly on 0.88 pp from 19.0% to 19.9% in 2017. SG&A as a % of Revenue increased on 2.5 pp from 14.7% to 17.2% in 2017.
Net Income marign increased slightly on 0.64 pp from 2.7% to 3.3% in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 3.7% in 2017. CAPEX/Revenue increased slightly on 1.4 pp from 2.3% in 2014 to 3.7% in 2017. For the last three years the average CAPEX/Revenue was 2.5%.
Return on investment
The company operates at low ROIC (4.86%) and ROE (5.08%). ROIC decreased slightly on 1.9 pp from 6.8% to 4.9% in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 2.9x. Net Debt / EBITDA surged on 1.4x from -1.8x to -0.4x in 2017. Debt increased on 8.1% while cash dropped on 27.9%.
Appendix 1: Peers in Machinery-Diversified
Below you can find Shanghai Electric Group Co Ltd benchmarking vs. other companies in Machinery-Diversified 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 |
|---|
| Haitian International Holdings Ltd ($1882) | 13.7% | 5.0% | -3.0% | 10.4% | |
| Shanghai Prime Machinery Co Ltd ($2345) | -8.9% | 37.3% | 52.8% | 7.3% | |
| Huazhang Technology Holding Ltd ($1673) | 9.5% | 22.9% | 23.5% | 3.3% | |
| Jingwei Textile Machinery ($350) | 21.4% | -5.1% | 1.1% | 2.1% | |
| CHTC Fong's Industries Co Ltd ($641) | 76.7% | -9.1% | -5.6% | -3.0% | |
| |
|---|
| Median (12 companies) | -4.2% | 1.1% | -5.6% | -6.2% | |
|---|
Top companies by Gross margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Haitian International Holdings Ltd ($1882) | 31.6% | 32.4% | 33.0% | 34.4% | |
| LK Technology Holdings Ltd ($558) | 24.9% | 26.0% | 26.0% | 24.8% | |
| Huazhang Technology Holding Ltd ($1673) | 28.5% | 27.9% | 24.7% | 24.7% | |
| Chen Hsong Holdings ($57) | 23.5% | 22.6% | 21.0% | 19.4% | |
| North Asia Strategic Holdings Ltd ($8080) | 18.9% | 14.3% | 13.7% | 14.6% | |
| |
|---|
| Median (7 companies) | 22.6% | 20.0% | 20.9% | 19.4% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Haitian International Holdings Ltd ($1882) | 20.7% | 21.9% | 22.8% | 24.4% | |
| Huazhang Technology Holding Ltd ($1673) | 11.2% | 12.5% | 11.3% | 10.8% | |
| LK Technology Holdings Ltd ($558) | 8.7% | 8.7% | 9.0% | 7.6% | |
| Sun East Technology Holdings Ltd ($365) | 2.3% | 2.0% | 2.1% | 2.5% | |
| North Asia Strategic Holdings Ltd ($8080) | 7.0% | -1.3% | 1.9% | -1.0% | |
| |
|---|
| Median (7 companies) | 8.7% | 8.5% | 5.7% | 2.5% | |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| LK Technology Holdings Ltd ($558) | 10.2% | 9.1% | 5.6% | 7.4% | |
| Chen Hsong Holdings ($57) | 6.3% | 6.6% | 2.4% | 2.4% | |
| Huazhang Technology Holding Ltd ($1673) | 0.5% | 2.6% | 4.8% | 0.9% | |
| China High Precision Automation Group Ltd ($591) | 9.1% | 18.4% | 0.6% | 0.2% | |
| Sun East Technology Holdings Ltd ($365) | 1.7% | 0.4% | 1.1% | 0.1% | |
| |
|---|
| Median (5 companies) | 4.3% | 4.5% | 2.4% | 0.9% | |
|---|
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Haitian International Holdings Ltd ($1882) | 21.2% | 19.4% | 16.3% | 16.6% | |
| Huazhang Technology Holding Ltd ($1673) | 16.2% | 16.3% | 16.2% | 12.8% | |
| LK Technology Holdings Ltd ($558) | 3.1% | 3.2% | 4.5% | 2.7% | |
| Sun East Technology Holdings Ltd ($365) | 0.8% | 1.3% | 1.4% | 1.6% | |
| North Asia Strategic Holdings Ltd ($8080) | 4.0% | -1.7% | 1.9% | -1.7% | |
| |
|---|
| Median (12 companies) | 4.0% | 2.6% | 1.4% | 1.6% | |
|---|
Top companies by Net Debt / EBITDA
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| LK Technology Holdings Ltd ($558) | 5.1x | 4.9x | 4.6x | 5.7x | |
| Sun East Technology Holdings Ltd ($365) | -6.9x | -1.8x | 3.1x | 4.7x | |
| Haitian International Holdings Ltd ($1882) | -1.0x | -0.6x | -0.4x | -0.6x | |
| Huazhang Technology Holding Ltd ($1673) | -2.1x | -1.8x | -0.5x | -1.6x | |
| |
|---|
| Median (4 companies) | 0.1x | -0.3x | 3.1x | 2.0x | |
|---|
