Ngai Hing Hong Co Ltd reports 28.0% EBITDA decline in 2020 and almost no change in EBITDA Margin of 2.4%
29/09/2020 • About Ngai Hing Hong Co Ltd (
$1047) • By InTwits
Ngai Hing Hong Co Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 2.4% in FY2020, 2.8% in FY2019, 4.9% in FY2018, 4.7% in FY2017, 1.9% in FY2016
- The company has potentially unprofitable business model: ROIC is 2.4%
- It operates with high leverage: Net Debt/EBITDA is 6.5x while industry average is 7.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ngai Hing Hong Co Ltd's Revenue dropped on 14.8%. During FY2016-FY2020 Revenue growth topped in FY2018 at 26.3% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.4 pp from 12.0% to 18.4% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 4.9% and was declining since that time.
Gross Margin increased slightly on 1.5 pp from 10.4% to 12.0% in FY2020. SG&A as a % of Revenue increased slightly on 0.93 pp from 10.1% to 11.0% in FY2020.
Net Income margin decreased slightly on 0.81 pp from 0.42% to -0.39% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 2.3% and was declining since that time.
Return on investment
The company operates at low but positive ROIC (2.4%) and negative ROE (-1.3%). ROIC decreased slightly on 1.2 pp from 3.6% to 2.4% in FY2020. ROE decreased on 2.9 pp from 1.6% to -1.3% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 9.2% and was declining since that time. During the last 5 years ROE topped in FY2018 at 9.5% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.5x and Debt / EBITDA is 9.9x. Net Debt / EBITDA surged on 0.6x from 6.0x to 6.5x in FY2020. Debt decreased on 8.5% while cash surged on 34.7%. During the last 5 years Net Debt/EBITDA bottomed in FY2018 at 2.6x and was growing since that time.
Ngai Hing Hong Co Ltd has short term refinancing risk: cash is only 34.2% of short term debt.
Financial and operational results
Ngai Hing Hong Co Ltd ($1047) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,506 | 1,580 | 1,995 | 1,853 | 1,579 | -14.8% |
| Gross Profit | 188 | 218 | 254 | 193 | 189 | -2.1% |
| SG&A | 105 | 182 | 196 | 187 | 174 | -6.9% |
| EBITDA | 29 | 75 | 98 | 52 | 38 | -28.0% |
| Net Income | -26 | 34 | 46 | 8 | -6 | -179.6% |
Balance Sheet
|
|---|
| Cash | 74 | 106 | 118 | 94 | 126 | 34.7% |
| Short Term Debt | 281 | 332 | 376 | 407 | 369 | -9.3% |
| Long Term Debt | 0 | 0 | 0 | 0 | 3 | |
Cash flow
|
|---|
| Capex | 7 | 13 | 21 | 8 | | |
Ratios
|
|---|
| Revenue growth | -7.0% | 4.9% | 26.3% | -7.1% | -14.8% | |
| EBITDA growth | -33.0% | 155.2% | 31.2% | -46.5% | -28.0% | |
|
|---|
| Gross Margin | 12.5% | 13.8% | 12.7% | 10.4% | 12.0% | 1.5% |
| EBITDA Margin | 1.9% | 4.7% | 4.9% | 2.8% | 2.4% | -0.4% |
| SG&A, % of revenue | 7.0% | 11.5% | 9.8% | 10.1% | 11.0% | 0.9% |
| Net Income Margin | -1.8% | 2.2% | 2.3% | 0.4% | -0.4% | -0.8% |
| CAPEX, % of revenue | 0.5% | 0.8% | 1.1% | 0.4% | | |
|
|---|
| ROIC | 1.3% | 7.5% | 9.2% | 3.6% | 2.4% | -1.2% |
| ROE | -5.7% | 7.7% | 9.5% | 1.6% | -1.3% | -2.9% |
| Net Debt/EBITDA | 7.1x | 3.0x | 2.6x | 6.0x | 6.5x | 0.6x |
Peers in Chemicals
Below we provide Ngai Hing Hong Co Ltd benchmarking against other companies in Chemicals 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Zenith Chemical Group Ltd ($362) | 8.6% | 172.5% | 97.5% | -12.1% | - |
| |
|---|
| Median (1 company) | 6.9% | 172.5% | 97.5% | -12.1% | - |
|---|
| Ngai Hing Hong Co Ltd ($1047) | - | 4.9% | 26.3% | -7.1% | -14.8% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Zenith Chemical Group Ltd ($362) | 30.9% | 18.2% | 18.6% | 20.7% | - |
| |
|---|
| Median (1 company) | 20.1% | 18.2% | 18.6% | 20.7% | - |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 12.5% | 13.8% | 12.7% | 10.4% | 12.0% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Zenith Chemical Group Ltd ($362) | -84.6% | 12.5% | 0.2% | -148.7% | - |
| |
|---|
| Median (1 company) | 12.0% | 12.5% | 0.2% | -148.7% | - |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 1.9% | 4.7% | 4.9% | 2.8% | 2.4% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Zenith Chemical Group Ltd ($362) | 191.4% | 49.6% | 6.8% | 5.6% | - |
| |
|---|
| Median (1 company) | 3.5% | 49.6% | 6.8% | 5.6% | - |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 0.5% | 0.8% | 1.1% | 0.4% | - |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Zenith Chemical Group Ltd ($362) | -7.1% | -3.6% | -5.4% | -26.7% | - |
| |
|---|
| Median (1 company) | 7.4% | -3.6% | -5.4% | -26.7% | - |
|---|
| Ngai Hing Hong Co Ltd ($1047) | 1.3% | 7.5% | 9.2% | 3.6% | 2.4% |
