Trending stocks
$327  
$1  
$5  
$2  
$3  

China Zenith Chemical Group Ltd revenue dropped on 39.8% while EBITDA Margin surged on 93.4 pp from -149% to -55.4%

30/09/2020 • About China Zenith Chemical Group Ltd ($362) • By InTwits

China Zenith Chemical Group Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • The company operates at negative EBITDA Margin: -55.4%
  • China Zenith Chemical Group Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 1.4%. Average EBITDA Margin for the same period was -54.6%
  • In the last 5 years the company invested considerably less than D&A: 266 HKDm vs. 469 HKDm. In FY2020 this situation was still the same: CAPEX was while D&A was 82
  • The company has unprofitable business model: ROIC is -10.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


China Zenith Chemical Group Ltd's Revenue dropped on 39.8%. During FY2016-FY2020 Revenue growth topped in FY2017 at 172% and was decelerating since that time. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 93.4 pp from -149% to -55.4% in FY2020.

Gross Margin dropped on 13.8 pp from 20.7% to 6.8% in FY2020. SG&A as a % of Revenue increased slightly on 0.70 pp from 56.7% to 57.4% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 56.7%.

Net Income margin jumped on 57.7 pp from -207% to -149% in FY2020.

Investments (CAPEX, working capital and M&A)


Accounts receivable as a % of Revenue increased slightly on 0.78 pp from 13.3% to 14.0% in FY2020. Inventories as a % of Revenue decreased on 6.9 pp from 12.5% to 5.6% in FY2020. Accounts payable as a % of Revenue increased on 7.7 pp from 22.8% to 30.6% in FY2020.

Return on investment


The company operates at negative ROIC (-10.7%) and ROE (-45.9%). ROIC jumped on 16.0 pp from -26.7% to -10.7% in FY2020. ROE jumped on 10.1 pp from -56.0% to -45.9% in FY2020.

Leverage (Debt)


Debt level is -56.8x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt surged on 11.8% while cash surged on 13.3%.

China Zenith Chemical Group Ltd has short term refinancing risk: cash is only 6.3% of short term debt.

Average interest expence paid by the company was 9.8% in FY2020.

Management team


Insider ownership is 0.45%. Insider ownership didn't change in 2020.

At the end of financial year the company had 596 employees. The number of employees dropped on 12.1%. Average revenue per employee in FY2020 was 326,069 HKD and it dropped on 31.6%.

Financial and operational results


China Zenith Chemical Group Ltd ($362) key annual financial indicators

mln. HKD201620172018201920202020/2019
P&L
Revenue68.3186.1367.6323.0194.3-39.8%
Gross Profit21.133.868.466.713.3-80.1%
SG&A104.6120.3209.6183.1111.5-39.1%
EBITDA-57.823.30.8-480.5-107.7
EBIT-91.8-144.5-607.4-189.5
Interest expence60.182.292.6110.619.4%
Tax-20.9-7.3-1.2
Net Income-421.668.5-199.3-667.4-289.3
Stock Based Compensation12.83.5
Balance Sheet
Cash39.393.262.27.28.113.3%
Accounts Receivable25.76.742.927.3-36.3%
Inventory19.928.240.510.9-73.0%
Accounts Payable42.1100.258.655.4-5.4%
Short Term Debt100.3106.7126.992.0128.940.1%
Long Term Debt446.3677.6844.7916.5998.28.9%
Cash flow
Capex130.792.425.118.2
Ratios
Revenue growth8.6%172.5%97.5%-12.1%-39.8%
EBITDA growth-61.4%-140.4%-96.5%-58,558.6%-77.6%

Gross Margin30.9%18.2%18.6%20.7%6.8%-13.8%
EBITDA Margin-84.6%12.5%0.2%-148.7%-55.4%93.4%
EBIT Margin-49.3%-39.3%-188.0%-97.5%90.5%
SG&A, % of revenue153.2%64.6%57.0%56.7%57.4%0.7%
SBC, % of revenue3.5%1.1%
Net Income Margin-617.3%36.8%-54.2%-206.6%-148.9%57.7%
CAPEX, % of revenue191.4%49.6%6.8%5.6%

ROIC-7.1%-3.6%-5.4%-26.7%-10.7%16.0%
ROE-22.1%4.0%-11.9%-56.0%-45.9%10.1%
Net Debt/EBITDA29.6x1,106.2x
Interest expence / Average debt9.0%9.4%9.4%9.8%0.5%
People
Insider ownership0.5%0.5%0.5%0.5%0.0%
Employees589717678596-12.1%
Revenue/Employee, th. HKD316513476326-31.6%

Peers in Chemicals


Below we provide China Zenith Chemical Group 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
Ngai Hing Hong Co Ltd ($1047)-4.9%26.3%-7.1%-14.8%
 
Median (1 company)5.3%4.9%26.3%-7.1%-14.8%
China Zenith Chemical Group Ltd ($362)-172.5%97.5%-12.1%-39.8%


Top companies by Gross margin, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Ngai Hing Hong Co Ltd ($1047)12.5%13.8%12.7%10.4%12.0%
 
Median (1 company)17.8%13.8%12.7%10.4%12.0%
China Zenith Chemical Group Ltd ($362)30.9%18.2%18.6%20.7%6.8%


Top companies by EBITDA margin, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Ngai Hing Hong Co Ltd ($1047)1.9%4.7%4.9%2.8%2.4%
 
Median (1 company)12.0%4.7%4.9%2.8%2.4%
China Zenith Chemical Group Ltd ($362)-84.6%12.5%0.2%-148.7%-55.4%


Top companies by CAPEX/Revenue, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Ngai Hing Hong Co Ltd ($1047)0.5%0.8%1.1%0.4%-
 
Median (1 company)1.4%0.8%1.1%0.4%-
China Zenith Chemical Group Ltd ($362)191.4%49.6%6.8%5.6%-


Top companies by ROIC, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Ngai Hing Hong Co Ltd ($1047)1.3%7.5%9.2%3.6%2.4%
 
Median (1 company)7.4%7.5%9.2%3.6%2.4%
China Zenith Chemical Group Ltd ($362)-7.1%-3.6%-5.4%-26.7%-10.7%


Top companies by Net Debt / EBITDA

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Ngai Hing Hong Co Ltd ($1047)7.1x3.0x2.6x6.0x6.5x
 
Median (1 company)0.7x3.0x2.6x6.0x6.5x