Action Construction Equipment reports 26.8% CAPEX growth while 1.8% Revenue decline

31-05-2015 • About Action Construction Equipment ($ACE) • By InTwits

Action Construction Equipment reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is quite volatile: 3.3% in FY2015, 4.1% in FY2014, 5.6% in FY2013, 6.5% in FY2012, 8.5% in FY2011
Action Construction Equipment has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's in pair with industry average of 5.6%.
CAPEX is quite volatile: 357 in FY2015, 281 in FY2014, 432 in FY2013, 749 in FY2012, 332 in FY2011
The company has potentially unprofitable business model: ROIC is at 2.4%
It operates with high leverage: Net Debt/EBITDA is 6.3x while industry average is 2.7x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Action Construction Equipment ($ACE) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	6,949	8,489	6,616	6,103	5,992	-1.8%
EBITDA	591	549	369	249	199	-20.1%
Net Income	416	283	74	46	66	45.1%
Balance Sheet
Cash	245	25	16	13	113	780.0%
Short Term Debt	715	1,206	1,330	1,020	1,060	3.9%
Long Term Debt	0	245	232	395	317	-19.6%
Cash flow
Capex	332	749	432	281	357	26.8%
Ratios
Revenue growth	-5.1%	22.2%	-22.1%	-7.8%	-1.8%
EBITDA growth	60.6%	-7.2%	-32.8%	-32.4%	-20.1%
EBITDA Margin	8.5%	6.5%	5.6%	4.1%	3.3%	-0.8%
Net Income Margin	6.0%	3.3%	1.1%	0.8%	1.1%	0.4%
CAPEX, % of revenue	4.8%	8.8%	6.5%	4.6%	6.0%	1.3%
ROIC	18.9%	10.9%	5.2%	2.2%	2.4%	0.2%
ROE	20.1%	10.6%	2.6%	1.6%	2.3%	0.7%
Net Debt/EBITDA	0.8x	2.6x	4.2x	5.6x	6.3x	0.7x

Revenue and profitability

The company's Revenue decreased slightly on 1.8% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.76 pp from 4.1% to 3.3% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 6.0% in FY2015. The company's CAPEX/Revenue decreased on 2.9 pp from 8.8% in FY2012 to 6.0% in FY2015. It's average CAPEX/Revenue for the last three years was 5.7%.Action Construction Equipment has spent a lot to CAPEX (179% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at low ROIC (2.36%) and ROE (2.30%). ROIC showed almost no change in FY2015. ROE increased slightly on 0.70 pp from 1.6% to 2.3% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 6.3x and Debt / EBITDA is 6.9x. Net Debt / EBITDA surged on 0.7x from 5.6x to 6.3x in FY2015. Debt decreased on 2.7% in FY2015 while cash jumped on 780% in FY2015.

Appendix 1: Peers in Transport Related Services

Below you can find Action Construction Equipment benchmarking vs. other companies in Transport Related Services 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	FY2011	FY2012	FY2013	FY2014	FY2015
Sanghvi Movers ($SANGHVIMOV)		24.7%	-26.3%	-27.2%	26.6%
Container Corporation Of India ($CONCOR)		5.2%	8.4%	19.6%	13.0%
Til ($TIL)		0.4%	-15.1%	11.8%	12.1%
Median (3 companies)		5.2%	-15.1%	11.8%	13.0%
Action Construction Equipment ($ACE)		22.2%	-22.1%	-7.8%	-1.8%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Sanghvi Movers ($SANGHVIMOV)	70.8%	70.1%	69.8%	57.9%	58.3%
Container Corporation Of India ($CONCOR)	26.1%	24.9%	23.6%	22.5%	23.4%
Til ($TIL)	9.0%	5.4%	7.0%	8.2%	10.1%
Kernex Microsystems (India) ($KERNEX)					-35.3%
Median (4 companies)	26.1%	24.9%	23.6%	22.5%	16.7%
Action Construction Equipment ($ACE)	8.5%	6.5%	5.6%	4.1%	3.3%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Sanghvi Movers ($SANGHVIMOV)	91.4%	51.3%	2.8%	3.9%	16.6%
Container Corporation Of India ($CONCOR)	8.1%	5.6%	13.3%	9.3%	14.1%
Til ($TIL)	6.0%	11.7%	5.6%	2.7%	3.4%
Median (3 companies)	8.1%	11.7%	5.6%	3.9%	14.1%
Action Construction Equipment ($ACE)	4.8%	8.8%	6.5%	4.6%	6.0%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Container Corporation Of India ($CONCOR)	17.8%	15.5%	14.1%	14.2%	13.3%
Til ($TIL)	17.8%	6.8%	5.7%	7.7%	10.7%
Sanghvi Movers ($SANGHVIMOV)	14.3%	15.3%	8.1%	1.7%	5.0%
Kernex Microsystems (India) ($KERNEX)	6.0%	5.7%
Median (4 companies)	16.1%	11.0%	8.1%	7.7%	10.7%
Action Construction Equipment ($ACE)	18.9%	10.9%	5.2%	2.2%	2.4%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Til ($TIL)	1.4x	4.6x	5.8x	5.1x	4.5x
Sanghvi Movers ($SANGHVIMOV)	2.5x	2.2x	2.5x	3.3x	1.7x
Container Corporation Of India ($CONCOR)	-0.0x	-0.8x	-1.0x	-2.2x	-2.0x
Median (3 companies)	1.8x	2.1x	1.2x	3.3x	1.7x
Action Construction Equipment ($ACE)	0.8x	2.6x	4.2x	5.6x	6.3x

Action Construction Equipment stock price chart

Action Construction Equipment financials

mln.	FY2010	FY2011	FY2012

Revenue	7,325	6,949	8,489
EBITDA	368.3	591.5	548.6
Net income	235.6	416.3	283.3
CAPEX	124.9	331.5	749.3
Debt	301.8	715.0	1,451
Cash	12.970	245.3	24.836

About Action Construction Equipment

Action Construction Equipment Limited manufactures and supplies material handling and construction equipments in India. The company operates through Cranes, Material Handling/Construction Equipment, and Agri Equipment segments. It offers mobile cranes, such as pick and move, crawler, and truck mounted cranes; tower cranes; backhoes and loaders; road constructions equipments, including rollers and graders; forklifts and tele handlers; and agriculture equipments, such as tractors, harvester combines, rice planters, and implements. The company serves various sectors comprising infrastructure construction, power projects, ports and shipyards, dams, metro rail, roads, mining, steel and engineering industry, railways, cement, petroleum, defense, chemicals and fertilizer plants, warehousing, logistics, building construction, etc. Action Construction Equipment Limited also exports it machines to the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, Iran, Portugal, Australia, South Africa, Kenya, Nigeria, Mozambique, Ethiopia, Algeria, Libya, Mauritius, Madagascar, Sri Lanka, Nepal, Bangladesh, Bhutan, Malaysia, Singapore, New Zealand, Sri Lanka, Kazakhstan, and Romania. The company was incorporated in 1995 and is based in Palwal, India.