Aban Offshore reports 90.6% Net Income decline in 2016 and 17.5% Revenue decline
23-05-2016 • About Aban Offshore (
$ABAN) • By InTwits
Aban Offshore reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Aban Offshore has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.1%. At the same time it's a lot of higher than industry average of 21.7%.
- CAPEX is quite volatile: ₹3,844m in FY2016, ₹7,159m in FY2015, ₹11,346m in FY2014, ₹29,163m in FY2013, ₹21,889m in FY2012
- The company has potentially unprofitable business model: ROIC is 6.0%
- It operates with high leverage: Net Debt/EBITDA is 7.6x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 17.5%. During FY2012-FY2016 Revenue growth topped in FY2013 at 16.1% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.8 pp from 23.5% to 28.3% in FY2016.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin dropped on 11.9 pp from 13.5% to 1.5% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Aban Offshore had CAPEX/Revenue of 25.3%. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 28.0%.
Return on investment
The company operates at low ROIC (6.0%) and ROE (0.9%). ROIC decreased on 3.1 pp from 9.1% to 6.0% in FY2016. ROE dropped on 10.1 pp from 11.0% to 0.92% in FY2016. During FY2012-FY2016 ROIC topped in FY2014 at 9.4% and was declining since that time.
Leverage (Debt)
Debt level is 7.6x Net Debt / EBITDA and 7.7x Debt / EBITDA. Net Debt / EBITDA surged on 1.8x from 5.9x to 7.6x in FY2016. Debt increased on 3.8% while cash jumped on 21.3%. During the last 5 years Net Debt/EBITDA bottomed in FY2015 at 5.9x.
Aban Offshore has short term refinancing risk: cash is only 10.1% of short term debt.
Management team
The company's CFO C P Gopalkrishnan has spent 13 years with the company.
Financial and operational results
Aban Offshore ($ABAN) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 31,629 | 36,727 | 39,363 | 40,408 | 33,346 | -17.5% |
| SG&A | | | | 9 | 3 | -69.6% |
| EBITDA | 18,898 | 20,351 | 22,436 | 23,788 | 18,916 | -20.5% |
| Net Income | 3,215 | 1,939 | 3,931 | 5,449 | 513 | -90.6% |
Balance Sheet
|
|---|
| Cash | 697 | 1,310 | 747 | 1,013 | 1,229 | 21.3% |
| Short Term Debt | 23,691 | 22,854 | 35,100 | 9,719 | 12,208 | 25.6% |
| Long Term Debt | 111,444 | 113,614 | 110,508 | 130,878 | 133,707 | 2.2% |
Cash flow
|
|---|
| Capex | 6,599 | 9,313 | 14,197 | 9,169 | 8,432 | -8.0% |
Ratios
|
|---|
| Revenue growth | -5.5% | 16.1% | 7.2% | 2.7% | -17.5% | |
| EBITDA growth | -13.9% | 7.7% | 10.2% | 6.0% | -20.5% | |
|
|---|
| EBITDA Margin | 59.7% | 55.4% | 57.0% | 58.9% | 56.7% | -2.1% |
| SG&A, % of revenue | | | | 0.0% | 0.0% | -0.0% |
| Net Income Margin | 10.2% | 5.3% | 10.0% | 13.5% | 1.5% | -11.9% |
| CAPEX, % of revenue | 20.9% | 25.4% | 36.1% | 22.7% | 25.3% | 2.6% |
|
|---|
| ROIC | 8.6% | 9.2% | 9.4% | 9.1% | 6.0% | -3.1% |
| ROE | 14.7% | 5.8% | 10.5% | 11.0% | 0.9% | -10.1% |
| Net Debt/EBITDA | 7.1x | 6.6x | 6.5x | 5.9x | 7.6x | 1.8x |
Peers in Exploration & Production
Below we provide Aban Offshore benchmarking against other companies in Exploration & Production 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oil India ($OIL) | 18.5% | 1.1% | -2.8% | -2.2% | - |
| Oil And Natural Gas Corporation ($ONGC) | 24.5% | 10.3% | 7.3% | -8.0% | - |
| Cairn India ($CAIRN) | - | 48.3% | 7.1% | -21.9% | -41.1% |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 1.5% | -16.5% | -72.5% | -40.0% | - |
| |
|---|
| Median (4 companies) | 18.5% | 5.7% | 2.1% | -15.0% | -41.1% |
|---|
| Aban Offshore ($ABAN) | - | 16.1% | 7.2% | 2.7% | -17.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 78.6% | 74.6% | 73.3% | 73.1% | 39.5% |
| Selan Exploration Technology ($SELAN) | - | - | - | 44.3% | - |
| Oil India ($OIL) | 42.7% | 43.7% | 37.6% | 38.3% | - |
| Oil And Natural Gas Corporation ($ONGC) | 33.9% | 27.3% | 28.4% | 26.7% | - |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 46.7% | 45.1% | - | -56.2% | - |
| |
|---|
| Median (5 companies) | 44.7% | 44.4% | 37.6% | 38.3% | 39.5% |
|---|
| Aban Offshore ($ABAN) | 59.7% | 55.4% | 57.0% | 58.9% | 56.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 25.0% | 9.3% | 15.3% | 38.1% | 19.1% |
| Oil India ($OIL) | 9.4% | 17.9% | 29.4% | 31.6% | - |
| Oil And Natural Gas Corporation ($ONGC) | 13.1% | 11.1% | 8.6% | 10.6% | - |
| Selan Exploration Technology ($SELAN) | - | - | - | 5.8% | - |
| |
|---|
| Median (4 companies) | 19.0% | 11.1% | 15.3% | 21.1% | 19.1% |
|---|
| Aban Offshore ($ABAN) | 20.9% | 25.4% | 36.1% | 22.7% | 25.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oil And Natural Gas Corporation ($ONGC) | 25.2% | 18.6% | 15.8% | 10.2% | - |
| Cairn India ($CAIRN) | 16.6% | 22.7% | 21.3% | 10.0% | 0.5% |
| Selan Exploration Technology ($SELAN) | 23.2% | 21.9% | 18.6% | 9.7% | 3.3% |
| Oil India ($OIL) | 19.8% | 18.3% | 10.5% | 8.6% | - |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 11.7% | 8.0% | - | - | - |
| |
|---|
| Median (5 companies) | 19.8% | 18.6% | 17.2% | 9.9% | 1.9% |
|---|
| Aban Offshore ($ABAN) | 8.6% | 9.2% | 9.4% | 9.1% | 6.0% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oil And Natural Gas Corporation ($ONGC) | -0.2x | 0.0x | 0.5x | 1.1x | - |
| Oil India ($OIL) | -0.0x | 0.2x | 2.7x | 0.0x | - |
| Cairn India ($CAIRN) | -0.3x | -0.0x | -0.0x | -0.0x | -0.4x |
| Selan Exploration Technology ($SELAN) | -1.7x | -0.2x | -2.2x | -3.2x | -7.2x |
| |
|---|
| Median (4 companies) | -0.2x | 0.0x | 0.3x | -0.0x | -3.8x |
|---|
| Aban Offshore ($ABAN) | 7.1x | 6.6x | 6.5x | 5.9x | 7.6x |
