Lg Chem Net Income jumped on 32.8% in 2015 and EBITDA Margin increased on 4.3 pp from 10.9% to 15.2%
26 Jan 2016 • About Lg Chem (
$LGCD) • By InTwits
Lg Chem reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lg Chem has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.6%. At the same time it's in pair with industry average of 7.3%.
- CAPEX is quite volatile: 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012, 5,330,968 in 2011
- The company has business model with average profitability: ROIC is at 11.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lg Chem ($LGCD) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 22,675,593 | 23,263,019 | 23,143,612 | 22,577,830 | 20,206,583 | -10.5% |
| Gross Profit | 4,080,731 | 3,307,943 | 3,308,939 | 3,003,890 | 3,666,042 | 22.0% |
| SG&A | 1,204,901 | 1,329,835 | 1,489,354 | 1,602,607 | 1,652,643 | 3.1% |
| EBITDA | 3,573,201 | 2,783,861 | 2,788,277 | 2,460,985 | 3,079,650 | 25.1% |
| Net Income | 2,137,930 | 1,494,490 | 1,265,970 | 867,924 | 1,152,990 | 32.8% |
Balance Sheet
|
|---|
| Cash | 1,379,379 | 720,767 | 1,399,054 | 988,016 | 1,704,918 | 72.6% |
| Short Term Debt | 1,837,637 | 1,751,781 | 2,206,848 | 2,205,720 | 2,150,778 | -2.5% |
| Long Term Debt | 689,081 | 1,195,126 | 803,634 | 727,830 | 507,928 | -30.2% |
Cash flow
|
|---|
| Capex | 2,195,418 | 1,907,427 | 1,360,673 | 1,411,268 | 1,633,410 | 15.7% |
Ratios
|
|---|
| Revenue growth | 16.5% | 2.6% | -0.5% | -2.4% | -10.5% | |
| EBITDA growth | 1.7% | -22.1% | 0.2% | -11.7% | 25.1% | |
| Gross Margin | 18.0% | 14.2% | 14.3% | 13.3% | 18.1% | 4.8% |
| EBITDA Margin | 15.8% | 12.0% | 12.0% | 10.9% | 15.2% | 4.3% |
| Net Income Margin | 9.4% | 6.4% | 5.5% | 3.8% | 5.7% | 1.9% |
| SG&A, % of revenue | 5.3% | 5.7% | 6.4% | 7.1% | 8.2% | 1.1% |
| CAPEX, % of revenue | 9.7% | 8.2% | 5.9% | 6.3% | 8.1% | 1.8% |
| ROIC | 24.6% | 14.4% | 12.0% | 8.6% | 11.6% | 3.0% |
| ROE | 22.3% | 13.3% | 10.2% | 6.6% | 8.2% | 1.7% |
| Net Debt/EBITDA | 0.3x | 0.8x | 0.6x | 0.8x | 0.3x | -0.5x |
Revenue and profitability
The company's Revenue dropped on 10.5% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.3 pp from 10.9% to 15.2% in 2015.
Gross Margin increased on 4.8 pp from 13.3% to 18.1% in 2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 7.1% to 8.2% in 2015.
Net Income marign increased slightly on 1.9 pp from 3.8% to 5.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 8.1%. CAPEX/Revenue showed almost no change from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 6.7%.Battling declining revenue Lg Chem invested a large share of EBITDA (53.0%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (11.60%) and ROE (8.25%). ROIC increased on 3.0 pp from 8.6% to 11.6% in 2015. ROE increased slightly on 1.7 pp from 6.6% to 8.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 0.9x. Net Debt / EBITDA dropped on 0.5x from 0.8x to 0.3x in 2015. Debt decreased on 9.4% in 2015 while cash surged on 72.6% in 2015.
Appendix 1: Peers in Chemicals
Below we provide Lg Chem 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 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Frutarom Industries ($FRUT) | 14.9% | 19.2% | 9.0% | 21.6% | |
| Phosagro OJSC ($PHOR) | 30.6% | 4.8% | -0.7% | 17.7% | |
| Halosource Inc ($HALO) | -14.9% | 10.3% | 21.0% | 11.6% | |
| Acron JSC ($AKRN) | 40.0% | 8.7% | -4.5% | 9.9% | |
| Uralkali PJSC ($URKA) | 105.7% | 13.0% | -15.9% | 7.1% | |
| |
|---|
| Median (9 companies) | 28.8% | 6.7% | -0.7% | 7.1% | 12.6% |
|---|
| Lg Chem ($LGCD) | | 2.6% | -0.5% | -2.4% | -10.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Uralkali PJSC ($URKA) | 74.6% | | 71.6% | 74.3% | |
| Phosagro OJSC ($PHOR) | 44.1% | 42.9% | 34.8% | 45.2% | |
| Halosource Inc ($HALO) | 34.8% | 32.9% | 40.7% | 44.8% | |
| Acron JSC ($AKRN) | 45.8% | 43.1% | 38.1% | 42.8% | |
| Frutarom Industries ($FRUT) | 36.4% | 36.6% | 38.1% | 39.1% | |
| |
|---|
| Median (9 companies) | 42.3% | 36.4% | 36.6% | 39.1% | 35.1% |
|---|
| Lg Chem ($LGCD) | 18.0% | 14.2% | 14.3% | 13.3% | 18.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Uralkali PJSC ($URKA) | 59.2% | | 44.5% | 48.6% | |
| Phosagro OJSC ($PHOR) | 35.2% | 32.9% | 22.9% | 30.5% | |
| Arab Potash Co ($APOD) | 51.0% | 47.2% | 36.3% | 27.7% | |
| Acron JSC ($AKRN) | 44.8% | 28.4% | 22.7% | 27.2% | |
| Croda International ($50GP) | | 27.2% | 27.6% | 26.7% | 27.7% |
| |
|---|
| Median (9 companies) | 25.8% | 21.6% | 22.7% | 26.7% | 20.5% |
|---|
| Lg Chem ($LGCD) | 15.8% | 12.0% | 12.0% | 10.9% | 15.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Phosagro OJSC ($PHOR) | 12.8% | 12.7% | 17.0% | 16.7% | |
| Acron JSC ($AKRN) | 16.6% | 22.7% | 21.3% | 15.4% | |
| Uralkali PJSC ($URKA) | 10.4% | | 12.5% | 9.8% | |
| Basf Se ($BFA) | 4.6% | 5.6% | 6.6% | 7.1% | |
| Croda International ($50GP) | | 4.8% | 4.1% | 6.0% | 8.6% |
| |
|---|
| Median (9 companies) | 7.5% | 5.2% | 6.6% | 6.0% | 5.5% |
|---|
| Lg Chem ($LGCD) | 9.7% | 8.2% | 5.9% | 6.3% | 8.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Croda International ($50GP) | | 46.5% | 42.3% | 35.3% | 30.5% |
| Phosagro OJSC ($PHOR) | 32.4% | 28.5% | 15.0% | 21.6% | |
| Basf Se ($BFA) | 20.8% | 15.4% | 16.6% | 16.6% | |
| Frutarom Industries ($FRUT) | 11.7% | 12.0% | 11.9% | 15.1% | |
| Uralkali PJSC ($URKA) | 23.7% | | | 13.2% | |
| |
|---|
| Median (9 companies) | 22.2% | 14.9% | 12.7% | 13.2% | 18.7% |
|---|
| Lg Chem ($LGCD) | 24.6% | 14.4% | 12.0% | 8.6% | 11.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Acron JSC ($AKRN) | 1.2x | 1.6x | 2.4x | 2.8x | |
| Phosagro OJSC ($PHOR) | 0.4x | 0.8x | 1.8x | 2.5x | |
| Uralkali PJSC ($URKA) | 1.1x | | 2.8x | 1.8x | |
| Plastics Capital ($PLA) | 2.3x | 2.1x | 1.9x | 1.4x | 2.2x |
| Basf Se ($BFA) | 0.9x | 1.2x | 1.2x | 1.3x | |
| |
|---|
| Median (8 companies) | 1.1x | 1.2x | 1.7x | 1.3x | 1.5x |
|---|
| Lg Chem ($LGCD) | 0.3x | 0.8x | 0.6x | 0.8x | 0.3x |
