Kumho Tire Co Inc reports 139% CAPEX growth while 11.6% Revenue decline
04 Feb 2016 • About Kumho Tire Co Inc (
$KHTC) • By InTwits
Kumho Tire Co Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kumho Tire Co Inc is a company in decline: 2015 revenue growth was -11.6%, 5 years revenue CAGR was -2.9%
- Kumho Tire Co Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's in pair with industry average of 11.8%.
- CAPEX is quite volatile: 675,758 in 2015, 282,816 in 2014, 244,824 in 2013, 192,566 in 2012, 108,283 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.6%
- It operates with high leverage: Net Debt/EBITDA is 7.4x while industry average is 5.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kumho Tire Co Inc ($KHTC) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,915,875 | 4,070,644 | 3,698,542 | 3,437,869 | 3,040,407 | -11.6% |
| Gross Profit | 806,143 | 1,031,552 | 978,830 | 1,012,380 | 775,315 | -23.4% |
| SG&A | 589,499 | 629,722 | 605,732 | 625,888 | 609,858 | -2.6% |
| EBITDA | 377,244 | 557,101 | 532,250 | 544,518 | 340,496 | -37.5% |
| Net Income | -33,561 | 123,667 | 95,441 | 129,551 | -69,366 | -153.5% |
Balance Sheet
|
|---|
| Cash | 146,163 | 147,444 | 163,516 | 197,113 | 243,881 | 23.7% |
| Short Term Debt | 1,754,824 | 1,581,678 | 2,568,937 | 897,321 | 1,697,475 | 89.2% |
| Long Term Debt | 1,286,189 | 1,335,618 | 27,199 | 1,524,285 | 1,083,073 | -28.9% |
Cash flow
|
|---|
| Capex | 108,283 | 192,566 | 244,824 | 282,816 | 675,758 | 138.9% |
Ratios
|
|---|
| Revenue growth | 10.9% | 4.0% | -9.1% | -7.0% | -11.6% | |
| EBITDA growth | 5.3% | 47.7% | -4.5% | 2.3% | -37.5% | |
| Gross Margin | 20.6% | 25.3% | 26.5% | 29.4% | 25.5% | -3.9% |
| EBITDA Margin | 9.6% | 13.7% | 14.4% | 15.8% | 11.2% | -4.6% |
| Net Income Margin | -0.9% | 3.0% | 2.6% | 3.8% | -2.3% | -6.0% |
| SG&A, % of revenue | 15.1% | 15.5% | 16.4% | 18.2% | 20.1% | 1.9% |
| CAPEX, % of revenue | 2.8% | 4.7% | 6.6% | 8.2% | 22.2% | 14.0% |
| ROIC | 5.4% | 10.2% | 9.3% | 9.7% | 3.6% | -6.2% |
| ROE | -8.0% | 19.6% | 10.5% | 11.6% | -5.9% | -17.5% |
| Net Debt/EBITDA | 7.7x | 5.0x | 4.6x | 4.1x | 7.4x | 3.4x |
Revenue and profitability
Kumho Tire Co Inc's Revenue dropped on 11.6% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.6 pp from 15.8% to 11.2% in 2015.
Gross Margin decreased on 3.9 pp from 29.4% to 25.5% in 2015. SG&A as a % of Revenue increased slightly on 1.9 pp from 18.2% to 20.1% in 2015.
Net Income marign decreased on 6.0 pp from 3.8% to -2.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 22.2% in 2015. Kumho Tire Co Inc's CAPEX/Revenue jumped on 17.5 pp from 4.7% in 2012 to 22.2% in 2015. It's average level of CAPEX/Revenue for the last three years was 12.4%.Battling declining revenue Kumho Tire Co Inc made large investments to CAPEX (198% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low but positive ROIC (3.57%) and negative ROE (-5.90%). ROIC decreased on 6.2 pp from 9.7% to 3.6% in 2015. ROE dropped on 17.5 pp from 11.6% to -5.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.4x and Debt / EBITDA is 8.2x. Net Debt / EBITDA jumped on 3.4x from 4.1x to 7.4x in 2015. Debt surged on 14.8% in 2015 while cash surged on 23.7% in 2015.
Appendix 1: Peers in Automobiles & Parts
Below we provide Kumho Tire Co Inc benchmarking against other companies in Automobiles & Parts 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Toyota Motor Corp ($TYT) | | -2.2% | 18.7% | 16.4% | 6.0% |
| Hyundai Motor Co ($HYUD) | | 8.6% | 3.4% | 2.2% | 3.0% |
| |
|---|
| Median (2 companies) | | 3.2% | 11.0% | 9.3% | 4.5% |
|---|
| Kumho Tire Co Inc ($KHTC) | | 4.0% | -9.1% | -7.0% | -11.6% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hyundai Motor Co ($HYUD) | 24.3% | 23.1% | 22.3% | 21.4% | 19.9% |
| Toyota Motor Corp ($TYT) | 12.5% | 11.8% | 15.5% | 19.0% | 19.8% |
| |
|---|
| Median (2 companies) | 18.4% | 17.4% | 18.9% | 20.2% | 19.8% |
|---|
| Kumho Tire Co Inc ($KHTC) | 20.6% | 25.3% | 26.5% | 29.4% | 25.5% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Toyota Motor Corp ($TYT) | 8.7% | 7.7% | 11.0% | 13.8% | 15.3% |
| Hyundai Motor Co ($HYUD) | 13.3% | 13.0% | 12.4% | 11.3% | 10.0% |
| |
|---|
| Median (2 companies) | 11.0% | 10.3% | 11.7% | 12.6% | 12.6% |
|---|
| Kumho Tire Co Inc ($KHTC) | 9.6% | 13.7% | 14.4% | 15.8% | 11.2% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hyundai Motor Co ($HYUD) | 3.7% | 3.6% | 3.6% | 3.8% | 8.9% |
| Toyota Motor Corp ($TYT) | 3.3% | 3.9% | 3.9% | 3.8% | 4.2% |
| |
|---|
| Median (2 companies) | 3.5% | 3.7% | 3.8% | 3.8% | 6.5% |
|---|
| Kumho Tire Co Inc ($KHTC) | 2.8% | 4.7% | 6.6% | 8.2% | 22.2% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Toyota Motor Corp ($TYT) | 1.9% | 1.5% | 5.0% | 7.3% | 7.5% |
| Hyundai Motor Co ($HYUD) | 10.1% | 9.3% | 8.2% | 6.6% | 4.9% |
| |
|---|
| Median (2 companies) | 6.0% | 5.4% | 6.6% | 7.0% | 6.2% |
|---|
| Kumho Tire Co Inc ($KHTC) | 5.4% | 10.2% | 9.3% | 9.7% | 3.6% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hyundai Motor Co ($HYUD) | 3.6x | 3.5x | 3.8x | 4.7x | 6.3x |
| Toyota Motor Corp ($TYT) | 6.3x | 7.3x | 5.1x | 4.0x | 4.0x |
| |
|---|
| Median (2 companies) | 4.9x | 5.4x | 4.5x | 4.4x | 5.2x |
|---|
| Kumho Tire Co Inc ($KHTC) | 7.7x | 5.0x | 4.6x | 4.1x | 7.4x |
