LSR Group OJSC EBITDA dropped on 20.9% in 2015 and EBITDA Margin decreased on 3.6 pp from 22.9% to 19.3%

17 Mar 2016 • About LSR Group OJSC ($LSRG) • By InTwits

LSR Group OJSC reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

LSR Group OJSC has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.3%. At the same time it's in pair with industry average of 5.8%.
CAPEX is quite volatile: 3,254 in 2015, 1,358 in 2014, 3,561 in 2013, 6,643 in 2012, 4,872 in 2011
The company has highly profitable business model: ROIC is at 14.7%

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

LSR Group OJSC ($LSRG) key annual financial indicators

mln. RUB	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	51,931	61,064	60,232	92,834	87,240	-6.0%
Gross Profit	14,668	18,878	18,843	26,187	26,220	0.1%
SG&A	7,432	9,133	9,913	11,346	12,039	6.1%
EBITDA	10,291	12,338	11,735	21,282	16,840	-20.9%
Net Income	2,467	4,947	3,272	9,251	10,699	15.6%
Balance Sheet
Cash	5,183	3,991	5,929	26,173	20,446	-21.9%
Short Term Debt	2,861	5,629	8,074	8,997	11,121	23.6%
Long Term Debt	36,054	34,156	26,244	19,376	21,917	13.1%
Cash flow
Capex	4,872	6,643	3,561	1,358	3,254	139.6%
Ratios
Revenue growth	4.0%	17.6%	-1.4%	54.1%	-6.0%
EBITDA growth	19.0%	19.9%	-4.9%	81.4%	-20.9%
Gross Margin	28.2%	30.9%	31.3%	28.2%	30.1%	1.8%
EBITDA Margin	19.8%	20.2%	19.5%	22.9%	19.3%	-3.6%
Net Income Margin	4.8%	8.1%	5.4%	10.0%	12.3%	2.3%
SG&A, % of revenue	14.3%	15.0%	16.5%	12.2%	13.8%	1.6%
CAPEX, % of revenue	9.4%	10.9%	5.9%	1.5%	3.7%	2.3%
ROIC	9.3%	10.2%	8.8%	20.1%	14.7%	-5.4%
ROE	4.9%	9.0%	5.6%	15.9%	16.7%	0.7%
Net Debt/EBITDA	3.3x	2.9x	2.4x	0.1x	0.7x	0.6x

Revenue and profitability

LSR Group OJSC's Revenue decreased on 6.0% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.6 pp from 22.9% to 19.3% in 2015.

Gross Margin increased slightly on 1.8 pp from 28.2% to 30.1% in 2015. SG&A as a % of Revenue increased slightly on 1.6 pp from 12.2% to 13.8% in 2015.

Net Income marign increased on 2.3 pp from 10.0% to 12.3% in 2015.

Capital expenditures (CAPEX) and working capital investments

LSR Group OJSC's CAPEX/Revenue was 3.7% in 2015. The company showed decline in CAPEX/Revenue of 7.1 pp from 10.9% in 2012 to 3.7% in 2015. It's average CAPEX/Revenue for the last three years was 3.7%.

Return on investment

The company operates at good ROIC (14.71%) and ROE (16.66%). ROIC decreased on 5.4 pp from 20.1% to 14.7% in 2015. ROE increased slightly on 0.72 pp from 15.9% to 16.7% in 2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 2.0x. Net Debt / EBITDA surged on 0.6x from 0.1x to 0.7x in 2015. Debt jumped on 16.4% in 2015 while cash dropped on 21.9% in 2015.

Valuation

LSR Group OJSC's trades at EV/EBITDA 0.7x and P/E 0.0x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 0.9x with the industry average at 4.7x.

Appendix 1: Peers in Construction & Materials

Below you can find LSR Group OJSC benchmarking vs. other companies in Construction & Materials 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 5	FY2011	FY2012	FY2013	FY2014	FY2015
Aukett Swanke Group ($AUK)		13.7%	5.5%	107.0%	14.6%
Accsys Technologies ($AXS)		9.5%	25.5%	78.0%	37.5%
Inch Kenneth Kajang Rubber ($IKK)		-18.7%	-14.2%	68.0%	-56.5%
Lucky Cement Ltd ($LKCS)		28.1%	68.2%	44.8%	1.2%
Swp Group ($SWP)		-14.7%	-31.6%	42.0%	-35.1%
Median (25 companies)	27.9%	2.6%	5.6%	8.8%	1.4%
LSR Group OJSC ($LSRG)		17.6%	-1.4%	54.1%	-6.0%

Top companies by Gross margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Heath(Samuel)& Sons ($HSM)	49.2%	49.5%	47.3%	48.6%	47.6%
James Halstead ($JHD)		41.2%	41.6%	41.0%	41.7%
Swp Group ($SWP)	39.2%	43.0%	48.1%	39.2%	49.7%
Billington Hldgs ($BILN)	30.4%	41.1%	41.7%	38.8%
Alumasc Group ($ALU)	26.6%	23.6%	26.3%	31.6%	32.7%
Median (24 companies)	24.4%	23.6%	24.2%	26.3%	29.2%
LSR Group OJSC ($LSRG)	28.2%	30.9%	31.3%	28.2%	30.1%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Lucky Cement Ltd ($LKCS)	25.0%	31.5%	26.8%	24.4%	26.5%
James Halstead ($JHD)		20.2%	19.8%	20.1%	20.9%
Asia Cement Corp ($ASCD)	20.2%	13.5%	16.3%	18.3%
Suez Cement Co ($SZCD)	20.9%	19.4%	19.3%	17.9%	5.0%
Steppe Cement ($STCM)	21.3%	20.8%	23.2%	14.3%
Median (25 companies)	7.9%	8.5%	7.3%	9.5%	9.6%
LSR Group OJSC ($LSRG)	19.8%	20.2%	19.5%	22.9%	19.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Steppe Cement ($STCM)	1.8%	8.4%	13.0%	18.7%
Inch Kenneth Kajang Rubber ($IKK)	15.9%	74.2%	5.4%	12.8%	54.9%
Swp Group ($SWP)	0.8%	0.9%	2.5%	8.5%	7.4%
Michelmersh Brick Hldgs ($MBH)	1.3%	1.1%	3.6%	7.3%
Lucky Cement Ltd ($LKCS)	7.3%	3.2%	5.2%	6.9%	12.0%
Median (25 companies)	2.1%	2.1%	2.4%	2.6%	2.3%
LSR Group OJSC ($LSRG)	9.4%	10.9%	5.9%	1.5%	3.7%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
James Halstead ($JHD)		49.3%	46.2%	46.7%	45.3%
Aukett Swanke Group ($AUK)	-41.2%	2.7%	11.4%	27.3%	31.6%
Alumasc Group ($ALU)	12.6%	6.5%	17.5%	22.6%	36.0%
Lucky Cement Ltd ($LKCS)	13.5%	23.8%	22.9%	20.3%	20.0%
Heath(Samuel)& Sons ($HSM)	8.1%	9.7%	8.7%	19.7%	32.0%
Median (25 companies)	5.2%	4.0%	7.2%	5.4%	7.1%
LSR Group OJSC ($LSRG)	9.3%	10.2%	8.8%	20.1%	14.7%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Mountfield Group ($MOGP)		26.3x	4.8x	52.0x
Asia Cement Corp ($ASCD)	4.3x	7.8x	6.9x	6.8x
Steppe Cement ($STCM)	2.6x	1.6x	1.2x	2.9x
Low & Bonar ($BD46)		2.7x	2.1x	2.1x	2.4x
Saint-Gobain(Compagnie De) ($COD)	1.8x	2.1x	2.0x	2.1x	1.4x
Median (19 companies)	1.2x	1.4x	0.6x	0.5x	-0.2x
LSR Group OJSC ($LSRG)	3.3x	2.9x	2.4x	0.1x	0.7x

LSR Group OJSC stock price chart

LSR Group OJSC financials

mln.	FY2010	FY2011	FY2012

Revenue	49,951	51,931	61,063
EBITDA	8,651	10,291	12,338
Net income	1,770	2,467	4,947
CAPEX	4,490	4,872	6,643
Debt	31,889	38,916	39,785
Cash	1,330	5,183	3,991

About LSR Group OJSC

OJSC LSR Group, together with its subsidiaries, engages in the real estate development, construction, and building materials business in Russia. The company is involved in the development of residential real estate, gated communities, and commercial real estate properties in Saint Petersburg, Leningrad region, Moscow, and Yekaterinburg. It also produces reinforced concrete items, including hollow slabs, beams, 3-layer insulated panels, piles, road labs, airfield slabs, non-pressure pipes, well rings, vent units, lift shafts, and other items for residential, industrial, commercial, and infrastructure construction; ready-mix concrete and mortars; ceramic bricks, such as facing, fa?ade and paving clinker, regular, porous, and decorative bricks, as well as ceramic items; and aerated concrete items under the trade mark of AEROC. In addition, the company provides aggregates, including sand and crushed granites; and engages in the prefabricated construction activities. Further, it is involved in provision of lifting services through tower cranes and other hoisting equipment, including project management for crane rental projects; rental of cranes; transportation, installation, and commissioning of cranes and hoists to construction sites; and maintenance and repair services. The company was founded in 1993 and is headquartered in St. Petersburg, the Russian Federation. OJSC LSR Group operates as a subsidiary of Streetlink Ltd.