Plastics Capital revenue growth accelerated to 28.4% in FY2016 vs. 21.9% a year earliner

04 Jul 2016 • About Plastics Capital ($PLA) • By InTwits

Plastics Capital reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Plastics Capital has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.0%.
CAPEX is quite volatile: 2.3 in FY2016, 0.98 in FY2015, 1.9 in FY2014, 0.94 in FY2013, 0.81 in FY2012
The company has potentially unprofitable business model: ROIC is at 4.3%
It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 1.2x

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

Plastics Capital ($PLA) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	32.096	31.407	32.456	39.576	50.803	28.4%
Gross Profit	11.633	11.482	11.693	13.980	16.871	20.7%
SG&A			10.279	12.481	12.528	0.4%
EBITDA	4.723	4.513	5.028	5.244	4.806	-8.4%
Net Income	1.653	1.303	0.879	-0.250	1.222	-588.8%
Balance Sheet
Cash	2.550	2.735	3.134	4.437	5.488	23.7%
Short Term Debt	5.137	5.201	3.928	5.143	8.067	56.9%
Long Term Debt	7.561	5.903	6.376	10.694	8.273	-22.6%
Cash flow
Capex	0.808	0.936	1.876	0.977	2.275	132.9%
Ratios
Revenue growth	-4.2%	-2.1%	3.3%	21.9%	28.4%
EBITDA growth	-13.8%	-4.4%	11.4%	4.3%	-8.4%
Gross Margin	36.2%	36.6%	36.0%	35.3%	33.2%	-2.1%
EBITDA Margin	14.7%	14.4%	15.5%	13.3%	9.5%	-3.8%
Net Income Margin	5.2%	4.1%	2.7%	-0.6%	2.4%	3.0%
SG&A, % of revenue			31.7%	31.5%	24.7%	-6.9%
CAPEX, % of revenue	2.5%	3.0%	5.8%	2.5%	4.5%	2.0%
ROIC	8.3%	7.3%	8.6%	6.8%	4.3%	-2.5%
ROE	8.9%	6.5%	4.0%	-1.0%	4.6%	5.7%
Net Debt/EBITDA	2.1x	1.9x	1.4x	2.2x	2.3x	0.1x

Revenue and profitability

The company's Revenue jumped on 28.4% in FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.54 pp from 7.8% to 7.2% in FY2016.

Gross Margin decreased on 2.1 pp from 35.3% to 33.2% in FY2016. SG&A as a % of Revenue decreased on 6.9 pp from 31.5% to 24.7% in FY2016.

Net Income marign increased on 3.0 pp from -0.63% to 2.4% in FY2016.

Capital expenditures (CAPEX) and working capital investments

Plastics Capital's CAPEX/Revenue was 4.5% in FY2016. Plastics Capital showed small growth in CAPEX/Revenue of 1.5 pp from 3.0% in FY2013 to 4.5% in FY2016. It's average CAPEX/Revenue for the last three years was 4.2%.

Return on investment

The company operates at low ROIC (4.32%) and ROE (4.64%). ROIC decreased on 2.5 pp from 6.8% to 4.3% in FY2016. ROE increased on 5.7 pp from -1.0% to 4.6% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 3.4x. Net Debt / EBITDA increased on 0.1x from 2.2x to 2.3x in FY2016. Debt increased on 3.2% in FY2016 while cash surged on 23.7% in FY2016.

Valuation

The company's trades at EV/EBITDA 9.0x and P/E 26.6x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 17.1x with the industry average at 19.0x.

Appendix 1: Peers in Chemicals

Below we provide Plastics Capital 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	FY2012	FY2013	FY2014	FY2015	FY2016
Phosagro OJSC ($PHOR)	4.8%	-0.7%	17.7%	54.1%
Acron JSC ($AKRN)	8.7%	-4.5%	9.9%	42.1%
Frutarom Industries ($FRUT)	19.2%	9.0%	21.6%	6.5%
Croda International ($50GP)		2.4%	-2.8%	3.4%	15.0%
Arab Potash Co ($APOD)	-18.6%	-11.1%	2.7%	-1.5%
Median (9 companies)	6.7%	-0.5%	7.1%	-1.5%	15.0%
Plastics Capital ($PLA)		-2.1%	3.3%	21.9%	28.4%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Uralkali PJSC ($URKA)		71.6%	74.3%	81.8%
Phosagro OJSC ($PHOR)	42.9%	34.8%	45.2%	56.2%
Acron JSC ($AKRN)	43.1%	38.1%	42.8%	52.7%
Arab Potash Co ($APOD)	51.3%	35.2%	26.2%	40.5%
Halosource Inc ($HALO)	32.9%	40.7%	44.8%	40.2%
Median (9 companies)	35.3%	35.2%	39.1%	40.2%	35.8%
Plastics Capital ($PLA)	36.2%	36.6%	36.0%	35.3%	33.2%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Uralkali PJSC ($URKA)		44.5%	48.6%	62.3%
Phosagro OJSC ($PHOR)	32.9%	22.9%	30.5%	43.5%
Arab Potash Co ($APOD)	47.2%	36.3%	27.7%	39.6%
Acron JSC ($AKRN)	28.4%	22.7%	27.2%	36.2%
Croda International ($50GP)	27.2%	27.6%	26.7%	27.7%	26.7%
Median (9 companies)	21.6%	22.7%	26.7%	27.7%	26.7%
Plastics Capital ($PLA)	14.7%	14.4%	15.5%	13.3%	9.5%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Phosagro OJSC ($PHOR)	12.7%	17.0%	16.7%	22.4%
Acron JSC ($AKRN)	22.7%	21.3%	15.4%	14.2%
Uralkali PJSC ($URKA)		12.5%	9.8%	10.9%
Croda International ($50GP)	4.8%	4.1%	6.0%	8.6%	8.3%
Basf Se ($BFA)	5.6%	6.6%	7.1%	8.2%
Median (9 companies)	6.5%	6.6%	6.3%	8.2%	8.3%
Plastics Capital ($PLA)	2.5%	3.0%	5.8%	2.5%	4.5%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Phosagro OJSC ($PHOR)	28.5%	15.0%	21.6%	41.2%
Croda International ($50GP)	46.5%	42.3%	35.3%	30.5%	27.7%
Uralkali PJSC ($URKA)			13.2%	23.1%
Acron JSC ($AKRN)	14.4%	9.2%	10.6%	17.9%
Arab Potash Co ($APOD)	21.2%	13.5%	9.8%	16.7%
Median (9 companies)	14.9%	12.8%	13.2%	16.7%	27.7%
Plastics Capital ($PLA)	8.3%	7.3%	8.6%	6.8%	4.3%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Uralkali PJSC ($URKA)		2.8x	1.8x	2.8x
Frutarom Industries ($FRUT)	1.4x	1.7x	1.1x	2.6x
Acron JSC ($AKRN)	1.6x	2.4x	2.8x	1.4x
Phosagro OJSC ($PHOR)	0.8x	1.8x	2.5x	1.3x
Basf Se ($BFA)	1.2x	1.2x	1.3x	1.2x
Median (8 companies)	0.8x	1.4x	1.2x	1.2x	1.1x
Plastics Capital ($PLA)	2.1x	1.9x	1.4x	2.2x	2.3x

Plastics Capital stock price chart

Plastics Capital financials

mln.	FY2010	FY2011	FY2012

Revenue	26.688	33.509	32.096
EBITDA	5.062	5.482	4.723
Net income	1.934	3.096	1.653
CAPEX	0.791	1.049	0.808
Debt	17.298	13.989	12.698
Cash	0.606	1.647	2.550

About Plastics Capital

Plastics Capital plc, through its subsidiaries, is engaged in the manufacture, sale, and export of plastic products. The company operates in two segments, Packaging and Industrial products. It offers nylon mandrels for use by the manufacturers of hydraulic and other industrial hoses; specialist films; and anti-slip stair treads, inserts, and nosings for use in commercial and public buildings, as well as provides wire and wire rope coating services with various plastics materials. The company also provides plastic rotating parts, including bearings, gears, shafts, and bushes for business machinery, water and leisure, electrical and security, automotive industry, and traditional product applications. In addition, it offers creasing matrix, a consumable plastic strip used in the manufacture of cardboard boxes, cards, point of sale materials, and packaging products; and secondary products, such as ejection rubbers and other printing accessories. Further, the company provides films, bags, liner sheets, and covers to a range of manufacturing and processing industries under the Palastrong and Nylastrong brand names. Plastics Capital plc exports its products to 80 countries worldwide. The company was founded in 2002 and is headquartered in London, the United Kingdom.