Alumasc Group reports 48.2% Net Income growth and almost no change in EBITDA Margin of 9.7%

01 Sep 2016 • About Alumasc Group ($ALU) • By InTwits

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

• Alumasc Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 3.1%.
• CAPEX is quite volatile: 3.7 in FY2016, 2.5 in FY2015, 1.8 in FY2014, 1.7 in FY2013, 1.4 in FY2012
• The company has highly profitable business model: ROIC is at 47.8%

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

Alumasc Group ($ALU) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	110.6	116.8	88.9	90.3	92.2	2.1%
Gross Profit	26.1	30.7	28.1	29.6	30.8	4.2%
EBITDA	5.9	9.5	8.7	8.8	8.9	2.2%
Net Income	0.4	1.9	4.0	4.4	6.5	48.2%
Balance Sheet
Cash	6.6	9.1	2.2	5.9	10.5	78.2%
Short Term Debt	0.0	0.0	0.0	5.0	0.0	-100.0%
Long Term Debt	19.8	16.8	9.9	0.0	1.9
Cash flow
Capex	1.9	1.5	1.3	1.1	1.0	-8.7%
Ratios
Revenue growth	3.6%	5.6%	-23.9%	1.6%	2.1%
EBITDA growth	-30.5%	61.2%	-8.3%	0.7%	2.2%
Gross Margin	23.6%	26.3%	31.6%	32.7%	33.4%	0.7%
EBITDA Margin	5.3%	8.1%	9.8%	9.7%	9.7%	0.0%
Net Income Margin	0.4%	1.6%	4.5%	4.8%	7.0%	2.2%
CAPEX, % of revenue	1.7%	1.3%	1.5%	1.2%	1.1%	-0.1%
ROIC	6.5%	17.5%	22.6%	36.0%	47.8%	11.7%
ROE	1.6%	9.1%	20.5%	26.5%	39.9%	13.3%
Net Debt/EBITDA	2.3x	0.8x	0.9x	-0.1x	-1.0x	-0.9x

Revenue and profitability

Alumasc Group's Revenue increased on 2.1% in FY2016. EBITDA Margin showed almost no change in FY2016.

Gross Margin increased slightly on 0.66 pp from 32.7% to 33.4% in FY2016.

Net Income marign increased on 2.2 pp from 4.8% to 7.0% in FY2016.

Capital expenditures (CAPEX) and working capital investments

In FY2016 Alumasc Group had CAPEX/Revenue of 1.1%. Alumasc Group's CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 1.3%.

Return on investment

The company operates at high and attractive ROIC (47.75%) and ROE (39.89%). ROIC surged on 11.7 pp from 36.0% to 47.8% in FY2016. ROE jumped on 13.3 pp from 26.5% to 39.9% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is -1.0x and Debt / EBITDA is 0.2x. Net Debt / EBITDA dropped on 0.9x from -0.1x to -1.0x in FY2016. Debt dropped on 61.8% in FY2016 while cash jumped on 78.2% in FY2016.

Appendix 1: Peers in Construction & Materials

Below we provide Alumasc Group benchmarking against other companies in Construction & Materials 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
Kingspan Group ($KGP)	5.3%	9.1%	6.4%	46.7%
Accsys Technologies ($AXS)		25.5%	78.0%	37.5%	14.5%
Billington Hldgs ($BILN)	-34.0%	8.4%	14.5%	25.8%
Crh ($CRH)		-0.3%	4.9%	25.0%	14.7%
Clarke(T.) ($CTO)	5.5%	12.0%	-4.2%	16.6%
Median (25 companies)	1.8%	5.5%	8.9%	1.7%	10.5%
Alumasc Group ($ALU)		5.6%	-23.9%	1.6%	2.1%

Top companies by Gross margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Inch Kenneth Kajang Rubber ($IKK)	46.5%	24.5%	21.7%	51.7%
Swp Group ($SWP)	43.0%	48.1%	39.2%	49.7%
Heath(Samuel)& Sons ($HSM)	49.5%	47.3%	48.6%	47.6%	48.1%
James Halstead ($JHD)	41.2%	41.6%	41.0%	41.7%	42.4%
Michelmersh Brick Hldgs ($MBH)	35.3%	28.4%	31.1%	38.2%
Median (23 companies)	25.4%	24.2%	26.3%	29.1%	34.4%
Alumasc Group ($ALU)	23.6%	26.3%	31.6%	32.7%	33.4%

Top companies by EBITDA margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Lucky Cement Ltd ($LKCS)	31.5%	26.8%	24.4%	26.5%	30.4%
Steppe Cement ($STCM)	20.8%	23.2%	14.3%	24.7%
James Halstead ($JHD)	20.2%	19.8%	20.1%	20.9%	21.6%
Michelmersh Brick Hldgs ($MBH)	10.6%	7.9%	14.1%	20.3%
LSR Group OJSC ($LSRG)	20.2%	19.5%	22.9%	19.3%
Median (25 companies)	8.7%	7.3%	9.5%	9.5%	12.1%
Alumasc Group ($ALU)	5.3%	8.1%	9.8%	9.7%	9.7%

Top companies by CAPEX/Revenue, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Inch Kenneth Kajang Rubber ($IKK)	74.2%	5.4%	12.8%	54.9%
Lucky Cement Ltd ($LKCS)	3.2%	5.2%	6.9%	12.0%	8.9%
Billington Hldgs ($BILN)	1.0%	1.1%	2.9%	10.8%
Low & Bonar ($BD46)	3.5%	2.8%	4.6%	9.1%	4.7%
Superglass Hldgs ($SPGH)	12.9%	14.2%	3.4%	7.9%
Median (25 companies)	2.2%	2.5%	2.6%	2.3%	3.1%
Alumasc Group ($ALU)	1.7%	1.3%	1.5%	1.2%	1.1%

Top companies by ROIC, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
James Halstead ($JHD)	49.3%	46.2%	46.7%	45.3%	47.1%
Heath(Samuel)& Sons ($HSM)	9.7%	8.7%	19.7%	32.0%	89.2%
Aukett Swanke Group ($AUK)	2.7%	11.4%	27.3%	31.6%
Lucky Cement Ltd ($LKCS)	23.8%	22.9%	20.3%	20.0%	20.8%
Clarke(T.) ($CTO)	6.9%	9.9%	-0.4%	19.6%
Median (25 companies)	4.0%	7.2%	5.4%	7.8%	9.1%
Alumasc Group ($ALU)	6.5%	17.5%	22.6%	36.0%	47.8%

Top companies by Net Debt / EBITDA

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Mountfield Group ($MOGP)	26.3x	4.8x	52.0x	18.8x
Asia Cement Corp ($ASCD)	7.8x	6.9x	6.8x	8.6x
Crh ($CRH)	2.0x	3.6x	1.6x	3.1x	1.7x
Low & Bonar ($BD46)	2.7x	2.1x	2.1x	2.4x	2.1x
Saint-Gobain(Compagnie De) ($COD)	2.1x	2.0x	2.1x	1.4x
Median (21 companies)	1.4x	0.6x	0.4x	-0.0x	-0.7x
Alumasc Group ($ALU)	2.3x	0.8x	0.9x	-0.1x	-1.0x

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