Lg Chem CAPEX dropped on 14.4% in 2016 while Revenue increased on 2.2%
26 Jan 2017 • About Lg Chem (
$LGCD) • By InTwits
Lg Chem reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lg Chem has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's in pair with industry average of 8.2%.
- CAPEX is quite volatile: 2,324,112 in 2016, 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012
- The company has highly profitable business model: ROIC is at 12.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lg Chem ($LGCD) key annual financial indicators
| mln. KRW | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 23,263,019 | 23,143,612 | 22,577,830 | 20,206,583 | 20,659,296 | 2.2% |
| Gross Profit | 3,307,943 | 3,308,939 | 3,003,890 | 3,666,042 | 4,064,236 | 10.9% |
| SG&A | 1,329,835 | 1,489,354 | 1,602,607 | 1,652,643 | 1,817,758 | 10.0% |
| EBITDA | 2,783,861 | 2,788,277 | 2,460,985 | 3,079,650 | 3,328,613 | 8.1% |
| Net Income | 1,494,490 | 1,265,970 | 867,924 | 1,152,990 | 1,281,120 | 11.1% |
Balance Sheet
|
|---|
| Cash | 720,767 | 1,399,054 | 988,016 | 1,704,918 | 1,474,367 | -13.5% |
| Short Term Debt | 1,751,781 | 2,206,848 | 2,205,720 | 2,150,778 | 2,212,641 | 2.9% |
| Long Term Debt | 1,195,126 | 803,634 | 727,830 | 507,928 | 678,000 | 33.5% |
Cash flow
|
|---|
| Capex | 1,907,427 | 1,360,673 | 1,411,268 | 1,633,410 | 1,398,503 | -14.4% |
Ratios
|
|---|
| Revenue growth | 2.6% | -0.5% | -2.4% | -10.5% | 2.2% | |
| EBITDA growth | -22.1% | 0.2% | -11.7% | 25.1% | 8.1% | |
| Gross Margin | 14.2% | 14.3% | 13.3% | 18.1% | 19.7% | 1.5% |
| EBITDA Margin | 12.0% | 12.0% | 10.9% | 15.2% | 16.1% | 0.9% |
| Net Income Margin | 6.4% | 5.5% | 3.8% | 5.7% | 6.2% | 0.5% |
| SG&A, % of revenue | 5.7% | 6.4% | 7.1% | 8.2% | 8.8% | 0.6% |
| CAPEX, % of revenue | 8.2% | 5.9% | 6.3% | 8.1% | 6.8% | -1.3% |
| ROIC | 14.4% | 12.0% | 8.6% | 11.6% | 12.0% | 0.4% |
| ROE | 13.3% | 10.2% | 6.6% | 8.2% | 8.6% | 0.3% |
| Net Debt/EBITDA | 0.8x | 0.6x | 0.8x | 0.3x | 0.4x | 0.1x |
Revenue and profitability
The company's Revenue increased on 2.2% in 2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.87 pp from 15.2% to 16.1% in 2016.
Gross Margin increased slightly on 1.5 pp from 18.1% to 19.7% in 2016. SG&A as a % of Revenue increased slightly on 0.62 pp from 8.2% to 8.8% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Lg Chem had CAPEX/Revenue of 6.8%. Lg Chem showed small growth in CAPEX/Revenue of 0.89 pp from 5.9% in 2013 to 6.8% in 2016. It's average CAPEX/Revenue for the last three years was 7.0%.
Return on investment
The company operates at good ROIC (12.04%) while ROE is low (8.55%). ROIC showed almost no change in 2016. ROE showed almost no change in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 0.9x. Net Debt / EBITDA jumped on 0.1x from 0.3x to 0.4x in 2016. Debt increased on 8.7% in 2016 while cash dropped on 13.5% in 2016.
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 | 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% | |
| Plastics Capital ($PLA) | | -2.1% | 3.3% | 21.9% | 28.4% |
| Frutarom Industries ($FRUT) | 19.2% | 9.0% | 21.6% | 6.5% | |
| Croda International ($50GP) | | 2.4% | -2.8% | 3.4% | 15.0% |
| |
|---|
| Median (9 companies) | 8.7% | -0.7% | 7.1% | 3.4% | 21.7% |
|---|
| Lg Chem ($LGCD) | | -0.5% | -2.4% | -10.5% | 2.2% |
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 ($HALO) | 32.9% | 40.7% | 44.8% | 40.2% | |
| |
|---|
| Median (9 companies) | 36.4% | 36.6% | 39.1% | 40.2% | 34.5% |
|---|
| Lg Chem ($LGCD) | 14.2% | 14.3% | 13.3% | 18.1% | 19.7% |
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 ($50GP) | 27.2% | 27.6% | 26.7% | 27.7% | 26.7% |
| |
|---|
| Median (9 companies) | 21.6% | 22.7% | 26.7% | 27.7% | 18.1% |
|---|
| Lg Chem ($LGCD) | 12.0% | 12.0% | 10.9% | 15.2% | 16.1% |
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) | 5.2% | 6.6% | 6.0% | 8.2% | 6.4% |
|---|
| Lg Chem ($LGCD) | 8.2% | 5.9% | 6.3% | 8.1% | 6.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Phosagro OJSC ($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% | 12.7% | 13.2% | 16.7% | 16.0% |
|---|
| Lg Chem ($LGCD) | 14.4% | 12.0% | 8.6% | 11.6% | 12.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Uralkali PJSC ($URKA) | | 2.8x | 1.8x | 2.8x | |
| Frutarom Industries ($FRUT) | 1.4x | 1.7x | 1.1x | 2.6x | |
| Plastics Capital ($PLA) | 2.1x | 1.9x | 1.4x | 2.2x | 2.3x |
| Acron JSC ($AKRN) | 1.6x | 2.4x | 2.8x | 1.4x | |
| Phosagro OJSC ($PHOR) | 0.8x | 1.8x | 2.5x | 1.3x | |
| |
|---|
| Median (8 companies) | 1.2x | 1.7x | 1.3x | 1.3x | 1.7x |
|---|
| Lg Chem ($LGCD) | 0.8x | 0.6x | 0.8x | 0.3x | 0.4x |
