Mitsubishi Corp Debt jumped on 99.6% and Revenue surged on 17.8%
08 May 2018 • About Mitsubishi Corp (
$MBC) • By InTwits
Mitsubishi Corp reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 8.9% in FY2018, 7.6% in FY2017, 1.2% in FY2016, 4.9% in FY2015, 4.4% in FY2014
- Mitsubishi Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's a lot of higher than industry average of 2.4%.
- CAPEX is quite volatile: 277,456 JPYm in FY2018, 160,055 JPYm in FY2017, 249,062 JPYm in FY2016, 307,539 JPYm in FY2015, 496,108 JPYm in FY2014
- The company has potentially unprofitable business model: ROIC is 3.9%
- It operates with high leverage: Net Debt/EBITDA is 6.2x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 17.8%. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -9.7% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.77 pp from 6.9% to 7.7% in 2018.
Gross Margin increased on 4.3 pp from 20.7% to 24.9% in FY2018. Gross Margin grew at 2.4 pp per annum in FY2014-FY2018. SG&A as a % of Revenue increased on 3.8 pp from 14.5% to 18.3% in FY2018. SG&A as a % of Revenue followed a growing trend at 1.3 pp per annum in the last 5 years.
Net Income margin increased slightly on 0.55 pp from 6.9% to 7.4% in FY2018.
Investments (CAPEX, working capital and M&A)
Mitsubishi Corp's CAPEX/Revenue was 3.7% in FY2018. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 3.3%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 2.5%.
Return on investment
The company operates at low ROIC (3.9%) and ROE (10.9%). ROIC increased slightly on 1.2 pp from 2.8% to 3.9% in FY2018. ROE increased slightly on 1.7 pp from 9.3% to 10.9% in FY2018. During the last 5 years ROE bottomed in FY2016 at -2.9% and was growing since that time.
Leverage (Debt)
Debt level is 6.2x Net Debt / EBITDA and 7.7x Debt / EBITDA. Net Debt / EBITDA jumped on 3.2x from 2.9x to 6.2x in FY2018. Debt jumped on 99.6% while cash dropped on 12.2%.
Mitsubishi Corp has short term refinancing risk: cash is only 76.8% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
Mitsubishi Corp ($MBC) key annual financial indicators| mln. JPY | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 7,635,168 | 7,669,489 | 6,925,582 | 6,425,761 | 7,567,394 | 17.8% |
| Gross Profit | 1,186,005 | 1,209,894 | 1,098,877 | 1,328,638 | 1,886,640 | 42.0% |
| SG&A | 952,898 | 998,751 | 1,015,968 | 932,607 | 1,387,266 | 48.8% |
| EBITDA | 336,486 | 373,267 | 85,771 | 489,330 | 671,537 | 37.2% |
| Net Income | 361,359 | 400,574 | -149,395 | 440,293 | 560,173 | 27.2% |
Balance Sheet
|
|---|
| Cash | 1,332,036 | 1,725,189 | 1,500,960 | 1,145,514 | 1,005,461 | -12.2% |
| Short Term Debt | 1,396,337 | 1,527,456 | 1,489,222 | 1,289,262 | 1,309,954 | 1.6% |
| Long Term Debt | 4,736,331 | 4,875,298 | 4,595,941 | 1,287,813 | 3,832,884 | 197.6% |
Cash flow
|
|---|
| Capex | 496,108 | 307,539 | 249,062 | 160,055 | 277,456 | 73.4% |
Ratios
|
|---|
| Revenue growth | 27.0% | 0.4% | -9.7% | -7.2% | 17.8% | |
| EBITDA growth | 16.6% | 10.9% | -77.0% | 470.5% | 37.2% | |
|
|---|
| Gross Margin | 15.5% | 15.8% | 15.9% | 20.7% | 24.9% | 4.3% |
| EBITDA Margin | 4.4% | 4.9% | 1.2% | 7.6% | 8.9% | 1.3% |
| SG&A, % of revenue | 12.5% | 13.0% | 14.7% | 14.5% | 18.3% | 3.8% |
| Net Income Margin | 4.7% | 5.2% | -2.2% | 6.9% | 7.4% | 0.6% |
| CAPEX, % of revenue | 6.5% | 4.0% | 3.6% | 2.5% | 3.7% | 1.2% |
|
|---|
| ROIC | 1.3% | 1.3% | -1.1% | 2.8% | 3.9% | 1.2% |
| ROE | 7.5% | 7.5% | -2.9% | 9.3% | 10.9% | 1.7% |
| Net Debt/EBITDA | 14.3x | 12.5x | 53.4x | 2.9x | 6.2x | 3.2x |
Peers in Support Services
Below we provide Mitsubishi Corp benchmarking against other companies in Support Services 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mortice Ltd ($MORT) | 11.0% | 18.9% | 51.1% | 36.1% | |
| Rws Hldgs ($RWS) | 20.9% | 1.8% | 28.1% | 34.5% | |
| Empresaria Group ($EMR) | -3.3% | -0.3% | 44.4% | 32.1% | |
| Norish ($NSH) | 3.7% | 16.4% | 16.7% | 31.4% | |
| Capital Drilling Ltd ($CAPD) | -15.0% | -20.4% | 18.7% | 28.0% | |
| |
|---|
| Median (45 companies) | 5.2% | 7.2% | 3.5% | 7.0% | 8.6% |
|---|
| Mitsubishi Corp ($MBC) | | 0.4% | -9.7% | -7.2% | 17.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inspired Energy ($INSE) | 78.7% | 76.2% | 80.5% | 83.1% | |
| Ienergizer Ltd ($IBPO) | 76.8% | 72.7% | 71.3% | 71.2% | |
| Spectra Systems Corp ($SPSY) | 51.4% | 47.6% | 68.3% | 71.1% | |
| Vianet Group ($VNET) | 58.8% | 69.2% | 70.1% | 69.7% | |
| Grafenia ($GRA) | 56.1% | 70.8% | 66.3% | 63.0% | |
| |
|---|
| Median (39 companies) | 29.2% | 28.4% | 27.3% | 28.7% | 15.4% |
|---|
| Mitsubishi Corp ($MBC) | 15.5% | 15.8% | 15.9% | 20.7% | 24.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Northgate ($67GX) | 40.6% | 39.4% | 38.3% | 35.9% | 35.4% |
| Spectra Systems Corp ($SPSY) | 12.3% | 6.0% | 19.7% | 34.0% | |
| Inspired Energy ($INSE) | 1.5% | 35.4% | 34.4% | 32.4% | |
| Vp ($VP.) | 24.2% | 26.2% | 28.4% | 28.6% | |
| Rws Hldgs ($RWS) | 22.8% | 23.1% | 26.4% | 25.5% | |
| |
|---|
| Median (45 companies) | 6.8% | 7.6% | 5.7% | 5.7% | 5.0% |
|---|
| Mitsubishi Corp ($MBC) | 4.4% | 4.9% | 1.2% | 7.6% | 8.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vp ($VP.) | 21.6% | 25.7% | 24.1% | 26.0% | |
| Augean ($AUG) | 12.3% | 12.3% | 11.0% | 10.0% | |
| Petards Group ($PEG) | 0.5% | 0.9% | 1.7% | 10.0% | |
| Capital Drilling Ltd ($CAPD) | 13.9% | 10.1% | 13.7% | 9.0% | |
| Billing Services Group ($BILL) | 2.1% | 4.1% | 3.0% | 4.5% | |
| |
|---|
| Median (45 companies) | 1.0% | 0.9% | 1.0% | 0.8% | 1.1% |
|---|
| Mitsubishi Corp ($MBC) | 6.5% | 4.0% | 3.6% | 2.5% | 3.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sthree ($STHR) | 38.1% | 50.2% | 46.2% | 43.4% | |
| Mortice Ltd ($MORT) | 19.6% | 21.9% | 14.5% | 23.2% | |
| Petards Group ($PEG) | 24.7% | 23.9% | 22.7% | 20.3% | |
| Rws Hldgs ($RWS) | 24.5% | 23.3% | 23.5% | 20.2% | |
| Latham(James) ($LTHM) | 17.5% | 16.8% | 19.2% | 19.3% | 17.4% |
| |
|---|
| Median (46 companies) | 11.1% | 10.7% | 7.9% | 8.4% | 7.4% |
|---|
| Mitsubishi Corp ($MBC) | 1.3% | 1.3% | -1.1% | 2.8% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nakama Group ($NAK) | 5.2x | 1.4x | 3.1x | 48.5x | |
| 21St Century Technology ($C21) | -0.8x | -0.2x | | 11.2x | |
| Ibex Global Solutions ($IBEX) | 2.7x | 1.0x | 1.7x | 4.5x | |
| Menzies(John) ($68HN) | 2.0x | 2.4x | 1.2x | 3.0x | |
| Kellan Group(The ($KLN) | 6.5x | 3.6x | | 2.9x | |
| |
|---|
| Median (41 companies) | 0.1x | -0.1x | 0.1x | -0.1x | 1.3x |
|---|
| Mitsubishi Corp ($MBC) | 14.3x | 12.5x | 53.4x | 2.9x | 6.2x |
