Kumho Tire Co Inc Net Debt / EBITDA dropped on 23.2x from 34.8x to 11.6x in 2018 while EBITDA surged on 122%
14 Feb 2019 • About Kumho Tire Co Inc (
$KHTC) • By InTwits
Kumho Tire Co Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Kumho Tire Co Inc is a company in decline: 2018 revenue growth was -11.0%, 5 years revenue CAGR was -7.1%
- EBITDA Margin is quite volatile: 5.6% in 2018, 2.2% in 2017, 11.7% in 2016, 11.2% in 2015, 15.8% in 2014
- Kumho Tire Co Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.8%. At the same time it's a lot of higher than industry average of 4.6%.
- CAPEX is quite volatile: 158,816 KRWm in 2018, 289,852 KRWm in 2017, 365,465 KRWm in 2016, 675,758 KRWm in 2015, 282,816 KRWm in 2014
- The company has unprofitable business model: ROIC is -2.5%
- It operates with high leverage: Net Debt/EBITDA is 11.6x while industry average is 8.7x
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 dropped on 11.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018. EBITDA Margin declined at -2.9 pp per annum in 2014-2018.
Gross Margin decreased slightly on 0.87 pp from 16.0% to 15.2% in 2018. Gross Margin declined at -3.8 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 3.2 pp from 20.6% to 17.4% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2017 at 20.6%.
Net Income margin decreased on 2.5 pp from -4.3% to -6.8% in 2018. Net Income margin declined at -2.3 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 6.2% in 2018. CAPEX/Revenue dropped on 16.0 pp from 22.2% in 2015 to 6.2% in 2018. Average CAPEX/Revenue for the last three years was 9.6%. The company has spent a lot to CAPEX (111% of EBITDA) which didn't stop revenue from falling. During 2014-2018 CAPEX as a % of Revenue topped in 2015 at 22.2% and was declining since that time.
Return on investment
The company operates at negative ROIC (-2.5%) and ROE (-14.7%). ROIC increased slightly on 2.0 pp from -4.5% to -2.5% in 2018. ROE decreased on 2.6 pp from -12.1% to -14.7% in 2018. ROIC declined at -3.2 pp per annum in 2014-2018. ROE declined at -5.9 pp per annum in 2014-2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 11.6x and Debt / EBITDA is 13.5x. Net Debt / EBITDA dropped on 23.2x from 34.8x to 11.6x in 2018. Debt dropped on 19.5% while cash surged on 78.8%. During the last 5 years Net Debt/EBITDA topped in 2017 at 34.8x.
Kumho Tire Co Inc has short term refinancing risk: cash is only 46.0% of short term debt.
Average interest expence charged on company's debt was 5.9% in 2018.
Management team
Kumho Tire Co Inc's CEO is Jeon Dae-Jin. Jeon Dae-Jin has 1 year tenure with the company. CEO total compensation was 774,000,000 KRW in 2018 which included 482,000,000 KRW salary.
Financial and operational results
FY ended 31 Dec 2018
Kumho Tire Co Inc ($KHTC) key annual financial indicators| mln. KRW | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 3,437,869 | 3,040,407 | 2,947,228 | 2,876,420 | 2,558,682 | -11.0% |
| Gross Profit | 1,012,380 | 775,315 | 745,476 | 461,300 | 388,174 | -15.9% |
| SG&A | 625,888 | 609,858 | 595,751 | 591,816 | 445,499 | -24.7% |
| EBITDA | 544,518 | 340,496 | 344,227 | 64,646 | 143,316 | 121.7% |
| EBIT | | | | | -78,850 | |
| Interest expence | | | | | 114,543 | |
| Tax | | | | | 1,030 | |
| Net Income | 129,551 | -69,366 | -36,049 | -124,832 | -174,223 | |
Balance Sheet
|
|---|
| Cash | 197,113 | 243,881 | 163,518 | 152,031 | 271,834 | 78.8% |
| Inventory | | | | | 458,636 | |
| Accounts Payable | | | | | 278,541 | |
| Short Term Debt | 897,321 | 1,697,475 | 1,586,374 | 1,551,772 | 591,508 | -61.9% |
| Long Term Debt | 1,524,285 | 1,083,073 | 1,146,770 | 852,431 | 1,344,730 | 57.8% |
Cash flow
|
|---|
| Capex | 282,816 | 675,758 | 365,465 | 289,852 | 158,816 | -45.2% |
Ratios
|
|---|
| Revenue growth | -7.0% | -11.6% | -3.1% | -2.4% | -11.0% | |
| EBITDA growth | 2.3% | -37.5% | 1.1% | -81.2% | 121.7% | |
|
|---|
| Gross Margin | 29.4% | 25.5% | 25.3% | 16.0% | 15.2% | -0.9% |
| EBITDA Margin | 15.8% | 11.2% | 11.7% | 2.2% | 5.6% | 3.4% |
| EBIT Margin | | | | | -3.1% |
| SG&A, % of revenue | 18.2% | 20.1% | 20.2% | 20.6% | 17.4% | -3.2% |
| Net Income Margin | 3.8% | -2.3% | -1.2% | -4.3% | -6.8% | -2.5% |
| CAPEX, % of revenue | 8.2% | 22.2% | 12.4% | 10.1% | 6.2% | -3.9% |
|
|---|
| ROIC | 9.7% | 3.6% | 3.1% | -4.5% | -2.5% | 2.0% |
| ROE | 11.6% | -5.9% | -3.2% | -12.1% | -14.7% | -2.6% |
| Net Debt/EBITDA | 4.1x | 7.4x | 7.5x | 34.8x | 11.6x | -23.2x |
| Interest expence / Average debt | | | | | 5.9% | |
Peers in Automobiles & Parts
Below you can find Kumho Tire Co Inc benchmarking vs. other companies in Automobiles & Parts 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | | 6.0% | 4.3% | -2.8% | 6.5% |
| Hyundai Motor Co ($HYUD) | | 3.0% | 1.8% | 2.9% | 0.5% |
| |
|---|
| Median (2 companies) | | 4.5% | 3.1% | 0.0% | 3.5% |
|---|
| Kumho Tire Co Inc ($KHTC) | | -11.6% | -3.1% | -2.4% | -11.0% |
Top companies by Gross margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 19.0% | 19.8% | 20.4% | 17.6% | 18.7% |
| Hyundai Motor Co ($HYUD) | 21.4% | 19.9% | 18.9% | 18.2% | 15.6% |
| |
|---|
| Median (2 companies) | 20.2% | 19.8% | 19.7% | 17.9% | 17.2% |
|---|
| Kumho Tire Co Inc ($KHTC) | 29.4% | 25.5% | 25.3% | 16.0% | 15.2% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 13.8% | 15.3% | 15.8% | 13.1% | 14.1% |
| Hyundai Motor Co ($HYUD) | 11.3% | 10.0% | 9.1% | 8.4% | 6.4% |
| |
|---|
| Median (2 companies) | 12.6% | 12.6% | 12.5% | 10.7% | 10.2% |
|---|
| Kumho Tire Co Inc ($KHTC) | 15.8% | 11.2% | 11.7% | 2.2% | 5.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 3.8% | 4.2% | 4.5% | 4.4% | 4.4% |
| Hyundai Motor Co ($HYUD) | 3.8% | 8.9% | 3.2% | 3.2% | 3.3% |
| |
|---|
| Median (2 companies) | 3.8% | 6.5% | 3.8% | 3.8% | 3.9% |
|---|
| Kumho Tire Co Inc ($KHTC) | 8.2% | 22.2% | 12.4% | 10.1% | 6.2% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 7.3% | 7.5% | 7.3% | 5.1% | 6.0% |
| Hyundai Motor Co ($HYUD) | 6.6% | 4.9% | 3.6% | 3.1% | 1.6% |
| |
|---|
| Median (2 companies) | 7.0% | 6.2% | 5.5% | 4.1% | 3.8% |
|---|
| Kumho Tire Co Inc ($KHTC) | 9.7% | 3.6% | 3.1% | -4.5% | -2.5% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hyundai Motor Co ($HYUD) | 4.7x | 6.3x | 7.7x | 7.8x | 10.4x |
| Toyota Motor Corp ($TYT) | 4.0x | 4.0x | 3.4x | 4.5x | 3.9x |
| |
|---|
| Median (2 companies) | 4.4x | 5.2x | 5.5x | 6.1x | 7.2x |
|---|
| Kumho Tire Co Inc ($KHTC) | 4.1x | 7.4x | 7.5x | 34.8x | 11.6x |
