Renesola Ltd. reports 117% EBITDA growth in 2018 while 5.9% Revenue decline
04/08/2019 • About Renesola Ltd. (
$SOL) • By InTwits
Renesola Ltd. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Renesola Ltd. is a company in decline: 2018 revenue growth was -5.9%, 5 years revenue CAGR was -42.3%
- EBITDA Margin is quite volatile: 24.7% in 2018, 10.7% in 2017, 5.9% in 2016, 17.1% in 2015, 6.3% in 2014
- Renesola Ltd. has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.6%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $40m in 2018, $80m in 2017, $0m in 2016, $0m in 2015, $55m in 2014
- The company has business model with low profitability: ROIC is 9.1%
- It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 5.9%. Revenue decline showed acceleration in 18Q4 - it was 91.4% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 14.0 pp from 10.7% to 24.7% in 2018.
Gross Margin surged on 15.2 pp from 13.7% to 29.0% in 2018. SG&A as a % of Revenue increased on 3.8 pp from 7.7% to 11.4% in 2018.
Net Income margin dropped on 31.6 pp from 33.5% to 1.8% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 41.7% in 2018. The company showed fast CAPEX/Revenue growth of 41.7 pp from 0% in 2015 to 41.7% in 2018. Battling declining revenue the company made large investments to CAPEX (169% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (9.1%) and ROE (1.9%). ROIC increased on 7.5 pp from 1.6% to 9.1% in 2018. ROE dropped on 42.1 pp from 44.0% to 1.9% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 3.6x. Net Debt / EBITDA surged on 1.0x from 2.3x to 3.3x in 2018. Debt jumped on 120% while cash dropped on 49.7%.
Renesola Ltd. has short term refinancing risk: cash is only 15.2% of short term debt.
Valuation and dividends
Renesola Ltd.'s trades at EV/EBITDA 5.9x and P/E 35.0x.
Management team
Xiaoliang Liang is a Renesola Ltd.'s CFO. Xiaoliang Liang has spent 1 year at the company.
Financial and operational results
FY ended 12/31/2018
Renesola Ltd. ($SOL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,561 | 116 | 81 | 103 | 97 | -5.9% |
| Gross Profit | 209 | 23 | 7 | 14 | 28 | 98.6% |
| SG&A | 160 | 8 | 7 | 8 | 11 | 40.5% |
| EBITDA | 98 | 20 | 5 | 11 | 24 | 117.0% |
| Net Income | -34 | -5 | -35 | 34 | 2 | -94.9% |
Balance Sheet
|
|---|
| Cash | 100 | 38 | 37 | 13 | 7 | -49.7% |
| Short Term Debt | 655 | 695 | 595 | 7 | 44 | 573.1% |
| Long Term Debt | 138 | 39 | 29 | 33 | 41 | 27.4% |
Cash flow
|
|---|
| Capex | 55 | 0 | 0 | 80 | 40 | -49.7% |
Ratios
|
|---|
| Revenue growth | 2.8% | -92.6% | -30.8% | 27.9% | -5.9% | |
| EBITDA growth | 4.5% | -79.8% | -76.1% | 132.3% | 117.0% | |
|
|---|
| Gross Margin | 13.4% | 19.8% | 9.0% | 13.7% | 29.0% | 15.2% |
| EBITDA Margin | 6.3% | 17.1% | 5.9% | 10.7% | 24.7% | 14.0% |
| SG&A, % of revenue | 10.3% | 6.6% | 9.2% | 7.7% | 11.4% | 3.8% |
| Net Income Margin | -2.2% | -4.4% | -43.1% | 33.5% | 1.8% | -31.6% |
| CAPEX, % of revenue | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% | -36.3% |
|
|---|
| ROIC | 0.9% | 1.9% | 0.3% | 1.6% | 9.1% | 7.5% |
| ROE | -22.1% | -4.1% | -39.0% | 44.0% | 1.9% | -42.1% |
| Net Debt/EBITDA | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x | 1.0x |
Renesola Ltd. ($SOL) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 45 | 28 | 19 | 6 | | -71.4% | -81.7% | | -91.4% |
| Net Income | 5 | -1 | 1 | -4 | | | | | -363.6% |
Balance Sheet
|
|---|
| Cash | 11 | 25 | 8 | 7 | | -59.2% | -13.4% | | -49.7% |
| Short Term Debt | 24 | 8 | 7 | 44 | | -96.3% | -98.9% | | 573.1% |
| Long Term Debt | 33 | 158 | 153 | 41 | | 5.4% | 420.2% | | 27.4% |
Ratios
|
|---|
| Gross Margin | 18.7% | 29.5% | 45.9% | 51.4% | | 17.6% | 26.8% | | 40.9% |
| Net Income Margin | 12.2% | -2.5% | 7.9% | -80.4% | | 27.0% | 18.3% | | -83.0% |
Peers in Semiconductors
Below we provide Renesola Ltd. benchmarking against other companies in Semiconductors 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 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 10.9% | 5.0% |
|---|
| Renesola Ltd. ($SOL) | | -92.6% | -30.8% | 27.9% | -5.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Renesola Ltd. ($SOL) | 13.4% | 19.8% | 9.0% | 13.7% | 29.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Renesola Ltd. ($SOL) | 6.3% | 17.1% | 5.9% | 10.7% | 24.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| Sequans Communications S.A. ($SQNS) | 0.0% | 16.9% | 11.8% | 13.3% | 22.9% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.4% |
|---|
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.7% | 3.8% | 1.7% | 3.2% | 3.0% |
|---|
| Renesola Ltd. ($SOL) | 0.9% | 1.9% | 0.3% | 1.6% | 9.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Himax Technologies, Inc. ($HIMX) | -0.6x | 1.1x | -0.6x | 0.4x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.3x | -0.0x | 0.4x | 0.3x |
|---|
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
