China Auto Logistics, Inc. :CALI-US: Earnings Analysis: Q4, 2016 By the Numbers : April 19, 2017

China Auto Logistics, Inc. reports financial results for the quarter ended December 31, 2016.

Highlights

  • Summary numbers: Revenues of USD 139.88 million, Net Earnings of USD 0.12 million.
  • Gross margins narrowed from 0.72% to 0.52% compared to the same period last year, operating (EBITDA) margins now -0.04% from -2.10%.
  • Change in operating cash flow of 87.31% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 139.88 96.29 93.82 137.39 115.47
Revenue Growth (%YOY) 21.14 -36.49 0.14 57.29 29.41
Earnings (mil) 0.12 -0.2 -0.48 -1.06 -8.35
Earnings Growth (%YOY) 101.49 -116.01 78.72 60.21 61.87
Net Margin (%) 0.09 -0.21 -0.51 -0.77 -7.23
EPS 0.03 -0.05 -0.38 -0.26 -2.07
Return on Equity (%) 2.03 -3.19 -8.29 -19.9 -127.65
Return on Assets (%) 0.31 -0.48 -0.81 -1.45 -10.97

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, CALI-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if CALI-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 45.27% and earnings by 162.11% compared to the previous period.

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from -2.10% to -0.04%. For comparison, gross margins were 0.62% and EBITDA margins were 0.00% in the last period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CALI-US‘s year-on-year change in operating cash flow of 87.31% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -2.59% to -0.06% and (2) one-time items. The company’s pretax margins are now 0.11% compared to -7.86% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

China Auto Logistics, Inc. engages in the automobile sales and trading service and a Web-based automobile sales and trading information platform. It operates through the following segments: Sales of Automobiles, Financing Services, Airport Auto Mall Automotive Services, and Other Services. The company was founded by Shi Ping Tong on February 22, 2005 and is headquartered in Tianjin, China.

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