Xinjiang Xinxin Mining Industry Co., Ltd. :XJXNY-US: Earnings Analysis: Q2, 2017 By the Numbers : October 4, 2017

Xinjiang Xinxin Mining Industry Co., Ltd. reports financial results for the quarter ended June 30, 2017.


  • Summary numbers: Revenues of USD 39.25 million, Net Earnings of USD -5.25 million.
  • Gross margins widened from 5.45% to 9.12% compared to the same period last year, operating (EBITDA) margins now 16.42% from -5.52%.
  • Change in operating cash flow of 279.15% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from -5.52% to -3.55%.

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

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 39.25 23.36 108.73 96.03 55.2
Revenue Growth (%YOY) -28.89 -43.39 -14.12 -6.67 -50.08
Earnings (mil) -5.25 -4.18 -6.73 -10.58 -1.26
Earnings Growth (%YOY) -315.37 66.67 88.65 39 94.28
Net Margin (%) -13.37 -17.91 -6.19 -11.02 -2.29
EPS -0.05 -0.04 -0.06 -0.1 -0.01
Return on Equity (%) -0.81 -0.65 -1.02 -1.55 -0.18
Return on Assets (%) -1.79 -1.44 -2.22 -3.28 -0.32

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, XJXNY-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 XJXNY-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 68.06% and earnings by -25.42% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 5.45% to 9.12%, while operating margins improved from -5.52% to 16.42% over this period. For comparison, gross margins were 12.33% and EBITDA margins -6.16% in the immediate last period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

XJXNY-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 172.70, compared to last year’s level of 50.37 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Cash Versus Earnings – Sustainable Performance?

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

XJXNY-US’s year-on-year change in operating cash flow of 279.15% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from -5.52% to -3.55%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from -7.11% to -15.73%.

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Xinjiang Xinxin Mining Industry Co., Ltd.

Company Profile

Xinjiang Xinxin Mining Industry Co., Ltd. engages in mining, ore processing, smelting, refining processing and sales of nickels, coppers and other non-ferrous metals. Its products include nickel cathode, copper cathode, cobalt products, copper concentrate, gold, silver, platinum and palladium. The company was founded on September 1, 2005 and is headquartered in Urumqi, China.

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