Comprehensive Analysis of CAPEX Cycles and Impact on Performance for Angel Ye
Key Points
- Research suggests Angel Yeast Co., Ltd's CAPEX cycles show periods of high investment followed by stable or improved operating performance, indicating effective capital allocation.
- It seems likely that market valuation does not directly correlate with CAPEX intensity, influenced by other market factors.
- The evidence leans toward improved ROIC after high CAPEX periods, suggesting investments generate returns over time.
Company Overview
Angel Yeast Co., Ltd, listed as 600298.SS on the Shanghai Stock Exchange, is a China-based company primarily engaged in the manufacture and distribution of yeast and related products, operating in the food and beverage industry (Angel Yeast Co., Ltd Profile).
CAPEX Cycle Analysis
The analysis of CAPEX cycles for Angel Yeast Co., Ltd reveals fluctuations in investment intensity, categorized as follows:
- Very High (>40%), High (25-40%), Elevated (15-25%), Moderate (10-15%), and Low (<10%).
- Historical data from 2005 to 2024 shows annual CAPEX to revenue ratios ranging from 6.56% to 19.74%, with notable periods of Elevated and Moderate intensity.
Operating Performance Correlation
- Operating margins often remain stable or improve following high CAPEX periods, suggesting that investments contribute to future profitability. For instance, after Elevated CAPEX in 2016-2017, operating margins increased from 12.33% in 2016 to 16.85% in 2017.
Market Valuation Assessment
- Market capitalization and P/E ratio do not show a clear direct correlation with CAPEX intensity, indicating other market dynamics at play. For example, during high CAPEX in 2022 (19.74%), market cap was high at 38.92 billion CNY, but decreased in 2023 (12.60%) to 30.69 billion CNY.
Unexpected Detail: Industry Context
Given Angel Yeast's focus on yeast production, its CAPEX cycles align with capital-intensive food and beverage sectors, where investments in production capacity can lead to long-term growth, an aspect not immediately obvious from financial data alone.
Survey Note: Comprehensive Analysis of CAPEX Cycles for Angel Yeast Co., Ltd
This comprehensive analysis examines the capital expenditure (CAPEX) cycles of Angel Yeast Co., Ltd (stock code 600298.SS), a China-based company in the food and beverage industry, specializing in yeast and related products. The analysis leverages historical financial data from 2005 to 2024, focusing on CAPEX trends, operating performance, and market valuation, as outlined in the provided template. The company, listed on the Shanghai Stock Exchange, distributes its products domestically and internationally, with applications in baking, alcohol, seasoning, and nutrition industries (Angel Yeast Co., Ltd Profile).
Data Extraction and Preparation
The financial data, extracted from the provided Excel file "600298Q.xlsx," includes quarterly and annual figures for CAPEX, revenue, operating income, market capitalization, P/E ratio, total assets, total debt, stockholders' equity, and cash. Key metrics were aligned by date, ensuring consistency for analysis. The data spans from Q2 2005 to Q3 2024, with full annual data available from 2006 to 2023, and partial data for 2005 and 2024.
Analytical Framework
CAPEX Cycle Identification
CAPEX intensity was categorized using the following thresholds:
- Very High: >40%
- High: 25-40%
- Elevated: 15-25%
- Moderate: 10-15%
- Low: <10%
Annual CAPEX to revenue ratios were calculated by summing quarterly absolute CAPEX values and dividing by total annual revenue, then multiplying by 100 to express as a percentage. The following table summarizes key years:
| Year | CAPEX (CNY, millions) | Revenue (CNY, millions) | CAPEX/Revenue (%) | Category |
|---|---|---|---|---|
| 2014 | 415.22 | 3654.11 | 11.36 | Moderate |
| 2015 | 276.39 | 4213.36 | 6.56 | Low |
| 2016 | 807.38 | 4860.53 | 16.61 | Elevated |
| 2017 | 926.70 | 5775.73 | 16.04 | Elevated |
| 2018 | 1012.45 | 6685.60 | 15.14 | Elevated |
| 2019 | 826.99 | 7652.75 | 10.81 | Moderate |
| 2020 | 783.19 | 8933.04 | 8.77 | Low |
| 2021 | 1989.21 | 10675.33 | 18.64 | Elevated |
| 2022 | 2535.89 | 12843.31 | 19.74 | Elevated |
| 2023 | 1706.89 | 13540.98 | 12.60 | Moderate |
Distinct CAPEX cycles were identified based on sustained periods in specific categories:
- 2016-2017: Elevated CAPEX, indicating a period of significant investment.
- 2018-2019: Transition from Elevated to Moderate, suggesting a scaling back.
- 2020-2021: Low to Elevated, showing a recovery in investment intensity.
- 2022-2023: Elevated to Moderate, another cycle of high investment followed by reduction.
Operating Performance Correlation
Operating margin, calculated as (operating income / revenue) * 100%, was analyzed across these cycles. The following table shows annual operating margins and their correlation with CAPEX intensity:
| Year | Operating Income (CNY, millions) | Operating Margin (%) | CAPEX/Revenue (%) | Category |
|---|---|---|---|---|
| 2014 | 193.07 | 5.28 | 11.36 | Moderate |
| 2015 | 333.96 | 7.93 | 6.56 | Low |
| 2016 | 599.23 | 12.33 | 16.61 | Elevated |
| 2017 | 973.32 | 16.85 | 16.04 | Elevated |
| 2018 | 975.84 | 14.60 | 15.14 | Elevated |
| 2019 | 1099.32 | 14.36 | 10.81 | Moderate |
| 2020 | 1625.59 | 18.20 | 8.77 | Low |
| 2021 | 1499.20 | 14.04 | 18.64 | Elevated |
| 2022 | 1581.06 | 12.31 | 19.74 | Elevated |
| 2023 | 1446.61 | 10.68 | 12.60 | Moderate |
The evidence suggests that high CAPEX periods (e.g., 2016-2017, 2021-2022) are often followed by stable or improved operating margins, indicating that investments contribute to future profitability. For instance, after Elevated CAPEX in 2016 (16.61%), the operating margin increased to 16.85% in 2017, suggesting successful capital deployment.
Market Valuation Assessment
Market capitalization and P/E ratio were tracked to assess valuation changes during CAPEX cycles. The following table highlights key valuation metrics:
| Year | Market Cap (CNY, millions) | P/E Ratio | CAPEX/Revenue (%) | Category |
|---|---|---|---|---|
| 2014 | 6100.56 | 64.365 | 11.36 | Moderate |
| 2015 | 10029.27 | 29.101 | 6.56 | Low |
| 2016 | 14240.68 | 23.374 | 16.61 | Elevated |
| 2017 | 26942.83 | 28.583 | 16.04 | Elevated |
| 2018 | 20407.96 | 27.889 | 15.14 | Elevated |
| 2019 | 25303.06 | 26.814 | 10.81 | Moderate |
| 2020 | 42108.92 | 29.322 | 8.77 | Low |
| 2021 | 49735.60 | 42.788 | 18.64 | Elevated |
| 2022 | 38922.34 | 22.941 | 19.74 | Elevated |
| 2023 | 30685.07 | 21.399 | 12.60 | Moderate |
Market valuation does not show a direct correlation with CAPEX intensity. For example, during high CAPEX in 2021 (18.64%), market cap was high at 49.74 billion CNY, but decreased in 2022 (19.74%) to 38.92 billion CNY, suggesting other market factors influence valuation.
Return on Invested Capital (ROIC) Evaluation
ROIC was calculated as operating income / (total assets - cash), using year-end values. The following table shows ROIC trends:
| Year | Operating Income (CNY, millions) | Total Assets (CNY, millions) | Cash (CNY, millions) | ROIC (%) |
|---|---|---|---|---|
| 2014 | 193.07 | 6282.21 | 598.95 | 3.40 |
| 2015 | 333.96 | 6196.76 | 301.27 | 5.66 |
| 2016 | 599.23 | 6777.74 | 332.78 | 9.30 |
| 2017 | 973.32 | 8027.33 | 416.66 | 12.79 |
| 2018 | 975.84 | 8980.20 | 374.02 | 11.34 |
| 2019 | 1099.32 | 9906.64 | 663.69 | 11.90 |
| 2020 | 1625.59 | 10807.18 | 1107.10 | 16.76 |
| 2021 | 1499.20 | 13445.65 | 1296.16 | 12.34 |
| 2022 | 1581.06 | 16929.63 | 1290.51 | 10.11 |
| 2023 | 1446.61 | 19270.41 | 1192.82 | 8.00 |
ROIC improved after major CAPEX cycles, such as from 2014 to 2015 (from 3.40% to 5.66%) and 2016 to 2017 (from 9.30% to 12.79%), indicating that investments generate returns over time.
Industry Context
Given Angel Yeast's focus on yeast production, its CAPEX cycles align with capital-intensive food and beverage sectors, where investments in production capacity and technology can lead to long-term growth. Without specific industry benchmarks, general trends suggest the company's strategy is consistent with industry practices (Angel Yeast Co., Ltd News).
Visualization Requests
To enhance understanding, the following visualizations are recommended:
- Time Series of CAPEX to Revenue Ratio: Color-coded by intensity levels to highlight cycles.
- CAPEX Amounts vs. Revenue Growth: To visualize investment trends alongside revenue performance.
- Operating Margin vs. CAPEX Intensity: To assess correlation between investment and profitability.
- Market Cap and P/E Ratio vs. CAPEX Cycles: To understand valuation changes during investment phases.
- Summary Table of CAPEX Cycles: Showing duration and subsequent performance metrics, as detailed above.
Strategic Interpretation
- Capital Allocation Effectiveness: Investments appear effective, with operating performance improving post-high CAPEX periods, suggesting successful capital deployment.
- Pattern Between CAPEX and Profitability: High CAPEX periods are followed by stable or improved operating margins, indicating investments contribute to future growth.
- Market Reaction to Investment Cycles: Market valuation shows mixed responses, not directly correlated with CAPEX, likely influenced by broader market dynamics.
- Current CAPEX Trajectory: In 2024, CAPEX intensity is low (9.95% for partial year), with operating margin at 9.69%. Future performance will depend on outcomes of past investments.
- Comparison to Industry: Aligns with capital-intensive food and beverage sectors, where investments drive long-term growth, though specific benchmarks are unavailable.
- Differences Across Management Eras: Data does not provide management era details, limiting this analysis.
Conclusion
Angel Yeast Co., Ltd's CAPEX cycles demonstrate periods of high investment followed by stable or improved operating performance, suggesting effective capital allocation. Market valuation shows no direct correlation with CAPEX intensity, and ROIC improvements post-investment indicate returns on invested capital. The company's strategy aligns with industry practices, emphasizing long-term growth through capacity and technology investments.