EPS of $-0.70 decreased by 461.5% from previous year
Gross margin of 18.1%
Net income of -9.35M
""Our ongoing efforts to innovate our product lines are essential, and we are exploring collaborations that can better position us in the urban agriculture market."" - CGA CEO
China Green Agriculture Inc (CGA) Q4 2023 Financial Results: Comprehensive Analysis and Insights
Executive Summary
In Q4 2023, China Green Agriculture Inc (CGA) reported revenues of $26.74 million, a decline of 31.05% sequentially, yet reflecting a 1.39% year-over-year increase. However, the company experienced a net loss of $9.35 million, reflecting ongoing challenges in operational efficiency and market conditions. The management’s commentary indicated a strategic pivot to optimize product offerings and targeting higher-margin segments in the agricultural market. This report will explore the factors influencing these results and provide insights into the company’s position and potential moving forward.
Key Performance Indicators
Revenue
26.74M
QoQ: -31.05% | YoY:1.39%
Gross Profit
4.84M
18.11% margin
QoQ: -14.80% | YoY:16.19%
Operating Income
-9.58M
QoQ: 2.44% | YoY:-499.35%
Net Income
-9.35M
QoQ: 5.06% | YoY:-480.08%
EPS
-0.70
QoQ: 7.59% | YoY:-461.54%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $26.74 million (YoY: +1.39%, QoQ: -31.05%)
**Gross Profit:** $4.84 million (YoY: +16.19%, QoQ: -14.80%)
**Operating Income:** -$9.58 million (YoY: -499.35%, QoQ: +2.44%)
**Net Income:** -$9.35 million (YoY: -480.08%, QoQ: +5.06%)
**EPS:** -$0.70 (YoY: -461.54%, QoQ: +7.59%)
Financial Highlights
Financial Performance Overview:
- Revenue: $26.74 million (YoY: +1.39%, QoQ: -31.05%)
- Gross Profit: $4.84 million (YoY: +16.19%, QoQ: -14.80%)
- Operating Income: -$9.58 million (YoY: -499.35%, QoQ: +2.44%)
- Net Income: -$9.35 million (YoY: -480.08%, QoQ: +5.06%)
- EPS: -$0.70 (YoY: -461.54%, QoQ: +7.59%)
Despite a slight increase in year-over-year revenue, the substantial decline in QoQ revenue highlights a need for strategic reassessment. Management indicated that cost control measures are underway, and efforts to enhance product pricing and customer acquisition are central to the recovery strategy.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
26.74M
1.39%
-31.05%
Gross Profit
4.84M
16.19%
-14.80%
Operating Income
-9.58M
-499.35%
2.44%
Net Income
-9.35M
-480.08%
5.06%
EPS
-0.70
-461.54%
7.59%
Key Financial Ratios
currentRatio
2.5
grossProfitMargin
18.1%
operatingProfitMargin
-35.8%
netProfitMargin
-35%
returnOnAssets
-5.01%
returnOnEquity
-7.46%
debtEquityRatio
0.06
operatingCashFlowPerShare
$0.34
freeCashFlowPerShare
$0.26
priceToBookRatio
0.27
priceEarningsRatio
-0.91
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights on Performance: On Revenue Decline: "We faced significant headwinds in the market which affected our revenue stream, primarily due to lower demand in certain product lines." On Future Strategy: "Our focus is shifting to more profitable fertilizer variants and expanding our reach within urban agricultural markets. This is critical for improving margins and sustaining growth."
These insights underscore the management's commitment to recalibrating their market approach amid challenging conditions and declining profitability, while also indicating a forward-looking strategy to enhance resilience.
"Our ongoing efforts to innovate our product lines are essential, and we are exploring collaborations that can better position us in the urban agriculture market."
— CGA CEO
"Despite these challenges, we're seeing interest in our specialized products that could yield better profitability in the long term.
— CGA CFO
Forward Guidance
Looking ahead, management has projected a moderate recovery in Q1 2024 with targeted revenue growth driven by new product launches and marketing strategies aimed at urban farmers. They anticipate a revenue increase of approximately 15-20% over the next quarter, contingent on improved demand and implementation of cost-saving initiatives. Key factors for investors to monitor include sales traction in new product lines and stabilization in raw material costs, which will be crucial for operational performance improvements.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CGA Focus
18.11%
-35.80%
-7.46%
-90.90%
YTEN
-21.70%
-54.12%
1.32%
-22.00%
KPLUY
10.40%
5.75%
0.61%
7.88%
IPI
7.21%
-6.79%
-5.45%
-2.05%
BIOX
36.80%
4.86%
-0.57%
-122.83%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
CGA exhibits a complex investment outlook. While current financial metrics indicate significant operational losses, the strategic pivot to urban agriculture and innovative fertilization solutions offers potential for recovery. Investors should consider the current cash flexibility, operational restructuring plans, and the company's ability to adapt to market changes moving forward. Continuous monitoring of Q1 performance and management's execution of articulated strategies will be crucial indicators for future investment decisions.
Key Investment Factors
Growth Potential
CGA is strategically positioning itself in the niche urban agriculture segment, which presents significant growth opportunities as demand for specialty fertilizers increases among urban and peri-urban farmers.
Profitability Risk
Calibrating against volatile market conditions and increasing competition from larger agricultural companies may hinder CGA's recovery efforts. Additionally, maintaining financial sustainability amid ongoing operational losses is a concern.
Financial Position
CGA's cash position remains solid at $71.14 million, with a healthy current ratio of 2.50, suggesting that while operational losses persist, liquidity is manageable for short-term survival.
SWOT Analysis
Strengths
Diverse product portfolio with a focus on innovative fertilizers.
Established distribution network across 22 provinces in China.
Weaknesses
Recent decline in sales and profitability.
High operating expenses impacting net income.
Opportunities
Growing demand for organic and specialty fertilizers in urban markets.
Potential for expansion in international markets, specifically in India and Africa.
Threats
Intense competition from larger agricultural firms.
Regulatory challenges and fluctuations in raw materials costs.