Kingsoft Corp Ltd revenue growth accelerated to 69.4% in 2015 vs. 54.2% a year earliner
22/03/2016 • About Kingsoft Corp Ltd (
$3888) • By InTwits
Kingsoft Corp Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 15.3% in 2015, 20.1% in 2014, 35.9% in 2013, 35.6% in 2012, 41.3% in 2011
- Kingsoft Corp Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.1%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 629 in 2015, 479 in 2014, 83.0 in 2013, 61.0 in 2012, 69.6 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kingsoft Corp Ltd ($3888) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,021 | 1,411 | 2,173 | 3,350 | 5,676 | 69.4% |
| Gross Profit | 873 | 1,224 | 1,876 | 2,760 | 4,357 | 57.8% |
| SG&A | 234 | 367 | 561 | 1,076 | 2,173 | 102.0% |
| EBITDA | 421 | 503 | 781 | 672 | 868 | 29.2% |
| Net Income | 325 | 433 | 671 | 769 | 369 | -52.0% |
Balance Sheet
|
|---|
| Cash | 1,954 | 2,416 | 4,481 | 6,984 | 8,606 | 23.2% |
| Short Term Debt | 347 | 414 | 16 | 16 | 147 | 831.9% |
| Long Term Debt | 0 | 0 | 1,116 | 2,792 | 2,710 | -2.9% |
Cash flow
|
|---|
| Capex | 70 | 61 | 83 | 479 | 629 | 31.3% |
Ratios
|
|---|
| Revenue growth | 5.1% | 38.3% | 54.0% | 54.2% | 69.4% | |
| EBITDA growth | 15.3% | 19.4% | 55.2% | -13.9% | 29.2% | |
| Gross Margin | 85.5% | 86.8% | 86.3% | 82.4% | 76.8% | -5.6% |
| EBITDA Margin | 41.3% | 35.6% | 35.9% | 20.1% | 15.3% | -4.8% |
| Net Income Margin | 31.8% | 30.7% | 30.9% | 22.9% | 6.5% | -16.4% |
| SG&A, % of revenue | 23.0% | 26.0% | 25.8% | 32.1% | 38.3% | 6.2% |
| CAPEX, % of revenue | 6.8% | 4.3% | 3.8% | 14.3% | 11.1% | -3.2% |
| ROIC | 14.2% | 14.6% | 16.9% | 7.3% | 5.0% | -2.3% |
| ROE | 16.1% | 18.7% | 22.8% | 19.4% | 5.9% | -13.4% |
| Net Debt/EBITDA | -3.8x | -4.0x | -4.3x | -6.2x | -6.6x | -0.4x |
Revenue and profitability
Kingsoft Corp Ltd's Revenue surged on 69.4% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 17.9 pp from -6.5% to -24.4% in 2015.
Gross Margin decreased on 5.6 pp from 82.4% to 76.8% in 2015. SG&A as a % of Revenue increased on 6.2 pp from 32.1% to 38.3% in 2015.
Net Income marign dropped on 16.4 pp from 22.9% to 6.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Kingsoft Corp Ltd had CAPEX/Revenue of 11.1%. The company showed CAPEX/Revenue growth of 6.8 pp from 4.3% in 2012 to 11.1% in 2015. It's average CAPEX/Revenue for the last three years was 9.7%.The company invested a big chunk of EBITDA (72.5%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (4.95%) and ROE (5.94%). ROIC decreased on 2.3 pp from 7.3% to 5.0% in 2015. ROE dropped on 13.4 pp from 19.4% to 5.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -6.6x and Debt / EBITDA is 3.3x. Net Debt / EBITDA dropped on 0.4x from -6.2x to -6.6x in 2015. Debt increased slightly on 1.8% in 2015 while cash surged on 23.2% in 2015.
Appendix 1: Peers in Software
Below we provide Kingsoft Corp Ltd benchmarking against other companies in Software 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | 40.3% | -42.9% | 1,742.9% | 157.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | 194.6% | 164.0% | 33.6% | 100.5% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | -16.7% | 393.7% | -6.6% | 92.2% | |
| Epicurean and Co Ltd ($8213) | | 177.0% | 185.7% | 62.6% | 22.0% |
| China Bio Cassava Holdings Ltd ($8129) | | -14.2% | 38.8% | 55.1% | -19.7% |
| |
|---|
| Median (33 companies) | 16.2% | 9.5% | 10.3% | 20.6% | 14.1% |
|---|
| Kingsoft Corp Ltd ($3888) | | 38.3% | 54.0% | 54.2% | 69.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.2% | 90.4% | 97.4% | 98.4% | 98.3% |
| Chanjet Information Technology Co Ltd ($1588) | 91.9% | 89.2% | 91.3% | 92.4% | 91.4% |
| NetDragon Websoft Inc ($777) | 90.1% | 93.4% | 90.8% | 89.3% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | 19.4% | 6.5% | 45.3% | 84.8% | |
| Kingdee International Software Group Co Ltd ($268) | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% |
| |
|---|
| Median (32 companies) | 46.4% | 44.3% | 40.5% | 39.7% | 39.4% |
|---|
| Kingsoft Corp Ltd ($3888) | 85.5% | 86.8% | 86.3% | 82.4% | 76.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sinosoft Technology Group Ltd ($1297) | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% |
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
| China Binary Sale Technology Ltd ($8255) | 41.3% | 35.1% | 35.4% | 44.4% | 50.5% |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | 25.8% |
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% |
| |
|---|
| Median (33 companies) | 11.8% | 8.1% | 10.8% | 8.8% | 9.1% |
|---|
| Kingsoft Corp Ltd ($3888) | 41.3% | 35.6% | 35.9% | 20.1% | 15.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| NetDragon Websoft Inc ($777) | 13.3% | 21.1% | 34.6% | 54.6% | |
| China Eco-Farming Ltd ($8166) | 0.3% | 0.6% | 0.7% | 18.1% | 2.5% |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | 1.1% |
| Epicurean and Co Ltd ($8213) | 18.7% | 25.3% | 10.4% | 10.3% | 5.5% |
| |
|---|
| Median (32 companies) | 2.0% | 1.3% | 2.0% | 3.5% | 1.7% |
|---|
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | 11.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Binary Sale Technology Ltd ($8255) | | 27.7% | 26.9% | 28.4% | 19.0% |
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | 15.6% |
| Finsoft Corp ($8018) | | 140.5% | 4.6% | 25.0% | -5.6% |
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| |
|---|
| Median (33 companies) | 1.6% | 3.0% | 4.6% | 1.2% | 2.2% |
|---|
| Kingsoft Corp Ltd ($3888) | 14.2% | 14.6% | 16.9% | 7.3% | 5.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | -0.4x |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | 12.0x |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | 4.4x |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | 0.2x |
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | 0.7x |
| |
|---|
| Median (21 companies) | -0.9x | -1.0x | -1.5x | -1.2x | -0.3x |
|---|
| Kingsoft Corp Ltd ($3888) | -3.8x | -4.0x | -4.3x | -6.2x | -6.6x |
