VTech Holdings Ltd reports 2.8% Net Income decline and almost no change in EBITDA Margin of 13.4%
19/05/2015 • About VTech Holdings Ltd (
$303) • By InTwits
VTech Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 13.4% in FY2015 vs. 13.6% in FY2014 vs. 14.6% in FY2011
- VTech Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's a lot of higher than industry average of 60.8%.
- CAPEX is quite volatile: 1,881 in 2015, 156 in 2014, 5,735 in 2013, 2,010 in 2012, 44.2 in 2011
- The company has highly profitable business model: ROIC is at 39.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
VTech Holdings Ltd ($303) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,713 | 1,785 | 1,858 | 1,899 | 1,880 | -1.0% |
| Gross Profit | 567 | 571 | 598 | 634 | 610 | -3.8% |
| SG&A | 293 | 306 | 317 | 349 | 334 | -4.4% |
| EBITDA | 250 | 236 | 253 | 258 | 252 | -2.2% |
| Net Income | 202 | 192 | 202 | 204 | 198 | -2.8% |
Balance Sheet
|
|---|
| Cash | 243 | 177 | 174 | 188 | 224 | 19.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 26 | 30 | 30 | 30 | 31 | 2.7% |
Ratios
|
|---|
| Revenue growth | 11.8% | 4.2% | 4.1% | 2.2% | -1.0% | |
| EBITDA growth | -4.1% | -5.8% | 7.3% | 2.0% | -2.2% | |
| Gross Margin | 33.1% | 32.0% | 32.2% | 33.4% | 32.5% | -0.9% |
| EBITDA Margin | 14.6% | 13.2% | 13.6% | 13.6% | 13.4% | -0.2% |
| Net Income Margin | 11.8% | 10.8% | 10.8% | 10.7% | 10.5% | -0.2% |
| SG&A, % of revenue | 17.1% | 17.1% | 17.1% | 18.4% | 17.8% | -0.6% |
| CAPEX, % of revenue | 1.5% | 1.7% | 1.6% | 1.6% | 1.6% | 0.1% |
| ROIC | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% | -0.2% |
| ROE | 38.1% | 34.9% | 36.0% | 36.2% | 35.9% | -0.3% |
| Net Debt/EBITDA | -1.0x | -0.7x | -0.7x | -0.7x | -0.9x | -0.2x |
Revenue and profitability
VTech Holdings Ltd's Revenue decreased slightly on 1.0% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.8 pp from 26.4% to 21.6% in 2015.
Gross Margin decreased slightly on 0.93 pp from 33.4% to 32.5% in FY2015. SG&A as a % of Revenue decreased slightly on 0.63 pp from 18.4% to 17.8% in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.6% in FY2015. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average level of CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at high and attractive ROIC (39.77%) and ROE (35.91%). ROIC showed almost no change in FY2015. ROE showed almost no change in FY2015.
Leverage (Debt)
The company has no debt. Cash surged on 19.3% in FY2015.
Management team
VTech Holdings Ltd's CEO is Wong Chi-Yun "Allan". Wong Chi-Yun "Allan" has 14 years tenure at the company.
Appendix 1: Peers in Telecommunications
Below you can find VTech Holdings Ltd benchmarking vs. other companies in Telecommunications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Energine International Holdings Ltd ($1185) | -41.8% | 143.6% | 34.3% | 103.1% | |
| MOBI Development Co Ltd ($947) | -23.4% | -13.8% | 29.1% | 85.6% | |
| Vodatel Networks Holdings Ltd ($8033) | 34.4% | -5.9% | -4.6% | 81.7% | |
| Gold Tat Group International Ltd ($8266) | 34.7% | 29.4% | 1,582.2% | 77.0% | |
| Great World Co Holdings Ltd ($8003) | -99.1% | 1,651.8% | -81.7% | 61.9% | |
| |
|---|
| Median (48 companies) | 7.8% | 9.1% | 8.1% | 7.2% | |
|---|
| VTech Holdings Ltd ($303) | | 4.2% | 4.1% | 2.2% | -1.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Synertone Communication Corp ($1613) | 65.4% | 68.1% | 64.1% | 70.5% | |
| Zhi Cheng Holdings Ltd ($8130) | 61.6% | 45.9% | 41.0% | 64.0% | |
| APT Satellite Holdings Ltd ($1045) | 52.3% | 58.7% | 64.1% | 62.5% | |
| Hong Kong Television Network Ltd ($1137) | | -59.6% | -101.3% | 59.7% | |
| Cisco Systems Inc ($4333) | 61.4% | 61.2% | 60.6% | 58.9% | |
| |
|---|
| Median (42 companies) | 28.1% | 25.5% | 27.2% | 26.6% | |
|---|
| VTech Holdings Ltd ($303) | 33.1% | 32.0% | 32.2% | 33.4% | 32.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 83.5% | 86.5% | 85.8% | 81.6% | |
| APT Satellite Holdings Ltd ($1045) | 76.7% | 81.0% | 78.9% | 77.5% | |
| Synertone Communication Corp ($1613) | 49.5% | 44.9% | 48.5% | 49.4% | |
| PCCW Ltd ($8) | 31.4% | 32.0% | 31.9% | 39.2% | |
| China Mobile Ltd ($941) | 47.1% | 43.7% | 38.2% | 36.9% | |
| |
|---|
| Median (48 companies) | 14.0% | 9.5% | 6.4% | 7.7% | |
|---|
| VTech Holdings Ltd ($303) | 14.6% | 13.2% | 13.6% | 13.6% | 13.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 12,435.9% | 504.9% | 1,283.5% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 61.8% | 93.8% | 71.7% | 75.0% | |
| Hanny Holdings Ltd ($275) | 80.8% | 19.8% | 11.6% | 28.3% | |
| APT Satellite Holdings Ltd ($1045) | 155.2% | 74.3% | 2.5% | 27.2% | |
| China Electronics Corp Holdings Co Ltd ($85) | 1.5% | 1.8% | 8.3% | 27.1% | |
| |
|---|
| Median (48 companies) | 3.1% | 2.7% | 3.8% | 5.2% | |
|---|
| VTech Holdings Ltd ($303) | 1.5% | 1.7% | 1.6% | 1.6% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TCL Communication Technology Holdings Ltd ($2618) | 6.4% | -1.6% | 6.0% | 17.2% | |
| China Fiber Optic Network System Group Ltd ($3777) | 23.1% | 18.8% | 17.6% | 16.6% | |
| China U-Ton Holdings Ltd ($6168) | 69.5% | 35.7% | 25.0% | 16.2% | |
| ETS Group Ltd ($8031) | 41.8% | 21.5% | 31.9% | 14.5% | |
| China Mobile Ltd ($941) | 23.5% | 21.4% | 17.6% | 14.0% | |
| |
|---|
| Median (48 companies) | 6.9% | 5.2% | 5.7% | 5.7% | |
|---|
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CCT Land Holdings Ltd ($261) | | 10.1x | 23.8x | 48.4x | |
| China Energine International Holdings Ltd ($1185) | | | | 13.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.1x | -2.0x | -1.3x | 12.5x | |
| China All Access Holdings Ltd ($633) | -1.0x | 0.9x | 1.8x | 5.2x | |
| Synertone Communication Corp ($1613) | -0.3x | -0.4x | -2.2x | 4.8x | |
| |
|---|
| Median (34 companies) | -0.1x | -0.2x | 0.6x | 1.1x | |
|---|
| VTech Holdings Ltd ($303) | -1.0x | -0.7x | -0.7x | -0.7x | -0.9x |
