ITE Holdings Ltd reports 56.7% Net Income growth and 28.4% Revenue growth
17/06/2015 • About ITE Holdings Ltd (
$8092) • By InTwits
ITE Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 9.1% in FY2015, 8.8% in FY2014, 4.0% in FY2013, -6.3% in FY2012, -14.1% in FY2011
- ITE Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.4%.
- The company has highly profitable business model: ROIC is at 19.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
ITE Holdings Ltd ($8092) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 23.418 | 25.903 | 28.365 | 22.902 | 29.395 | 28.4% |
| Gross Profit | 6.492 | 7.420 | 10.211 | 9.950 | 11.584 | 16.4% |
| SG&A | | | | | 9.203 | |
| EBITDA | -3.300 | -1.619 | 1.122 | 2.005 | 2.677 | 33.5% |
| Net Income | -3.432 | -1.841 | 1.062 | 2.070 | 3.244 | 56.7% |
Balance Sheet
|
|---|
| Cash | 2.460 | 2.306 | 5.485 | 7.197 | 7.501 | 4.2% |
| Short Term Debt | 1.821 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.017 | 0.013 | 0.439 | 0.046 | 0.047 | 1.1% |
Ratios
|
|---|
| Revenue growth | -57.4% | 10.6% | 9.5% | -19.3% | 28.4% | |
| EBITDA growth | -498.5% | -50.9% | -169.3% | 78.8% | 33.5% | |
| Gross Margin | 27.7% | 28.6% | 36.0% | 43.4% | 39.4% | -4.0% |
| EBITDA Margin | -14.1% | -6.3% | 4.0% | 8.8% | 9.1% | 0.4% |
| Net Income Margin | -14.7% | -7.1% | 3.7% | 9.0% | 11.0% | 2.0% |
| SG&A, % of revenue | | | | | 31.3% | 31.3% |
| CAPEX, % of revenue | 0.1% | 0.1% | 1.5% | 0.2% | 0.2% | -0.0% |
| ROIC | -19.6% | -15.0% | 10.6% | 16.8% | 19.8% | 2.9% |
| ROE | -29.6% | -18.0% | 11.1% | 18.6% | 25.3% | 6.7% |
| Net Debt/EBITDA | | | -4.9x | -3.6x | -2.8x | 0.8x |
Revenue and profitability
The company's Revenue jumped on 28.4% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 1,180 pp from 97.9% to 1,278% in 2015.
Gross Margin decreased on 4.0 pp from 43.4% to 39.4% in FY2015.
Net Income marign increased slightly on 2.0 pp from 9.0% to 11.0% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 ITE Holdings Ltd had CAPEX/Revenue of 0.16%. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average CAPEX/Revenue for the last three years was 0.64%.
Return on investment
The company operates at high and attractive ROE (25.30%) while ROIC is a bit lower (19.78%). ROIC increased on 2.9 pp from 16.8% to 19.8% in FY2015. ROE increased on 6.7 pp from 18.6% to 25.3% in FY2015.
Leverage (Debt)
The company has no debt. Cash increased on 4.2% in FY2015.
Appendix 1: Peers in Software
Below we provide ITE Holdings 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) | -55.1% | 40.3% | -42.9% | 1,742.9% | |
| 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) | -38.5% | 177.0% | 185.7% | 62.6% | |
| China Bio Cassava Holdings Ltd ($8129) | -15.0% | -14.2% | 38.8% | 55.1% | |
| |
|---|
| Median (30 companies) | 14.6% | 10.6% | 11.4% | 21.5% | 348.0% |
|---|
| ITE Holdings Ltd ($8092) | | 10.6% | 9.5% | -19.3% | 28.4% |
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% | |
| 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% | |
| Kingsoft Corp Ltd ($3888) | 85.5% | 86.8% | 86.3% | 82.4% | |
| |
|---|
| Median (29 companies) | 43.5% | 40.0% | 38.6% | 33.0% | 18.6% |
|---|
| ITE Holdings Ltd ($8092) | 27.7% | 28.6% | 36.0% | 43.4% | 39.4% |
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% | |
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | |
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | |
| TravelSky Technology Ltd ($696) | 43.3% | 38.1% | 35.8% | 31.9% | |
| |
|---|
| Median (30 companies) | 10.3% | 7.8% | 10.9% | 5.4% | -1.4% |
|---|
| ITE Holdings Ltd ($8092) | -14.1% | -6.3% | 4.0% | 8.8% | 9.1% |
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% | |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | |
| |
|---|
| Median (29 companies) | 3.1% | 2.6% | 2.8% | 3.6% | 0.0% |
|---|
| ITE Holdings Ltd ($8092) | 0.1% | 0.1% | 1.5% | 0.2% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | |
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| TravelSky Technology Ltd ($696) | 16.2% | 15.0% | 13.8% | 12.5% | |
| Beijing Beida Jade Bird Universal Sci-Tech Co Ltd ($8095) | 5.6% | 8.9% | 10.7% | 11.0% | |
| |
|---|
| Median (30 companies) | 4.9% | 1.4% | 1.9% | -2.4% | -2.2% |
|---|
| ITE Holdings Ltd ($8092) | -19.6% | -15.0% | 10.6% | 16.8% | 19.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | |
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | |
| |
|---|
| Median (18 companies) | -0.9x | -0.7x | -0.9x | -0.7x | |
|---|
| ITE Holdings Ltd ($8092) | | | -4.9x | -3.6x | -2.8x |
