International Entertainment Corp reports 59.9% Net Income decline and 5.9% Revenue decline
19/06/2015 • About International Entertainment Corp (
$1009) • By InTwits
International Entertainment Corp reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- International Entertainment Corp is a company in decline: FY2015 revenue growth was -5.9%, 5 years revenue CAGR was -2.9%
- EBITDA Margin is quite volatile: 62.0% in FY2015, 54.9% in FY2014, 64.0% in FY2013, 50.8% in FY2012, 235.1% in FY2011
- International Entertainment Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's in pair with industry average of 6.3%.
- CAPEX is quite volatile: 14.9 in FY2015, 23.8 in FY2014, 23.7 in FY2013, 20.1 in FY2012, 39.7 in FY2011
- The company has potentially unprofitable business model: ROIC is at 2.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
International Entertainment Corp ($1009) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 409.7 | 432.5 | 450.4 | 389.7 | 366.8 | -5.9% |
| Gross Profit | 201.7 | 219.5 | 228.6 | 173.2 | 160.0 | -7.6% |
| SG&A | 130.4 | 155.5 | 146.3 | 139.7 | 158.9 | 13.8% |
| EBITDA | 963.1 | 219.7 | 288.4 | 213.8 | 227.5 | 6.4% |
| Net Income | 762.2 | 60.1 | -23.4 | 114.7 | 45.9 | -59.9% |
Balance Sheet
|
|---|
| Cash | 2,182.2 | 1,300.2 | 1,379.0 | 1,645.9 | 1,591.5 | -3.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 39.7 | 20.1 | 23.7 | 23.8 | 14.9 | -37.5% |
Ratios
|
|---|
| Revenue growth | -3.6% | 5.6% | 4.1% | -13.5% | -5.9% | |
| EBITDA growth | 236.2% | -77.2% | 31.3% | -25.9% | 6.4% | |
| Gross Margin | 49.2% | 50.8% | 50.8% | 44.4% | 43.6% | -0.8% |
| EBITDA Margin | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% | 7.2% |
| Net Income Margin | 186.0% | 13.9% | -5.2% | 29.4% | 12.5% | -16.9% |
| SG&A, % of revenue | 31.8% | 36.0% | 32.5% | 35.8% | 43.3% | 7.5% |
| CAPEX, % of revenue | 9.7% | 4.6% | 5.3% | 6.1% | 4.1% | -2.1% |
| ROIC | 22.0% | 1.4% | 3.5% | 1.2% | 2.2% | 0.9% |
| ROE | 30.7% | 2.7% | -1.3% | 6.2% | 2.5% | -3.7% |
| Net Debt/EBITDA | -2.3x | -5.9x | -4.8x | -7.7x | -7.0x | 0.7x |
Revenue and profitability
The company's Revenue decreased on 5.9% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.2 pp from 54.9% to 62.0% in FY2015.
Gross Margin decreased slightly on 0.82 pp from 44.4% to 43.6% in FY2015. SG&A as a % of Revenue increased on 7.5 pp from 35.8% to 43.3% in FY2015.
Net Income marign dropped on 16.9 pp from 29.4% to 12.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
International Entertainment Corp's CAPEX/Revenue was 4.1% in FY2015. The company's CAPEX/Revenue decreased slightly on 0.58 pp from 4.6% in FY2012 to 4.1% in FY2015. For the last three years the average CAPEX/Revenue was 5.1%.
Return on investment
The company operates at low ROIC (2.16%) and ROE (2.48%). ROIC increased slightly on 0.91 pp from 1.2% to 2.2% in FY2015. ROE decreased on 3.7 pp from 6.2% to 2.5% in FY2015.
Leverage (Debt)
The company has no debt. Cash decreased on 3.3% in FY2015.
Appendix 1: Peers in Software
Below we provide International Entertainment Corp 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) | 15.8% | 10.6% | 11.4% | 21.5% | 188.2% |
|---|
| International Entertainment Corp ($1009) | | 5.6% | 4.1% | -13.5% | -5.9% |
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) | 41.6% | 34.3% | 36.0% | 33.0% | 29.0% |
|---|
| International Entertainment Corp ($1009) | 49.2% | 50.8% | 50.8% | 44.4% | 43.6% |
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% | |
| 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% | |
| Boyaa Interactive International Ltd ($434) | 38.9% | 38.5% | 25.8% | 30.7% | |
| |
|---|
| Median (30 companies) | 8.4% | 6.9% | 10.6% | 5.4% | 3.9% |
|---|
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
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) | 2.4% | 1.4% | 2.6% | 3.5% | 0.1% |
|---|
| International Entertainment Corp ($1009) | 9.7% | 4.6% | 5.3% | 6.1% | 4.1% |
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% | |
| ITE Holdings Ltd ($8092) | -19.6% | -15.0% | 10.6% | 16.8% | 19.8% |
| TravelSky Technology Ltd ($696) | 16.2% | 15.0% | 13.8% | 12.5% | |
| |
|---|
| Median (30 companies) | 1.6% | -2.7% | 3.1% | -2.4% | 8.8% |
|---|
| International Entertainment Corp ($1009) | 22.0% | 1.4% | 3.5% | 1.2% | 2.2% |
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) | -0.7x | -0.7x | -0.9x | -0.7x | -2.8x |
|---|
| International Entertainment Corp ($1009) | -2.3x | -5.9x | -4.8x | -7.7x | -7.0x |
