LK Technology Holdings Ltd reports 26.5% CAPEX decline while 18.5% Revenue growth
26/06/2015 • About LK Technology Holdings Ltd (
$558) • By InTwits
LK Technology Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- LK Technology Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.4%. At the same time it's a lot of higher than industry average of 4.4%.
- CAPEX is quite volatile: 65.9 in 2015, 50.5 in 2014, 49.2 in 2013, 44.7 in 2012, 298 in 2011
- The company has potentially unprofitable business model: ROIC is at 4.5%
- It operates with high leverage: Net Debt/EBITDA is 4.6x while industry average is -2.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
LK Technology Holdings Ltd ($558) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,603 | 3,012 | 2,560 | 2,653 | 3,145 | 18.5% |
| Gross Profit | 844 | 826 | 636 | 690 | 819 | 18.7% |
| SG&A | | | 570 | 620 | 705 | 13.7% |
| EBITDA | 454 | 351 | 222 | 231 | 284 | 23.2% |
| Net Income | 259 | 204 | 34 | 71 | 105 | 48.9% |
Balance Sheet
|
|---|
| Cash | 444 | 439 | 390 | 354 | 307 | -13.2% |
| Short Term Debt | 757 | 1,008 | 1,481 | 1,277 | 1,196 | -6.4% |
| Long Term Debt | 92 | 305 | 31 | 203 | 414 | 104.1% |
Cash flow
|
|---|
| Capex | 198 | 280 | 261 | 240 | 176 | -26.5% |
Ratios
|
|---|
| Revenue growth | 84.8% | 15.7% | -15.0% | 3.7% | 18.5% | |
| EBITDA growth | 201.4% | -22.7% | -36.8% | 3.9% | 23.2% | |
| Gross Margin | 32.4% | 27.4% | 24.9% | 26.0% | 26.0% | 0.0% |
| EBITDA Margin | 17.5% | 11.7% | 8.7% | 8.7% | 9.0% | 0.3% |
| Net Income Margin | 10.0% | 6.8% | 1.3% | 2.7% | 3.3% | 0.7% |
| SG&A, % of revenue | | | 22.3% | 23.4% | 22.4% | -0.9% |
| CAPEX, % of revenue | 7.6% | 9.3% | 10.2% | 9.1% | 5.6% | -3.4% |
| ROIC | 16.7% | 8.7% | 3.1% | 3.2% | 4.5% | 1.3% |
| ROE | 21.6% | 12.6% | 2.0% | 4.1% | 5.8% | 1.8% |
| Net Debt/EBITDA | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x | -0.3x |
Revenue and profitability
The company's Revenue surged on 18.5% in FY2015. EBITDA Margin showed almost no change in FY2015.
Gross Margin showed almost no change in FY2015. SG&A as a % of Revenue decreased slightly on 0.95 pp from 23.4% to 22.4% in FY2015.
Net Income marign increased slightly on 0.68 pp from 2.7% to 3.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
LK Technology Holdings Ltd's CAPEX/Revenue was 5.6% in FY2015. LK Technology Holdings Ltd's CAPEX/Revenue decreased on 3.7 pp from 9.3% in FY2012 to 5.6% in FY2015. It's average level of CAPEX/Revenue for the last three years was 8.3%.To deliver this fast growth the company invested a large share of EBITDA (62.1%) to CAPEX.
Return on investment
The company operates at low ROIC (4.51%) and ROE (5.85%). ROIC increased slightly on 1.3 pp from 3.2% to 4.5% in FY2015. ROE increased slightly on 1.8 pp from 4.1% to 5.8% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.6x and Debt / EBITDA is 5.7x. Net Debt / EBITDA dropped on 0.3x from 4.9x to 4.6x in FY2015. Debt increased on 8.8% in FY2015 while cash dropped on 13.2% in FY2015.
Appendix 1: Peers in Machinery-Diversified
Below we provide LK Technology Holdings Ltd benchmarking against other companies in Machinery-Diversified 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 |
|---|
| Sun East Technology Holdings Ltd ($365) | | -25.1% | -10.7% | 39.3% | 6.4% |
| Shanghai Prime Machinery Co Ltd ($2345) | 30.3% | 2.6% | -8.9% | 37.3% | |
| Sinoref Holdings Ltd ($1020) | 1.5% | -0.2% | -42.2% | 29.2% | |
| North Asia Strategic Holdings Ltd ($8080) | | -52.2% | -29.1% | 23.7% | 42.6% |
| Asia Tele-Net & Technology Corp Ltd ($679) | 3.5% | -36.9% | 23.0% | 18.6% | |
| |
|---|
| Median (21 companies) | 13.8% | -6.8% | -4.2% | -2.6% | 6.4% |
|---|
| LK Technology Holdings Ltd ($558) | | 15.7% | -15.0% | 3.7% | 18.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 38.3% | 49.1% | 51.7% | 54.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 36.4% | 44.3% | 44.8% | 45.4% | |
| Haitian International Holdings Ltd ($1882) | 29.7% | 30.1% | 31.6% | 32.4% | |
| CHTC Fong's Industries Co Ltd ($641) | 26.5% | 24.4% | 30.0% | 32.3% | |
| Good Friend International Holdings Inc ($2398) | 23.3% | 20.1% | 22.9% | 26.5% | |
| |
|---|
| Median (21 companies) | 23.3% | 21.5% | 20.1% | 18.5% | 13.7% |
|---|
| LK Technology Holdings Ltd ($558) | 32.4% | 27.4% | 24.9% | 26.0% | 26.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jingwei Textile Machinery ($350) | 18.5% | 24.0% | 26.9% | 28.0% | |
| Haitian International Holdings Ltd ($1882) | 20.5% | 19.7% | 20.7% | 21.9% | |
| Renheng Enterprise Holdings Ltd ($3628) | 22.9% | 24.7% | 23.9% | 20.7% | |
| Good Friend International Holdings Inc ($2398) | 11.7% | 6.7% | 9.1% | 12.9% | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 12.9% | 12.9% | 6.5% | 12.3% | |
| |
|---|
| Median (21 companies) | 9.6% | 7.8% | 8.4% | 7.7% | 2.1% |
|---|
| LK Technology Holdings Ltd ($558) | 17.5% | 11.7% | 8.7% | 8.7% | 9.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China High Precision Automation Group Ltd ($591) | 33.0% | 20.5% | 9.1% | 18.4% | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 14.9% | 20.5% | 20.3% | 11.6% | |
| First Tractor Co Ltd ($38) | 6.3% | 4.9% | 4.3% | 7.3% | |
| Greens Holdings Ltd ($1318) | 9.3% | 8.9% | 3.1% | 7.1% | |
| Honghua Group Ltd ($196) | 9.9% | 11.5% | 14.6% | 6.8% | |
| |
|---|
| Median (21 companies) | 6.1% | 4.2% | 3.6% | 4.2% | 1.1% |
|---|
| LK Technology Holdings Ltd ($558) | 7.6% | 9.3% | 10.2% | 9.1% | 5.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Haitian International Holdings Ltd ($1882) | 26.8% | 19.8% | 21.2% | 19.4% | |
| Jingwei Textile Machinery ($350) | 23.3% | 19.4% | 20.9% | 17.4% | |
| Good Friend International Holdings Inc ($2398) | 20.0% | 6.5% | 8.7% | 12.1% | |
| China CNR Corp Ltd ($6199) | 11.1% | 7.9% | 9.3% | 10.6% | |
| Shanghai Electric Group Co Ltd ($2727) | 9.8% | 10.9% | 8.6% | 8.9% | |
| |
|---|
| Median (21 companies) | 9.8% | 6.5% | 4.0% | 2.5% | 1.4% |
|---|
| LK Technology Holdings Ltd ($558) | 16.7% | 8.7% | 3.1% | 3.2% | 4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Tractor Co Ltd ($38) | 1.1x | 0.5x | 2.5x | 9.2x | |
| Shanghai Prime Machinery Co Ltd ($2345) | -0.0x | -0.6x | 0.3x | 6.0x | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 1.9x | 3.0x | 11.4x | 5.6x | |
| Honghua Group Ltd ($196) | 0.1x | 1.2x | 3.2x | 5.2x | |
| CHTC Fong's Industries Co Ltd ($641) | 3.4x | | 2.2x | 2.5x | |
| |
|---|
| Median (17 companies) | -0.5x | -1.7x | -1.0x | -0.3x | -6.2x |
|---|
| LK Technology Holdings Ltd ($558) | 0.9x | 2.5x | 5.1x | 4.9x | 4.6x |
