Herald Holdings Ltd reports 28.3% EBITDA decline and 5.6% Revenue decline
29/06/2015 • About Herald Holdings Ltd (
$114) • By InTwits
Herald Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Herald Holdings Ltd is a company in decline: FY2015 revenue growth was -5.6%, 5 years revenue CAGR was -2.9%
- Herald Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's a lot of higher than industry average of 7.5%.
- CAPEX is quite volatile: 32.8 in FY2015, 32.3 in FY2014, 75.0 in FY2013, 45.3 in FY2012, 22.0 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.
Herald Holdings Ltd ($114) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,624 | 1,400 | 1,345 | 1,340 | 1,265 | -5.6% |
| Gross Profit | 390 | 328 | 345 | 333 | 292 | -12.4% |
| SG&A | | | 317 | 313 | 286 | -8.5% |
| EBITDA | 134 | 72 | 87 | 61 | 44 | -28.3% |
| Net Income | 111 | 22 | 23 | 26 | 16 | -38.7% |
Balance Sheet
|
|---|
| Cash | 300 | 242 | 184 | 197 | 172 | -12.4% |
| Short Term Debt | 0 | 0 | 16 | 12 | 9 | -29.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 22 | 45 | 75 | 32 | 33 | 1.5% |
Ratios
|
|---|
| Revenue growth | 10.7% | -13.8% | -3.9% | -0.4% | -5.6% | |
| EBITDA growth | -25.2% | -46.3% | 20.1% | -29.2% | -28.3% | |
| Gross Margin | 24.0% | 23.4% | 25.7% | 24.9% | 23.1% | -1.8% |
| EBITDA Margin | 8.3% | 5.2% | 6.4% | 4.6% | 3.5% | -1.1% |
| Net Income Margin | 6.9% | 1.6% | 1.7% | 2.0% | 1.3% | -0.7% |
| SG&A, % of revenue | | | 23.6% | 23.4% | 22.6% | -0.7% |
| CAPEX, % of revenue | 1.4% | 3.2% | 5.6% | 2.4% | 2.6% | 0.2% |
| ROIC | 11.0% | 4.7% | 6.2% | 3.9% | 2.2% | -1.6% |
| ROE | 12.6% | 2.4% | 2.6% | 3.1% | 2.0% | -1.2% |
| Net Debt/EBITDA | -2.2x | -3.4x | -1.9x | -3.0x | -3.7x | -0.7x |
Revenue and profitability
The company's Revenue decreased on 5.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.0 pp from -6.2% to -2.2% in FY2015.
Gross Margin decreased slightly on 1.8 pp from 24.9% to 23.1% in FY2015. SG&A as a % of Revenue decreased slightly on 0.72 pp from 23.4% to 22.6% in FY2015.
Net Income marign decreased slightly on 0.69 pp from 2.0% to 1.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Herald Holdings Ltd's CAPEX/Revenue was 2.6% in FY2015. CAPEX/Revenue decreased slightly on 0.64 pp from 3.2% in FY2012 to 2.6% in FY2015. It's average CAPEX/Revenue for the last three years was 3.5%.Battling declining revenue the company invested a large share of EBITDA (74.6%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.24%) and ROE (1.95%). ROIC decreased slightly on 1.6 pp from 3.9% to 2.2% in FY2015. ROE decreased slightly on 1.2 pp from 3.1% to 2.0% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.7x and Debt / EBITDA is 0.2x. Net Debt / EBITDA dropped on 0.7x from -3.0x to -3.7x in FY2015. Debt dropped on 29.0% in FY2015 while cash dropped on 12.4% in FY2015.
Appendix 1: Peers in Miscellaneous Manufactur
Below you can find Herald Holdings Ltd benchmarking vs. other companies in Miscellaneous Manufactur 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 |
|---|
| CSR Corp Ltd ($1766) | 24.0% | 12.0% | 9.7% | 123.7% | |
| Sunny Optical Technology Group Co Ltd ($2382) | 37.4% | 59.5% | 45.9% | 45.0% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 21.4% | 1.5% | 22.2% | 43.2% | |
| Time Watch Investments Ltd ($2033) | 29.3% | 28.2% | 25.4% | 25.6% | |
| China International Marine Containers Group Co Ltd ($2039) | 23.4% | -15.6% | 6.6% | 21.4% | |
| |
|---|
| Median (25 companies) | 22.4% | -1.8% | 0.1% | 8.2% | -11.5% |
|---|
| Herald Holdings Ltd ($114) | | -13.8% | -3.9% | -0.4% | -5.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Time Watch Investments Ltd ($2033) | 58.5% | 60.2% | 60.6% | 65.0% | |
| Man Sang International Ltd ($938) | 34.7% | 42.4% | 32.8% | 60.3% | 78.6% |
| Lee & Man Chemical Co Ltd ($746) | 46.7% | 34.3% | 35.7% | 41.9% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 35.0% | 33.2% | 35.1% | 37.4% | |
| Launch Tech Co Ltd ($2488) | 39.2% | 27.4% | 33.6% | 33.6% | |
| |
|---|
| Median (24 companies) | 20.6% | 19.7% | 19.7% | 23.4% | 20.8% |
|---|
| Herald Holdings Ltd ($114) | 24.0% | 23.4% | 25.7% | 24.9% | 23.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lee & Man Chemical Co Ltd ($746) | 42.8% | 30.4% | 31.3% | 38.4% | |
| Man Sang International Ltd ($938) | 18.7% | 24.9% | 15.4% | 37.0% | 33.8% |
| IPE Group Ltd ($929) | 24.9% | 25.6% | 22.5% | 29.5% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 19.5% | 18.4% | 19.8% | 20.6% | |
| Time Watch Investments Ltd ($2033) | 16.8% | 17.6% | 16.8% | 19.4% | |
| |
|---|
| Median (25 companies) | 10.7% | 8.1% | 9.8% | 9.8% | 5.9% |
|---|
| Herald Holdings Ltd ($114) | 8.3% | 5.2% | 6.4% | 4.6% | 3.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lee & Man Chemical Co Ltd ($746) | 1.4% | 5.8% | 51.1% | 33.7% | |
| KEE Holdings Co Ltd ($2011) | 20.9% | 21.8% | 43.7% | 24.9% | |
| China International Marine Containers Group Co Ltd ($2039) | 4.7% | 3.9% | 12.1% | 18.5% | |
| China Environmental Energy Investment Ltd ($986) | 77.7% | 6.1% | 0.4% | 17.9% | |
| TK Group Holdings Ltd ($2283) | 8.9% | 13.3% | 8.1% | 13.7% | |
| |
|---|
| Median (25 companies) | 5.2% | 4.9% | 4.2% | 4.4% | 4.2% |
|---|
| Herald Holdings Ltd ($114) | 1.4% | 3.2% | 5.6% | 2.4% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TK Group Holdings Ltd ($2283) | 34.0% | 36.8% | 31.1% | 29.4% | |
| Time Watch Investments Ltd ($2033) | 30.5% | 34.5% | 27.1% | 27.8% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 21.4% | 16.9% | 17.7% | 20.0% | |
| Sunny Optical Technology Group Co Ltd ($2382) | 12.2% | 19.7% | 17.8% | 16.5% | |
| CSR Corp Ltd ($1766) | 13.4% | 11.1% | 11.2% | 15.3% | |
| |
|---|
| Median (25 companies) | 6.4% | 4.2% | 3.6% | 4.4% | 1.3% |
|---|
| Herald Holdings Ltd ($114) | 11.0% | 4.7% | 6.2% | 3.9% | 2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| South China China Ltd ($413) | 2.3x | | 37.5x | 2,842.3x | |
| Continental Holdings Ltd ($513) | 8.3x | | 20.1x | 92.9x | |
| China International Marine Containers Group Co Ltd ($2039) | 2.8x | 4.0x | 4.7x | 5.8x | |
| VS International Group Ltd ($1002) | 8.6x | 5.1x | 6.5x | 4.4x | |
| Launch Tech Co Ltd ($2488) | -0.4x | 7.6x | 2.4x | 3.9x | |
| |
|---|
| Median (21 companies) | 0.1x | -0.2x | -0.2x | 0.1x | -1.3x |
|---|
| Herald Holdings Ltd ($114) | -2.2x | -3.4x | -1.9x | -3.0x | -3.7x |
