Zhi Cheng Holdings Ltd CAPEX surged on 251% in 2015 and Revenue jumped on 20.6%
30/06/2015 • About Zhi Cheng Holdings Ltd (
$8130) • By InTwits
Zhi Cheng Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhi Cheng Holdings Ltd doesn't have a profitable business model yet: FY2015 ROIC is -20.4%
- The company operates at negative EBITDA Margin: -114.0%
- Zhi Cheng Holdings Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2011-FY2015 was 0.0%. On average EBITDA Margin was -80.4% for the sames years0
- Zhi Cheng Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.4%. At the same time it's a lot of higher than industry average of 21.4%.
- CAPEX is quite volatile: 5.5 in FY2015, 1.6 in FY2014, 2.7 in FY2013, 2.2 in FY2012, 1.3 in FY2011
- The company has unprofitable business model: ROIC is at -20.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Zhi Cheng Holdings Ltd ($8130) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 19.953 | 21.445 | 35.132 | 27.456 | 33.103 | 20.6% |
| Gross Profit | 12.296 | 9.840 | 14.416 | 17.573 | 6.495 | -63.0% |
| SG&A | | | | 54.662 | 64.652 | 18.3% |
| EBITDA | -19.894 | -24.703 | -16.342 | -11.489 | -37.742 | 228.5% |
| Net Income | -650.385 | -484.340 | -336.474 | -113.528 | -155.627 | 37.1% |
Balance Sheet
|
|---|
| Cash | 217.007 | 100.480 | 24.886 | 5.815 | 4.252 | -26.9% |
| Short Term Debt | 0.504 | 0.513 | 0.373 | 0.000 | 0.000 | |
| Long Term Debt | 177.640 | 201.015 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 1.323 | 2.208 | 2.692 | 1.571 | 5.517 | 251.2% |
Ratios
|
|---|
| Revenue growth | 5.2% | 7.5% | 63.8% | -21.8% | 20.6% | |
| EBITDA growth | 343.0% | 24.2% | -33.8% | -29.7% | 228.5% | |
| Gross Margin | 61.6% | 45.9% | 41.0% | 64.0% | 19.6% | -44.4% |
| EBITDA Margin | -99.7% | -115.2% | -46.5% | -41.8% | -114.0% | -72.2% |
| Net Income Margin | -3,259.6% | -2,258.5% | -957.7% | -413.5% | -470.1% | -56.6% |
| SG&A, % of revenue | | | | 199.1% | 195.3% | -3.8% |
| CAPEX, % of revenue | 6.6% | 10.3% | 7.7% | 5.7% | 16.7% | 10.9% |
| ROIC | -7.0% | -10.0% | -12.9% | -10.7% | -20.4% | -9.6% |
| ROE | -55.4% | -53.4% | -65.8% | -35.4% | -58.4% | -23.0% |
Revenue and profitability
Zhi Cheng Holdings Ltd's Revenue jumped on 20.6% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 72.2 pp from -41.8% to -114% in FY2015.
Gross Margin dropped on 44.4 pp from 64.0% to 19.6% in FY2015. SG&A as a % of Revenue decreased on 3.8 pp from 199% to 195% in FY2015.
Net Income marign dropped on 56.6 pp from -413% to -470% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 16.7%. Zhi Cheng Holdings Ltd's CAPEX/Revenue increased on 6.4 pp from 10.3% in FY2012 to 16.7% in FY2015. It's average CAPEX/Revenue for the last three years was 10.0%.
Return on investment
The company operates at negative ROIC (-20.35%) and ROE (-58.44%). ROIC decreased on 9.6 pp from -10.7% to -20.4% in FY2015. ROE dropped on 23.0 pp from -35.4% to -58.4% in FY2015.
Leverage (Debt)
The company has no debt. Cash dropped on 26.9% in FY2015.
Appendix 1: Peers in Telecommunications
Below we provide Zhi Cheng Holdings Ltd benchmarking against other companies in Telecommunications 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 |
|---|
| 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) | | 29.4% | 1,582.2% | 77.0% | 26.5% |
| Great World Co Holdings Ltd ($8003) | | 1,651.8% | -81.7% | 61.9% | -3.7% |
| |
|---|
| Median (49 companies) | 7.9% | 9.7% | 7.9% | 7.5% | 26.5% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | | 7.5% | 63.8% | -21.8% | 20.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Synertone Communication Corp ($1613) | 65.4% | 68.1% | 64.1% | 70.5% | |
| 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% | |
| HKT Trust & HKT Ltd ($6823) | 58.9% | 57.2% | 55.7% | 58.2% | |
| |
|---|
| Median (43 companies) | 29.9% | 26.1% | 28.1% | 27.1% | 32.5% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | 61.6% | 45.9% | 41.0% | 64.0% | 19.6% |
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 (49 companies) | 14.5% | 13.2% | 7.5% | 8.9% | -0.4% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | -99.7% | -115.2% | -46.5% | -41.8% | -114.0% |
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% | 0.2% |
| 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 (49 companies) | 3.0% | 2.5% | 3.7% | 3.6% | 0.4% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | 6.6% | 10.3% | 7.7% | 5.7% | 16.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
| Telecom Service One Holdings Ltd ($8145) | | 95.0% | 5.4% | 26.7% | 39.8% |
| 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% | |
| |
|---|
| Median (49 companies) | 7.2% | 6.1% | 5.8% | 6.6% | -1.6% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | -7.0% | -10.0% | -12.9% | -10.7% | -20.4% |
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 (36 companies) | -0.2x | -0.2x | 0.3x | 0.7x | -0.4x |
|---|
