Hong Kong Education International Investments Ltd reports 150% Net Income growth while 11.6% Revenue decline
25/09/2015 • About Hong Kong Education International Investments Ltd (
$1082) • By InTwits
Hong Kong Education International Investments Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Education International Investments Ltd is a company in decline: FY2015 revenue growth was -11.6%, 5 years revenue CAGR was -10.0%
- The company operates at negative EBITDA Margin: -9.6%
- EBITDA Margin is quite volatile: -9.6% in FY2015, -3.8% in FY2014, -4.6% in FY2013, 14.2% in FY2012, 12.5% in FY2011
- Hong Kong Education International Investments Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.9%. At the same time it's in pair with industry average of 8.3%.
- CAPEX is quite volatile: 5.6 in FY2015, 6.6 in FY2014, 76.0 in FY2013, 7.0 in FY2012, 3.7 in FY2011
- The company has unprofitable business model: ROIC is at -9.2%
- It operates with high leverage: Net Debt/EBITDA is 10.9x while industry average is -22.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Education International Investments Ltd ($1082) key annual financial indicators
| mln. | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 268.6 | 318.7 | 248.3 | 235.8 | 208.4 | -11.6% |
| SG&A | | | | 19.7 | 20.6 | 4.6% |
| EBITDA | 33.5 | 45.3 | -11.3 | -9.0 | -20.1 | 124.3% |
| Net Income | 20.5 | 31.2 | -25.2 | -66.5 | 33.0 | -149.7% |
Balance Sheet
|
|---|
| Cash | 14.5 | 78.0 | 28.9 | 38.9 | 105.2 | 170.2% |
| Short Term Debt | 49.6 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 3.7 | 7.0 | 76.0 | 6.6 | 5.6 | -15.8% |
Ratios
|
|---|
| Revenue growth | -24.0% | 18.6% | -22.1% | -5.1% | -11.6% | |
| EBITDA growth | -43.4% | 35.3% | -125.0% | -20.8% | 124.3% | |
| EBITDA Margin | 12.5% | 14.2% | -4.6% | -3.8% | -9.6% | -5.8% |
| Net Income Margin | 7.6% | 9.8% | -10.2% | -28.2% | 15.8% | 44.1% |
| SG&A, % of revenue | | | | 8.3% | 9.9% | 1.5% |
| CAPEX, % of revenue | 1.4% | 2.2% | 30.6% | 2.8% | 2.7% | -0.1% |
| ROIC | 36.4% | 31.5% | -10.6% | -7.5% | -9.2% | -1.7% |
| ROE | 68.1% | 38.4% | -14.1% | -32.5% | 12.0% | 44.6% |
| Net Debt/EBITDA | 1.0x | -1.7x | | | | 0.0x |
Revenue and profitability
The company's Revenue dropped on 11.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from -9.1% to -7.5% in FY2015.
SG&A as a % of Revenue increased slightly on 1.5 pp from 8.3% to 9.9% in FY2015.
Net Income marign jumped on 44.1 pp from -28.2% to 15.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Hong Kong Education International Investments Ltd had CAPEX/Revenue of 2.7%. CAPEX/Revenue showed almost no change from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 12.0%.
Return on investment
The company operates at negative ROIC (-9.17%) and low but positive ROE (12.04%). ROIC decreased slightly on 1.7 pp from -7.5% to -9.2% in FY2015. ROE jumped on 44.6 pp from -32.5% to 12.0% in FY2015.
Leverage (Debt)
The company has no debt. Cash surged on 170% in FY2015.
Appendix 1: Peers in Commercial Services
Below we provide Hong Kong Education International Investments Ltd benchmarking against other companies in Commercial Services 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 |
|---|
| Global Energy Resources International Group Ltd ($8192) | 429.3% | -61.9% | -27.8% | 2,912.9% | |
| Dingyi Group Investment Ltd ($508) | | 8.8% | -95.9% | 1,361.2% | -32.6% |
| China Smartpay Group Holdings Ltd ($8325) | | 60.0% | 274.7% | 75.6% | 124.5% |
| Goldpac Group Ltd ($3315) | 24.4% | 52.3% | 64.4% | 36.8% | |
| Wonderful Sky Financial Group Holdings Ltd ($1260) | | 21.3% | 4.5% | 33.5% | 14.2% |
| |
|---|
| Median (56 companies) | 19.5% | 6.9% | 4.5% | 9.4% | 10.2% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | | 18.6% | -22.1% | -5.1% | -11.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HC International Inc ($2280) | 84.7% | 87.5% | 91.9% | 92.5% | |
| Fu Shou Yuan International Group Ltd ($1448) | 81.6% | 80.5% | 80.4% | 80.0% | |
| China Communication Telecom Services Co Ltd ($8206) | -56.6% | 61.6% | 58.6% | 69.1% | 70.2% |
| Dingyi Group Investment Ltd ($508) | 76.5% | 75.8% | | 64.5% | 86.0% |
| Yuexiu Transport Infrastructure Ltd ($1052) | 67.1% | 66.2% | 66.8% | 62.8% | |
| |
|---|
| Median (53 companies) | 33.4% | 31.6% | 29.9% | 30.9% | 28.7% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Shenzhen International Holdings Ltd ($152) | 69.3% | 60.2% | 65.8% | 97.1% | |
| Shenzhen Expressway Co Ltd ($548) | 80.4% | 74.3% | 79.4% | 76.6% | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 74.3% | 78.3% | 74.5% | 74.0% | |
| Anhui Expressway Co Ltd ($995) | 62.7% | 56.9% | 54.1% | 60.4% | |
| Dragon Crown Group Holdings Ltd ($935) | 57.8% | 67.3% | 62.9% | 60.2% | |
| |
|---|
| Median (56 companies) | 16.4% | 16.0% | 13.4% | 9.3% | 3.3% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 12.5% | 14.2% | -4.6% | -3.8% | -9.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kai Yuan Holdings Ltd ($1215) | 16.8% | 3.9% | 7.0% | 59.8% | |
| COSCO Pacific Ltd ($1199) | 111.3% | 96.6% | 66.6% | 43.3% | |
| Finet Group Ltd ($8317) | 3.9% | 10.3% | 9.1% | 26.0% | 8.4% |
| HC International Inc ($2280) | 15.1% | 8.5% | 28.7% | 24.7% | |
| Dragon Crown Group Holdings Ltd ($935) | 2.5% | 37.2% | 52.0% | 23.0% | |
| |
|---|
| Median (55 companies) | 3.8% | 3.4% | 4.0% | 4.8% | 2.1% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 1.4% | 2.2% | 30.6% | 2.8% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mega Expo Holdings Ltd ($1360) | | 270.5% | 481.1% | 54.4% | 10.1% |
| China Packaging Holdings Development Ltd ($1439) | 50.0% | 52.0% | 46.6% | 34.1% | |
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 136.8% | 51.5% | 26.6% | 30.0% | 29.5% |
| 1010 Printing Group Ltd ($1127) | 14.4% | 13.5% | 20.8% | 17.8% | |
| Poly Culture Group Corp Ltd ($3636) | 48.0% | 29.1% | 33.0% | 16.3% | |
| |
|---|
| Median (56 companies) | 5.0% | 5.7% | 4.2% | 3.2% | 0.9% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 36.4% | 31.5% | -10.6% | -7.5% | -9.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dalian Port PDA Co Ltd ($2880) | 5.7x | 5.7x | 4.8x | 4.7x | |
| Sichuan Expressway Co Ltd ($107) | 1.8x | 2.7x | 3.8x | 4.3x | |
| Anxian Yuan China Holdings Ltd ($922) | | | 4.6x | 3.8x | 0.8x |
| Eagle Legend Asia Ltd ($936) | 4.3x | 4.0x | 4.0x | 3.3x | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 2.9x | 4.5x | 3.1x | 2.7x | |
| |
|---|
| Median (36 companies) | -0.1x | 0.0x | -0.7x | -0.7x | -2.1x |
|---|
