City e-Solutions Ltd reports 57.2% CAPEX growth while 13.1% Revenue decline
24/02/2016 • About City e-Solutions Ltd (
$557) • By InTwits
City e-Solutions Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- City e-Solutions Ltd doesn't have a profitable business model yet: 2015 ROIC is -4.7%
- The company operates at negative EBITDA Margin: -24.0%
- City e-Solutions Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 is 0.0%. Average EBITDA Margin for the same period was -12.7%0
- City e-Solutions Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's a lot of higher than industry average of 5.7%.
- CAPEX is quite volatile: 4.4 in 2015, 2.8 in 2014, 1.1 in 2013, 1.6 in 2012, 17.5 in 2011
- The company has unprofitable business model: ROIC is at -4.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
City e-Solutions Ltd ($557) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 109.3 | 97.4 | 102.8 | 100.1 | 87.0 | -13.1% |
| Gross Profit | 75.4 | 79.0 | 83.9 | 81.7 | 68.9 | -15.7% |
| SG&A | | | | 105.4 | 96.7 | -8.2% |
| EBITDA | -0.6 | -19.8 | -8.0 | -13.8 | -20.9 | 51.3% |
| Net Income | -31.2 | 7.1 | 17.2 | -19.0 | -55.1 | 190.2% |
Balance Sheet
|
|---|
| Cash | 399.7 | 376.5 | 383.1 | 389.9 | 371.5 | -4.7% |
| Short Term Debt | 0.6 | 0.0 | 0.9 | 1.0 | 0.9 | -7.2% |
| Long Term Debt | 37.4 | 0.1 | 31.2 | 30.4 | 29.6 | -2.6% |
Cash flow
|
|---|
| Capex | 17.5 | 1.6 | 1.1 | 2.8 | 4.4 | 57.2% |
Ratios
|
|---|
| Revenue growth | 30.7% | -10.9% | 5.5% | -2.6% | -13.1% | |
| EBITDA growth | -111.9% | 3,078.8% | -59.7% | 72.8% | 51.3% | |
| Gross Margin | 69.0% | 81.1% | 81.5% | 81.6% | 79.1% | -2.4% |
| EBITDA Margin | -0.6% | -20.4% | -7.8% | -13.8% | -24.0% | -10.2% |
| Net Income Margin | -28.6% | 7.2% | 16.7% | -19.0% | -63.3% | -44.3% |
| SG&A, % of revenue | | | | 105.2% | 111.1% | 5.9% |
| CAPEX, % of revenue | 16.0% | 1.7% | 1.0% | 2.8% | 5.1% | 2.3% |
| ROIC | -1.2% | -4.1% | -2.2% | -3.2% | -4.7% | -1.6% |
| ROE | -5.6% | 1.3% | 3.1% | -3.4% | -10.6% | -7.2% |
Revenue and profitability
The company's Revenue dropped on 13.1% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.2 pp from -20.7% to -17.5% in FY2015.
Gross Margin decreased on 2.4 pp from 81.6% to 79.1% in 2015. SG&A as a % of Revenue increased on 5.9 pp from 105% to 111% in 2015.
Net Income marign dropped on 44.3 pp from -19.0% to -63.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
City e-Solutions Ltd's CAPEX/Revenue was 5.1% in 2015. The company showed CAPEX/Revenue growth of 3.4 pp from 1.7% in 2012 to 5.1% in 2015. It's average level of CAPEX/Revenue for the last three years was 3.0%.
Return on investment
The company operates at negative ROIC (-4.71%) and ROE (-10.57%). ROIC decreased slightly on 1.6 pp from -3.2% to -4.7% in 2015. ROE decreased on 7.2 pp from -3.4% to -10.6% in 2015.
Leverage (Debt)
Debt level is -12.7x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2015. Debt decreased on 2.8% in 2015 while cash decreased on 4.7% in 2015.
Appendix 1: Peers in Investment Companies
Below we provide City e-Solutions Ltd benchmarking against other companies in Investment Companies 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 |
|---|
| DT Capital Ltd ($356) | | | -49.8% | 1,065.5% | |
| Capital VC Ltd ($2324) | | | | 489.2% | 861.9% |
| Oriental Explorer Holdings Ltd ($430) | | | -62.7% | 414.5% | |
| China Merchants China Direct Investments Ltd ($133) | | | 59.1% | 255.9% | |
| Eternity Investment Ltd ($764) | 1.2% | -14.8% | -61.8% | 243.8% | |
| |
|---|
| Median (24 companies) | -7.6% | 14.9% | 3.2% | 17.5% | 130.2% |
|---|
| City e-Solutions Ltd ($557) | | -10.9% | 5.5% | -2.6% | -13.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Eternity Investment Ltd ($764) | 100.0% | | | 86.6% | |
| China Properties Investment Holdings Ltd ($736) | 10.6% | 47.5% | 40.8% | 46.2% | 87.2% |
| Infinity Financial Group Holdings Ltd ($1152) | 24.3% | 19.0% | 17.5% | 22.4% | |
| AVIC Joy Holdings HK Ltd ($260) | 20.4% | 19.5% | 20.9% | 14.0% | |
| Harmonic Strait Financial Holdings Ltd ($33) | 16.9% | 40.8% | 8.4% | 11.8% | |
| |
|---|
| Median (6 companies) | 20.4% | 19.5% | 17.5% | 18.2% | 87.2% |
|---|
| City e-Solutions Ltd ($557) | 69.0% | 81.1% | 81.5% | 81.6% | 79.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Capital VC Ltd ($2324) | -2,944.6% | | 36.7% | 93.1% | 99.3% |
| Unity Investments Holdings Ltd ($913) | | | 89.0% | 90.8% | |
| Oriental Explorer Holdings Ltd ($430) | | 93.6% | 100.5% | 90.4% | |
| China Merchants China Direct Investments Ltd ($133) | | 68.6% | 82.2% | 89.3% | |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | 39.4% | | 101.3% | 85.9% | 85.8% |
| |
|---|
| Median (27 companies) | 6.2% | 7.9% | -27.7% | 1.9% | 34.1% |
|---|
| City e-Solutions Ltd ($557) | -0.6% | -20.4% | -7.8% | -13.8% | -24.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CK Hutchison Holdings Ltd ($1) | 3.9% | 0.7% | 1.0% | 503.6% | |
| Opes Asia Development Ltd ($810) | | | 11.3% | 76.1% | |
| Cosmopolitan International Holdings Ltd ($120) | 0.0% | 0.4% | 1.8% | 55.2% | |
| Great China Properties Holdings Ltd ($21) | 1.7% | 6.8% | 0.9% | 30.9% | |
| China Properties Investment Holdings Ltd ($736) | 215.9% | 55.3% | 3.0% | 20.8% | 58.1% |
| |
|---|
| Median (29 companies) | 2.3% | 0.9% | 0.6% | 0.2% | 0.1% |
|---|
| City e-Solutions Ltd ($557) | 16.0% | 1.7% | 1.0% | 2.8% | 5.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Unity Investments Holdings Ltd ($913) | -69.6% | -36.2% | 26.4% | 47.4% | |
| China Merchants China Direct Investments Ltd ($133) | -3.2% | 4.8% | 8.8% | 28.6% | |
| Capital VC Ltd ($2324) | -5.0% | | | 21.8% | 100.7% |
| Shanghai International Shanghai Growth Investment Ltd ($770) | 9.7% | -15.9% | -51.2% | 18.4% | |
| Oriental Explorer Holdings Ltd ($430) | -8.5% | 9.3% | 3.2% | 14.4% | |
| |
|---|
| Median (37 companies) | -5.0% | -3.1% | -2.3% | -5.3% | 0.2% |
|---|
| City e-Solutions Ltd ($557) | -1.2% | -4.1% | -2.2% | -3.2% | -4.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Harmonic Strait Financial Holdings Ltd ($33) | 1.8x | -1.2x | | 162.5x | |
| AVIC Joy Holdings HK Ltd ($260) | -0.5x | 0.2x | 15.0x | 19.6x | |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | 9.3x | | 12.5x | 9.5x | 11.2x |
| CK Hutchison Holdings Ltd ($1) | 1.8x | 1.9x | 0.6x | 7.2x | |
| Lee Hing Development Ltd ($68) | -18.9x | -0.7x | | 2.7x | |
| |
|---|
| Median (15 companies) | -0.6x | -1.1x | 0.3x | -0.8x | -0.5x |
|---|
