Hong Kong Exchanges and Clearing Ltd Net Income jumped on 54.0% in 2015 and Revenue surged on 34.0%
02/03/2016 • About Hong Kong Exchanges and Clearing Ltd (
$388) • By InTwits
Hong Kong Exchanges and Clearing Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Exchanges and Clearing Ltd is a growth stock: 2015 revenue growth was 34.0%, 5 year revenue CAGR was 11.5% at 2015 ROIC 29.1%
- Hong Kong Exchanges and Clearing Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.1%. At the same time it's a lot of higher than industry average of 4.8%.
- CAPEX is quite volatile: 327 in 2015, 1,270 in 2014, 252 in 2013, 365 in 2012, 449 in 2011
- The company has highly profitable business model: ROIC is at 29.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Exchanges and Clearing Ltd ($388) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 7,357 | 6,432 | 8,131 | 9,127 | 12,233 | 34.0% |
| SG&A | 16 | 19 | 29 | 53 | 41 | -22.6% |
| EBITDA | 6,142 | 5,251 | 5,966 | 6,911 | 10,049 | 45.4% |
| Net Income | 5,093 | 4,084 | 4,552 | 5,165 | 7,956 | 54.0% |
Balance Sheet
|
|---|
| Cash | 2,340 | 4,035 | 6,531 | 8,067 | 12,744 | 58.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 6,615 | 6,921 | 7,026 | 3,409 | -51.5% |
Cash flow
|
|---|
| Capex | 456 | 1,042 | 797 | 665 | 710 | 6.8% |
Ratios
|
|---|
| Revenue growth | 3.7% | -12.6% | 26.4% | 12.2% | 34.0% | |
| EBITDA growth | 1.6% | -14.5% | 13.6% | 15.8% | 45.4% | |
| EBITDA Margin | 83.5% | 81.6% | 73.4% | 75.7% | 82.1% | 6.4% |
| Net Income Margin | 69.2% | 63.5% | 56.0% | 56.6% | 65.0% | 8.4% |
| SG&A, % of revenue | 0.2% | 0.3% | 0.4% | 0.6% | 0.3% | -0.2% |
| CAPEX, % of revenue | 6.2% | 16.2% | 9.8% | 7.3% | 5.8% | -1.5% |
| ROIC | 65.6% | 29.1% | 20.1% | 21.5% | 29.1% | 7.6% |
| ROE | 57.1% | 30.3% | 23.9% | 24.8% | 31.1% | 6.4% |
| Net Debt/EBITDA | -0.4x | 0.5x | 0.1x | -0.2x | -0.9x | -0.8x |
Revenue and profitability
Hong Kong Exchanges and Clearing Ltd's Revenue jumped on 34.0% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.6 pp from 15.0% to 17.6% in 2015.
SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased on 8.4 pp from 56.6% to 65.0% in 2015.
Capital expenditures (CAPEX) and working capital investments
Hong Kong Exchanges and Clearing Ltd's CAPEX/Revenue was 5.8% in 2015. The company showed big decline in CAPEX/Revenue of 10.4 pp from 16.2% in 2012 to 5.8% in 2015. Average CAPEX/Revenue for the last three years was 7.6%.
Return on investment
The company operates at high and attractive ROIC (29.11%) and ROE (31.15%). ROIC increased on 7.6 pp from 21.5% to 29.1% in 2015. ROE increased on 6.4 pp from 24.8% to 31.1% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.9x and Debt / EBITDA is 0.3x. Net Debt / EBITDA dropped on 0.8x from -0.2x to -0.9x in 2015. Debt dropped on 51.5% in 2015 while cash jumped on 58.0% in 2015.
Appendix 1: Peers in Diversified Finan Serv
Below we provide Hong Kong Exchanges and Clearing Ltd benchmarking against other companies in Diversified Finan Serv 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 New Energy Power Group Ltd ($1041) | | 100.0% | 0.0% | 64,246.0% | |
| ReOrient Group Ltd ($376) | | 112.8% | 75.1% | 1,106.9% | -90.8% |
| Global Strategic Group Ltd ($8007) | | -3.9% | 2.1% | 806.3% | 681.2% |
| AID Partners Capital Holdings Ltd ($8088) | -38.7% | 0.9% | -79.5% | 655.2% | |
| Willie International Holdings Ltd ($273) | | | | 543.9% | |
| |
|---|
| Median (62 companies) | 5.3% | 1.2% | 12.9% | 26.5% | 23.1% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | | -12.6% | 26.4% | 12.2% | 34.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Roma Group Ltd ($8072) | | | | 99.4% | 98.7% |
| Freeman Financial Corp Ltd ($279) | 97.1% | 52.3% | 99.3% | 98.5% | |
| Chinese Strategic Holdings Ltd ($8089) | 97.9% | 99.1% | 97.9% | 97.0% | |
| First China Financial Network Holdings Ltd ($8123) | 98.6% | 93.4% | | 94.5% | |
| Allied Group Ltd ($373) | 94.5% | 95.1% | 94.4% | 93.6% | |
| |
|---|
| Median (13 companies) | 80.8% | 64.2% | 75.1% | 88.2% | 89.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Styland Holdings Ltd ($211) | 68.6% | 198.6% | 91.5% | 161.0% | 17.9% |
| Roma Group Ltd ($8072) | 81.4% | 18.1% | 36.8% | 143.0% | 44.7% |
| First China Financial Network Holdings Ltd ($8123) | -231.6% | -329.2% | -211.2% | 124.3% | |
| Willie International Holdings Ltd ($273) | | | 75.3% | 95.2% | |
| Get Nice Holdings Ltd ($64) | 28.4% | 2.6% | 153.4% | 92.7% | 83.9% |
| |
|---|
| Median (63 companies) | 29.5% | 14.0% | 35.5% | 43.6% | 28.4% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 83.5% | 81.6% | 73.4% | 75.7% | 82.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Gemini Investments Holdings Ltd ($174) | 14.9% | 479.1% | 37.3% | 216.0% | 10.0% |
| China Assurance Finance Group Ltd ($8090) | | 94.7% | 68.9% | 53.3% | |
| Chinese Strategic Holdings Ltd ($8089) | 93.2% | 376.0% | 5.7% | 32.6% | |
| AID Partners Capital Holdings Ltd ($8088) | 196.3% | 4.1% | 2.9% | 28.4% | |
| Asian Capital Holdings Ltd ($8295) | 2.3% | 0.1% | 0.2% | 15.6% | |
| |
|---|
| Median (63 companies) | 2.2% | 1.8% | 1.7% | 1.1% | 1.7% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 6.2% | 16.2% | 9.8% | 7.3% | 5.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ReOrient Group Ltd ($376) | -24.9% | -45.6% | -53.5% | 128.6% | -2.8% |
| Roma Group Ltd ($8072) | | 19.6% | 43.7% | 107.8% | 13.3% |
| Convoy Financial Holdings Ltd ($1019) | 31.1% | 3.4% | 39.3% | 47.3% | |
| Willie International Holdings Ltd ($273) | -28.1% | -9.5% | 4.7% | 30.9% | |
| Value Partners Group Ltd ($806) | 8.7% | 16.8% | 16.5% | 26.8% | |
| |
|---|
| Median (65 companies) | 4.6% | 3.4% | 4.0% | 4.7% | 1.8% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 65.6% | 29.1% | 20.1% | 21.5% | 29.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cash Financial Services Group Ltd ($510) | -1.1x | 7.8x | | 67.5x | |
| Far East Horizon Ltd ($3360) | 17.8x | 16.9x | 21.7x | 20.0x | |
| Bright Smart Securities & Commodities Group Ltd ($1428) | 7.3x | 2.1x | 10.3x | 9.3x | 39.3x |
| China Cinda Asset Management Co Ltd ($1359) | 2.1x | 5.0x | 7.7x | 8.4x | |
| Aeon Credit Service Asia Co Ltd ($900) | 6.3x | 5.2x | 6.0x | 6.9x | 5.5x |
| |
|---|
| Median (45 companies) | -1.1x | -1.3x | 0.2x | 0.1x | -1.5x |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | -0.4x | 0.5x | 0.1x | -0.2x | -0.9x |
