Hong Kong Aircraft Engineering Co Ltd Debt dropped on 16.3% in 2015 while Net Debt / EBITDA surged on 0.4x from 2.3x to 2.7x
08/03/2016 • About Hong Kong Aircraft Engineering Co Ltd (
$44) • By InTwits
Hong Kong Aircraft Engineering Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 8.5% in 2015, 9.7% in 2014, 9.5% in 2013, 16.0% in 2012, 17.7% in 2011
- Hong Kong Aircraft Engineering Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.1%. At the same time it's in pair with industry average of 6.5%.
- CAPEX is quite volatile: 1,912 in 2015, 6,734 in 2014, 3,863 in 2013, 6,172 in 2012, 8,374 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Aircraft Engineering Co Ltd ($44) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,171 | 5,830 | 7,387 | 11,927 | 12,095 | 1.4% |
| EBITDA | 917 | 932 | 704 | 1,158 | 1,029 | -11.1% |
| Net Income | 821 | 822 | 625 | 573 | 464 | -19.0% |
Balance Sheet
|
|---|
| Cash | 1,296 | 1,413 | 2,318 | 2,289 | 1,399 | -38.9% |
| Short Term Debt | 1,157 | 262 | 902 | 1,623 | 181 | -88.8% |
| Long Term Debt | 293 | 1,422 | 1,655 | 3,318 | 3,956 | 19.2% |
Cash flow
|
|---|
| Capex | 532 | 364 | 558 | 664 | 702 | 5.7% |
Ratios
|
|---|
| Revenue growth | 21.2% | 12.7% | 26.7% | 61.5% | 1.4% | |
| EBITDA growth | 22.1% | 1.6% | -24.5% | 64.5% | -11.1% | |
| EBITDA Margin | 17.7% | 16.0% | 9.5% | 9.7% | 8.5% | -1.2% |
| Net Income Margin | 15.9% | 14.1% | 8.5% | 4.8% | 3.8% | -1.0% |
| CAPEX, % of revenue | 10.3% | 6.2% | 7.6% | 5.6% | 5.8% | 0.2% |
| ROIC | 5.8% | 5.0% | 2.3% | 4.5% | 3.4% | -1.2% |
| ROE | 14.1% | 14.0% | 10.6% | 9.4% | 7.8% | -1.7% |
| Net Debt/EBITDA | 0.2x | 0.3x | 0.3x | 2.3x | 2.7x | 0.4x |
Revenue and profitability
Hong Kong Aircraft Engineering Co Ltd's Revenue increased slightly on 1.4% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.0 pp from 24.7% to 26.7% in 2015.
Net Income marign decreased slightly on 0.97 pp from 4.8% to 3.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Hong Kong Aircraft Engineering Co Ltd had CAPEX/Revenue of 5.8%. The company's CAPEX/Revenue showed almost no change from 2012 to 2015. For the last three years the average CAPEX/Revenue was 6.3%.Hong Kong Aircraft Engineering Co Ltd invested a large share of EBITDA (68.2%) to CAPEX.
Return on investment
The company operates at low ROIC (3.39%) and ROE (7.77%). ROIC decreased slightly on 1.2 pp from 4.5% to 3.4% in 2015. ROE decreased slightly on 1.7 pp from 9.4% to 7.8% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.7x and Debt / EBITDA is 4.0x. Net Debt / EBITDA jumped on 0.4x from 2.3x to 2.7x in 2015. Debt dropped on 16.3% in 2015 while cash dropped on 38.9% in 2015.
Management team
The company's CEO Tang Kin Wing "Augustus" has spent 10 years at the company.
Appendix 1: Peers in Engineering&Construction
Below we provide Hong Kong Aircraft Engineering Co Ltd benchmarking against other companies in Engineering&Construction 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 |
|---|
| Richly Field China Development Ltd ($313) | | | -45.0% | 464.2% | -65.7% |
| Junefield Department Store Group Ltd ($758) | 22.9% | -20.3% | -24.9% | 126.6% | |
| CNQC International Holdings Ltd ($1240) | 401.9% | 21.6% | 91.0% | 103.7% | |
| Wison Engineering Services Co Ltd ($2236) | 1.2% | -2.9% | -24.9% | 90.3% | |
| China Resources and Transportation Group Ltd ($269) | | 939.8% | 3,196.3% | 87.9% | -41.6% |
| |
|---|
| Median (41 companies) | 15.5% | 9.2% | 20.8% | 11.7% | 14.3% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | | 12.7% | 26.7% | 61.5% | 1.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huayu Expressway Group Ltd ($1823) | 2.2% | 43.6% | 65.6% | 64.0% | |
| HNA Infrastructure Company Ltd ($357) | 61.6% | 66.4% | 62.1% | 62.4% | |
| Freetech Road Recycling Technology Holdings Ltd ($6888) | 50.1% | 54.1% | 54.3% | 41.5% | |
| Kingbo Strike Ltd ($1421) | 22.9% | 32.4% | 44.4% | 40.3% | 30.7% |
| Grand Ming Group Holdings Ltd ($1271) | 20.4% | 11.0% | 18.1% | 35.7% | 19.7% |
| |
|---|
| Median (37 companies) | 11.0% | 12.4% | 12.1% | 12.9% | 12.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Huayu Expressway Group Ltd ($1823) | -0.5% | 46.2% | 73.8% | 77.1% | |
| HNA Infrastructure Company Ltd ($357) | 60.0% | 62.8% | 63.7% | 62.8% | |
| Beijing Capital International Airport Co Ltd ($694) | 55.1% | 53.4% | 52.9% | 50.3% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 39.8% | 31.2% | 20.6% | 36.2% | |
| Grand Ming Group Holdings Ltd ($1271) | 17.5% | 10.0% | 15.8% | 31.0% | 19.0% |
| |
|---|
| Median (42 companies) | 7.8% | 8.7% | 7.4% | 6.2% | 3.7% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 17.7% | 16.0% | 9.5% | 9.7% | 8.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HNA Infrastructure Company Ltd ($357) | 43.3% | 36.8% | 5.7% | 85.4% | |
| PYI Corp Ltd ($498) | 6.6% | 3.7% | 4.2% | 24.5% | 13.1% |
| Shun Cheong Holdings ($650) | 7.2% | 16.4% | 8.0% | 23.9% | |
| Freetech Road Recycling Technology Holdings Ltd ($6888) | 6.1% | 4.2% | 7.7% | 20.2% | |
| KFM Kingdom Holdings Ltd ($3816) | 6.5% | 4.6% | 11.5% | 14.9% | 9.6% |
| |
|---|
| Median (42 companies) | 4.4% | 2.4% | 2.6% | 1.7% | 2.0% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 10.3% | 6.2% | 7.6% | 5.6% | 5.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chun Sing Engineering Holdings Ltd ($2277) | | | 98.3% | 54.9% | 43.7% |
| Kingbo Strike Ltd ($1421) | | 56.9% | 125.4% | 48.9% | 11.4% |
| Ngai Shun Holdings Ltd ($1246) | | 68.8% | 77.2% | 45.2% | 31.0% |
| CNQC International Holdings Ltd ($1240) | 23.1% | 12.2% | 22.3% | 40.4% | |
| China Saite Group Co Ltd ($153) | 46.3% | 64.0% | 53.2% | 35.3% | |
| |
|---|
| Median (43 companies) | 7.0% | 6.1% | 5.5% | 3.8% | 2.0% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 5.8% | 5.0% | 2.3% | 4.5% | 3.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Resources and Transportation Group Ltd ($269) | | | | 66.7x | 29.7x |
| CNC Holdings Ltd ($8356) | -0.7x | | 22.0x | 21.9x | 24.3x |
| Deson Development International Holdings ($262) | 3.1x | 3.8x | 4.9x | 13.7x | 47.0x |
| Chun Wo Development Holdings Ltd ($711) | | 14.3x | 8.1x | 12.6x | 15.9x |
| Hsin Chong Construction Group Ltd ($404) | 4.3x | 1.8x | 8.0x | 10.2x | |
| |
|---|
| Median (35 companies) | 0.7x | 1.7x | 1.9x | 2.6x | 2.9x |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 0.2x | 0.3x | 0.3x | 2.3x | 2.7x |
