Capital Environment Holdings Ltd reports 24.3 pp EBITDA Margin growth from -5.7% to 18.6% in 2015 while 13.0% Revenue decline
14/03/2016 • About Capital Environment Holdings Ltd (
$3989) • By InTwits
Capital Environment Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Capital Environment Holdings Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 was 0.0%. On average EBITDA Margin was -0.4% for the sames years0
- Capital Environment Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's a lot of higher than industry average of 5.7%.
- CAPEX is quite volatile: 27.0 in 2015, 65.8 in 2014, 1.5 in 2013, 4.0 in 2012, 2.3 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Capital Environment Holdings Ltd ($3989) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 20.1 | 17.6 | 282.4 | 963.6 | 838.1 | -13.0% |
| Gross Profit | -35.3 | -0.5 | 143.1 | 122.5 | 164.0 | 33.8% |
| SG&A | | | 71.6 | 103.2 | 119.0 | 15.4% |
| EBITDA | -112.9 | -107.9 | 112.0 | -55.1 | 156.0 | -383.3% |
| Net Income | -325.5 | -147.1 | -124.4 | -68.3 | 23.5 | -134.5% |
Balance Sheet
|
|---|
| Cash | 54.9 | 263.2 | 575.9 | 468.2 | 1,201.4 | 156.6% |
| Short Term Debt | 52.3 | 26.6 | 483.4 | 1,089.6 | 458.7 | -57.9% |
| Long Term Debt | 287.4 | 642.5 | 607.1 | 636.9 | 479.5 | -24.7% |
Cash flow
|
|---|
| Capex | 2.3 | 4.0 | 1.5 | 65.8 | 27.0 | -59.0% |
Ratios
|
|---|
| Revenue growth | -89.7% | -12.6% | 1,503.8% | 241.2% | -13.0% | |
| EBITDA growth | -56.6% | -4.4% | -203.8% | -149.2% | -383.3% | |
| Gross Margin | -175.0% | -2.7% | 50.7% | 12.7% | 19.6% | 6.9% |
| EBITDA Margin | -560.2% | -612.9% | 39.7% | -5.7% | 18.6% | 24.3% |
| Net Income Margin | -1,615.6% | -835.1% | -44.0% | -7.1% | 2.8% | 9.9% |
| SG&A, % of revenue | | | 25.4% | 10.7% | 14.2% | 3.5% |
| CAPEX, % of revenue | 11.2% | 22.7% | 0.5% | 6.8% | 3.2% | -3.6% |
| ROIC | -19.6% | -17.5% | 8.4% | -4.0% | 3.6% | 7.6% |
| ROE | -435.2% | -206.8% | -45.9% | -14.1% | 1.5% | 15.6% |
| Net Debt/EBITDA | | | 4.6x | | -1.7x | -1.7x |
Revenue and profitability
The company's Revenue dropped on 13.0% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 24.3 pp from -5.7% to 18.6% in 2015.
Gross Margin increased on 6.9 pp from 12.7% to 19.6% in 2015. SG&A as a % of Revenue increased on 3.5 pp from 10.7% to 14.2% in 2015.
Net Income marign increased on 9.9 pp from -7.1% to 2.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Capital Environment Holdings Ltd had CAPEX/Revenue of 3.2%. CAPEX/Revenue dropped on 19.5 pp from 22.7% in 2012 to 3.2% in 2015. It's average level of CAPEX/Revenue for the last three years was 3.5%.
Return on investment
The company operates at low ROIC (3.56%) and ROE (1.52%). ROIC increased on 7.6 pp from -4.0% to 3.6% in 2015. ROE surged on 15.6 pp from -14.1% to 1.5% in 2015.
Leverage (Debt)
Debt level is -1.7x Net Debt / EBITDA and 6.0x Debt / EBITDA. Net Debt / EBITDA dropped1.7x from to -1.7x in 2015. Debt dropped on 45.7% in 2015 while cash jumped on 157% in 2015.
Appendix 1: Peers in Environmental Control
Below we provide Capital Environment Holdings Ltd benchmarking against other companies in Environmental Control 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 Environmental Technology Holdings Ltd ($646) | -58.7% | 138.4% | -89.9% | 509.7% | |
| CT Environmental Group Ltd ($1363) | 21.9% | -18.7% | 23.1% | 112.9% | |
| Asia Energy Logistics Group Ltd ($351) | | | | 92.2% | |
| Green Energy Group Ltd ($979) | 57.8% | -75.7% | 92.3% | 43.5% | |
| New Universe International Group Ltd ($8068) | -17.6% | 45.7% | 17.6% | 33.0% | |
| |
|---|
| Median (20 companies) | 19.6% | -2.1% | 6.0% | 8.0% | 2.3% |
|---|
| Capital Environment Holdings Ltd ($3989) | | -12.6% | 1,503.8% | 241.2% | -13.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| EverChina International Holdings Co Ltd ($202) | 40.2% | 51.8% | 53.4% | 95.3% | 95.4% |
| China Environmental Resources Group Ltd ($1130) | 12.3% | 17.2% | 11.3% | 73.7% | 34.1% |
| CT Environmental Group Ltd ($1363) | 57.7% | 65.8% | 63.1% | 56.4% | |
| China Everbright International Ltd ($257) | 41.3% | 49.4% | 44.7% | 46.7% | 45.8% |
| New Universe International Group Ltd ($8068) | 51.9% | 47.9% | 47.7% | 45.0% | |
| |
|---|
| Median (19 companies) | 34.8% | 33.2% | 30.1% | 31.3% | 35.5% |
|---|
| Capital Environment Holdings Ltd ($3989) | -175.0% | -2.7% | 50.7% | 12.7% | 19.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 52.2% | 63.6% | 62.8% | 58.7% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 55.9% | 57.5% | 56.6% | 57.8% | |
| China Everbright International Ltd ($257) | 37.3% | 44.6% | 40.7% | 43.6% | 44.1% |
| New Universe International Group Ltd ($8068) | 42.0% | 40.2% | 37.8% | 39.3% | |
| China Water Affairs Group Ltd ($855) | 38.8% | 38.2% | 38.1% | 37.1% | 40.3% |
| |
|---|
| Median (19 companies) | 10.3% | 8.1% | 0.1% | 2.3% | -3.1% |
|---|
| Capital Environment Holdings Ltd ($3989) | -560.2% | -612.9% | 39.7% | -5.7% | 18.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 31.8% | 65.0% | 27.1% | 51.4% | |
| New Universe International Group Ltd ($8068) | 103.4% | 16.4% | 16.6% | 44.9% | |
| Green Energy Group Ltd ($979) | 7.5% | 169.0% | 270.8% | 41.9% | |
| Integrated Waste Solutions Group Holdings Ltd ($923) | 25.4% | 13.2% | 10.6% | 41.7% | 88.1% |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 42.2% | 43.1% | 46.5% | 38.6% | |
| |
|---|
| Median (20 companies) | 10.8% | 12.9% | 15.8% | 12.7% | 7.7% |
|---|
| Capital Environment Holdings Ltd ($3989) | 11.2% | 22.7% | 0.5% | 6.8% | 3.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CT Environmental Group Ltd ($1363) | 34.4% | 25.9% | 20.5% | 20.8% | |
| Sound Global Ltd ($967) | 15.0% | 12.8% | 11.5% | 10.8% | |
| China Everbright International Ltd ($257) | 11.1% | 10.4% | 11.2% | 10.5% | 10.8% |
| Dongjiang Environmental Co Ltd ($895) | 17.0% | 14.3% | 7.4% | 9.4% | |
| New Universe International Group Ltd ($8068) | 5.8% | 6.3% | 6.8% | 8.9% | |
| |
|---|
| Median (20 companies) | 5.3% | -0.7% | -0.1% | -0.6% | -0.2% |
|---|
| Capital Environment Holdings Ltd ($3989) | -19.6% | -17.5% | 8.4% | -4.0% | 3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Water Affairs Group Ltd ($855) | 2.8x | 2.6x | 2.7x | 3.2x | 3.4x |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 4.1x | 4.2x | 3.1x | 2.9x | |
| Sound Global Ltd ($967) | -0.7x | -0.1x | 0.3x | 1.9x | |
| CT Environmental Group Ltd ($1363) | 1.8x | 2.4x | 0.5x | 1.9x | |
| China Everbright International Ltd ($257) | 2.8x | 2.1x | 0.5x | 1.5x | 2.6x |
| |
|---|
| Median (10 companies) | 1.0x | 2.3x | 0.0x | 1.2x | 2.9x |
|---|
