Cheung Kong Infrastructure Holdings Ltd reports 64.9% Net Income decline while 24.7 pp EBITDA Margin growth from 36.2% to 60.9%
16/03/2016 • About Cheung Kong Infrastructure Holdings Ltd (
$1038) • By InTwits
Cheung Kong Infrastructure Holdings 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: 60.9% in 2015, 36.2% in 2014, 20.6% in 2013, 31.2% in 2012, 39.8% in 2011
- Cheung Kong Infrastructure Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.0%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 294 in 2015, 292 in 2014, 405 in 2013, 680 in 2012, 353 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cheung Kong Infrastructure Holdings Ltd ($1038) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,493 | 4,105 | 5,018 | 6,100 | 5,557 | -8.9% |
| EBITDA | 1,389 | 1,279 | 1,036 | 2,207 | 3,383 | 53.3% |
| Net Income | 7,745 | 9,427 | 11,639 | 31,782 | 11,162 | -64.9% |
Balance Sheet
|
|---|
| Cash | 5,947 | 6,980 | 5,958 | 7,108 | 7,897 | 11.1% |
| Short Term Debt | 11,342 | 24 | 44 | 1,690 | 15 | -99.1% |
| Long Term Debt | 3,126 | 11,089 | 12,985 | 16,947 | 17,162 | 1.3% |
Cash flow
|
|---|
| Capex | 353 | 680 | 405 | 292 | 294 | 0.7% |
Ratios
|
|---|
| Revenue growth | 24.1% | 17.5% | 22.2% | 21.6% | -8.9% | |
| EBITDA growth | 49.4% | -7.9% | -19.0% | 113.0% | 53.3% | |
| EBITDA Margin | 39.8% | 31.2% | 20.6% | 36.2% | 60.9% | 24.7% |
| Net Income Margin | 221.7% | 229.6% | 231.9% | 521.0% | 200.9% | -320.2% |
| CAPEX, % of revenue | 10.1% | 16.6% | 8.1% | 4.8% | 5.3% | 0.5% |
| ROIC | 1.9% | 1.5% | 1.0% | 1.8% | 2.5% | 0.7% |
| ROE | 15.9% | 16.4% | 17.5% | 38.8% | 11.4% | -27.4% |
| Net Debt/EBITDA | 6.1x | 3.2x | 6.8x | 5.2x | 2.7x | -2.5x |
Revenue and profitability
Cheung Kong Infrastructure Holdings Ltd's Revenue decreased on 8.9% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 24.7 pp from 36.2% to 60.9% in 2015.
Net Income marign dropped on 320 pp from 521% to 201% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.3% in 2015. CAPEX/Revenue dropped on 11.3 pp from 16.6% in 2012 to 5.3% in 2015. It's average CAPEX/Revenue for the last three years was 6.0%.
Return on investment
The company operates at low ROIC (2.52%) and ROE (11.37%). ROIC increased slightly on 0.71 pp from 1.8% to 2.5% in 2015. ROE dropped on 27.4 pp from 38.8% to 11.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.7x and Debt / EBITDA is 5.1x. Net Debt / EBITDA dropped on 2.5x from 5.2x to 2.7x in 2015. Debt decreased on 7.8% in 2015 while cash surged on 11.1% in 2015.
Appendix 1: Peers in Engineering&Construction
Below you can find Cheung Kong Infrastructure Holdings Ltd benchmarking vs. other companies in Engineering&Construction industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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) | 14.0% | 9.2% | 20.8% | 11.7% | 14.0% |
|---|
| Cheung Kong Infrastructure Holdings Ltd ($1038) | | 17.5% | 22.2% | 21.6% | -8.9% |
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% | |
| Grand Ming Group Holdings Ltd ($1271) | 17.5% | 10.0% | 15.8% | 31.0% | 19.0% |
| Kingbo Strike Ltd ($1421) | 20.2% | 26.4% | 37.4% | 27.7% | 21.9% |
| |
|---|
| Median (42 companies) | 7.8% | 8.7% | 7.4% | 6.2% | 4.7% |
|---|
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 39.8% | 31.2% | 20.6% | 36.2% | 60.9% |
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% |
|---|
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 10.1% | 16.6% | 8.1% | 4.8% | 5.3% |
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% | 4.3% | 2.4% |
|---|
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 1.9% | 1.5% | 1.0% | 1.8% | 2.5% |
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) | 0.5x | 1.3x | 1.4x | 2.3x | 2.7x |
|---|
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 6.1x | 3.2x | 6.8x | 5.2x | 2.7x |
