ETS Group Ltd reports 36.1% Net Income decline and 0.61 pp EBITDA Margin growth from 14.4% to 15.0%
18/03/2016 • About ETS Group Ltd (
$8031) • By InTwits
ETS Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ETS Group Ltd is a company in decline: 2015 revenue growth was -18.4%, 5 years revenue CAGR was -5.6%
- ETS Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 0.42 in 2015, 6.3 in 2014, 6.3 in 2013, 1.8 in 2012, 4.5 in 2011
- The company has highly profitable business model: ROIC is at 12.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
ETS Group Ltd ($8031) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 195.8 | 164.6 | 169.7 | 176.0 | 143.6 | -18.4% |
| EBITDA | 30.3 | 23.0 | 39.2 | 25.3 | 21.5 | -15.0% |
| Net Income | 19.2 | 14.2 | 25.7 | 14.4 | 9.2 | -36.1% |
Balance Sheet
|
|---|
| Cash | 3.2 | 40.4 | 34.5 | 17.1 | 31.9 | 86.5% |
| Short Term Debt | 16.6 | 13.5 | 7.1 | 3.9 | 1.7 | -56.5% |
| Long Term Debt | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 4.5 | 1.8 | 6.3 | 6.3 | 0.4 | -93.4% |
Ratios
|
|---|
| Revenue growth | 2.4% | -15.9% | 3.1% | 3.7% | -18.4% | |
| EBITDA growth | 35.0% | -23.9% | 70.5% | -35.6% | -15.0% | |
| EBITDA Margin | 15.5% | 14.0% | 23.1% | 14.4% | 15.0% | 0.6% |
| Net Income Margin | 9.8% | 8.6% | 15.1% | 8.2% | 6.4% | -1.8% |
| CAPEX, % of revenue | 2.3% | 1.1% | 3.7% | 3.6% | 0.3% | -3.3% |
| ROIC | 41.8% | 21.5% | 31.9% | 14.5% | 12.1% | -2.4% |
| ROE | 49.6% | 24.3% | 29.7% | 14.3% | 8.6% | -5.7% |
| Net Debt/EBITDA | 0.4x | -1.2x | -0.7x | -0.5x | -1.4x | -0.9x |
Revenue and profitability
ETS Group Ltd's Revenue dropped on 18.4% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.61 pp from 14.4% to 15.0% in 2015.
Net Income marign decreased slightly on 1.8 pp from 8.2% to 6.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.29% in 2015. The company showed small CAPEX/Revenue decline of 0.83 pp from 1.1% in 2012 to 0.29% in 2015. Average CAPEX/Revenue for the last three years was 2.5%.
Return on investment
The company operates at good ROIC (12.13%) while ROE is low (8.62%). ROIC decreased on 2.4 pp from 14.5% to 12.1% in 2015. ROE decreased on 5.7 pp from 14.3% to 8.6% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.4x and Debt / EBITDA is 0.1x. Net Debt / EBITDA dropped on 0.9x from -0.5x to -1.4x in 2015. Debt dropped on 56.5% in 2015 while cash surged on 86.5% in 2015.
Appendix 1: Peers in Telecommunications
Below you can find ETS Group Ltd benchmarking vs. other companies in Telecommunications 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 |
|---|
| China Energine International Holdings Ltd ($1185) | -41.8% | 143.6% | 34.3% | 103.1% | |
| MOBI Development Co Ltd ($947) | -23.4% | -13.8% | 29.1% | 85.6% | |
| Vodatel Networks Holdings Ltd ($8033) | | -5.9% | -4.6% | 81.7% | -25.8% |
| Gold Tat Group International Ltd ($8266) | | 29.4% | 1,582.2% | 77.0% | 26.5% |
| Great World Co Holdings Ltd ($8003) | | 1,651.8% | -81.7% | 61.9% | -3.7% |
| |
|---|
| Median (53 companies) | 14.3% | 9.1% | 8.3% | 7.5% | 8.5% |
|---|
| ETS Group Ltd ($8031) | | -15.9% | 3.1% | 3.7% | -18.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HKBN Ltd ($1310) | | | 84.3% | 86.5% | 86.9% |
| Synertone Communication Corp ($1613) | 65.4% | 68.1% | 64.1% | 70.5% | 50.3% |
| Zhi Cheng Holdings Ltd ($8130) | 61.6% | 45.9% | 41.0% | 64.0% | 19.6% |
| APT Satellite Holdings Ltd ($1045) | 52.3% | 58.7% | 64.1% | 62.5% | |
| Hong Kong Television Network Ltd ($1137) | | -59.6% | -101.3% | 59.7% | |
| |
|---|
| Median (48 companies) | 28.1% | 23.8% | 27.2% | 26.6% | 34.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 83.5% | 86.5% | 85.8% | 81.6% | 82.4% |
| APT Satellite Holdings Ltd ($1045) | 76.7% | 81.0% | 78.9% | 77.5% | |
| Synertone Communication Corp ($1613) | 49.5% | 44.9% | 48.5% | 49.4% | 51.5% |
| HKBN Ltd ($1310) | | | 39.2% | 40.1% | 39.0% |
| PCCW Ltd ($8) | 31.4% | 32.0% | 31.9% | 39.2% | 30.6% |
| |
|---|
| Median (53 companies) | 9.8% | 8.3% | 6.1% | 7.5% | 13.0% |
|---|
| ETS Group Ltd ($8031) | 15.5% | 14.0% | 23.1% | 14.4% | 15.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 12,435.9% | 504.9% | 1,283.5% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 61.8% | 93.8% | 71.7% | 75.0% | 52.8% |
| Hanny Holdings Ltd ($275) | 80.8% | 19.8% | 11.6% | 28.3% | 0.2% |
| APT Satellite Holdings Ltd ($1045) | 155.2% | 74.3% | 2.5% | 27.2% | |
| China Electronics Corp Holdings Co Ltd ($85) | 1.5% | 1.8% | 8.3% | 27.1% | |
| |
|---|
| Median (52 companies) | 3.0% | 2.5% | 3.6% | 4.0% | 2.8% |
|---|
| ETS Group Ltd ($8031) | 2.3% | 1.1% | 3.7% | 3.6% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
| Telecom Service One Holdings Ltd ($8145) | | 95.0% | 5.4% | 26.7% | 39.8% |
| TCL Communication Technology Holdings Ltd ($2618) | 6.4% | -1.6% | 6.0% | 17.2% | |
| China Fiber Optic Network System Group Ltd ($3777) | 23.1% | 18.8% | 17.6% | 16.6% | |
| China U-Ton Holdings Ltd ($6168) | 69.5% | 35.7% | 25.0% | 16.2% | |
| |
|---|
| Median (53 companies) | 7.1% | 6.0% | 5.6% | 5.8% | 5.4% |
|---|
| ETS Group Ltd ($8031) | 41.8% | 21.5% | 31.9% | 14.5% | 12.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CCT Land Holdings Ltd ($261) | | 10.1x | 23.8x | 48.4x | |
| China Energine International Holdings Ltd ($1185) | | | | 13.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.1x | -2.0x | -1.3x | 12.5x | |
| China All Access Holdings Ltd ($633) | -1.0x | 0.9x | 1.8x | 5.2x | |
| Synertone Communication Corp ($1613) | -0.3x | -0.4x | -2.2x | 4.8x | 2.5x |
| |
|---|
| Median (38 companies) | -0.2x | -0.2x | 0.6x | 0.7x | 0.7x |
|---|
| ETS Group Ltd ($8031) | 0.4x | -1.2x | -0.7x | -0.5x | -1.4x |
