Chinasoft International Ltd reports 40.0% Net Income growth and almost no change in EBITDA Margin of 10.8%
21/03/2016 • About Chinasoft International Ltd (
$354) • By InTwits
Chinasoft International Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 10.8% in 2015 vs. 11.1% in 2014 vs. 12.4% in 2011
- Chinasoft International Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 5.3%.
- CAPEX is quite volatile: 272 in 2015, 215 in 2014, 80.7 in 2013, 93.2 in 2012, 63.1 in 2011
- The company has business model with low profitability: ROIC is at 8.3%
- It operates with high leverage: Net Debt/EBITDA is 0.7x while industry average is -2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Chinasoft International Ltd ($354) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,244 | 2,768 | 3,206 | 4,429 | 5,129 | 15.8% |
| Gross Profit | 729 | 915 | 1,005 | 1,349 | 1,523 | 12.9% |
| SG&A | | 615 | 688 | 885 | 923 | 4.4% |
| EBITDA | 278 | 326 | 356 | 491 | 552 | 12.3% |
| Net Income | 111 | 133 | 148 | 200 | 280 | 40.0% |
Balance Sheet
|
|---|
| Cash | 773 | 775 | 941 | 811 | 1,266 | 56.0% |
| Short Term Debt | 187 | 525 | 484 | 1,293 | 1,387 | 7.3% |
| Long Term Debt | 223 | 19 | 707 | 256 | 263 | 3.0% |
Cash flow
|
|---|
| Capex | 63 | 93 | 81 | 215 | 272 | 26.6% |
Ratios
|
|---|
| Revenue growth | 40.1% | 23.4% | 15.8% | 38.2% | 15.8% | |
| EBITDA growth | 40.3% | 17.2% | 9.4% | 37.9% | 12.3% | |
| Gross Margin | 32.5% | 33.1% | 31.4% | 30.5% | 29.7% | -0.8% |
| EBITDA Margin | 12.4% | 11.8% | 11.1% | 11.1% | 10.8% | -0.3% |
| Net Income Margin | 4.9% | 4.8% | 4.6% | 4.5% | 5.5% | 0.9% |
| SG&A, % of revenue | | 22.2% | 21.4% | 20.0% | 18.0% | -2.0% |
| CAPEX, % of revenue | 2.8% | 3.4% | 2.5% | 4.9% | 5.3% | 0.5% |
| ROIC | 9.2% | 9.3% | 7.8% | 8.5% | 8.3% | -0.2% |
| ROE | 8.0% | 7.3% | 7.1% | 8.4% | 9.8% | 1.4% |
| Net Debt/EBITDA | -1.3x | -0.7x | 0.7x | 1.5x | 0.7x | -0.8x |
Revenue and profitability
The company's Revenue surged on 15.8% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 8.0% to 9.9% in 2015.
Gross Margin decreased slightly on 0.76 pp from 30.5% to 29.7% in 2015. SG&A as a % of Revenue decreased slightly on 2.0 pp from 20.0% to 18.0% in 2015.
Net Income marign increased slightly on 0.94 pp from 4.5% to 5.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
Chinasoft International Ltd's CAPEX/Revenue was 5.3% in 2015. CAPEX/Revenue increased slightly on 1.9 pp from 3.4% in 2012 to 5.3% in 2015. Average CAPEX/Revenue for the last three years was 4.2%.
Return on investment
The company operates at low ROIC (8.32%) and ROE (9.75%). ROIC showed almost no change in 2015. ROE increased slightly on 1.4 pp from 8.4% to 9.8% in 2015.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.8x from 1.5x to 0.7x in 2015. Debt increased on 6.6% in 2015 while cash surged on 56.0% in 2015.
Appendix 1: Peers in Software
Below you can find Chinasoft International Ltd benchmarking vs. other companies in Software 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 |
|---|
| Pizu Group Holdings Ltd ($8053) | | 40.3% | -42.9% | 1,742.9% | 157.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | 194.6% | 164.0% | 33.6% | 100.5% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | -16.7% | 393.7% | -6.6% | 92.2% | |
| Epicurean and Co Ltd ($8213) | | 177.0% | 185.7% | 62.6% | 22.0% |
| China Bio Cassava Holdings Ltd ($8129) | | -14.2% | 38.8% | 55.1% | -19.7% |
| |
|---|
| Median (33 companies) | 17.0% | 9.5% | 10.3% | 20.6% | 9.2% |
|---|
| Chinasoft International Ltd ($354) | | 23.4% | 15.8% | 38.2% | 15.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.2% | 90.4% | 97.4% | 98.4% | 98.3% |
| Chanjet Information Technology Co Ltd ($1588) | 91.9% | 89.2% | 91.3% | 92.4% | 91.4% |
| NetDragon Websoft Inc ($777) | 90.1% | 93.4% | 90.8% | 89.3% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | 19.4% | 6.5% | 45.3% | 84.8% | |
| Kingdee International Software Group Co Ltd ($268) | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% |
| |
|---|
| Median (32 companies) | 51.0% | 46.5% | 43.1% | 42.8% | 41.5% |
|---|
| Chinasoft International Ltd ($354) | 32.5% | 33.1% | 31.4% | 30.5% | 29.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sinosoft Technology Group Ltd ($1297) | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% |
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
| China Binary Sale Technology Ltd ($8255) | 41.3% | 35.1% | 35.4% | 44.4% | 50.5% |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | 25.8% |
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% |
| |
|---|
| Median (33 companies) | 11.8% | 8.1% | 10.8% | 8.8% | 5.7% |
|---|
| Chinasoft International Ltd ($354) | 12.4% | 11.8% | 11.1% | 11.1% | 10.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| NetDragon Websoft Inc ($777) | 13.3% | 21.1% | 34.6% | 54.6% | |
| China Eco-Farming Ltd ($8166) | 0.3% | 0.6% | 0.7% | 18.1% | |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | 1.1% |
| |
|---|
| Median (32 companies) | 2.0% | 1.3% | 2.0% | 3.5% | 1.1% |
|---|
| Chinasoft International Ltd ($354) | 2.8% | 3.4% | 2.5% | 4.9% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Binary Sale Technology Ltd ($8255) | | 27.7% | 26.9% | 28.4% | 19.0% |
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | 15.6% |
| Finsoft Corp ($8018) | | 140.5% | 4.6% | 25.0% | -5.6% |
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| |
|---|
| Median (33 companies) | 1.6% | 3.0% | 4.6% | 1.2% | 2.0% |
|---|
| Chinasoft International Ltd ($354) | 9.2% | 9.3% | 7.8% | 8.5% | 8.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | -0.4x |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | 12.0x |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | 4.4x |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | 0.2x |
| Kingdee International Software Group Co Ltd ($268) | -0.1x | 5.0x | 1.1x | 0.5x | -1.2x |
| |
|---|
| Median (21 companies) | -0.9x | -1.1x | -1.9x | -2.3x | -0.4x |
|---|
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | 0.7x |
