Global Digital Creations Holdings Ltd Net Income dropped on 65.5% in 2015 and EBITDA Margin dropped on 14.6 pp from 30.5% to 16.0%
23/03/2016 • About Global Digital Creations Holdings Ltd (
$8271) • By InTwits
Global Digital Creations Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Global Digital Creations Holdings Ltd doesn't have a profitable business model yet: 2015 ROIC is 0.7%
- EBITDA Margin is quite volatile: 16.0% in 2015, 30.5% in 2014, 15.0% in 2013, -5.7% in 2012, -13.0% in 2011
- Global Digital Creations Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 50.3%. At the same time it's in pair with industry average of 43.9%.
- CAPEX is quite volatile: 15.4 in 2015, 18.3 in 2014, 22.6 in 2013, 125 in 2012, 102 in 2011
- The company has potentially unprofitable business model: ROIC is at 0.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Global Digital Creations Holdings Ltd ($8271) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 94.7 | 111.0 | 160.7 | 204.4 | 181.7 | -11.1% |
| Gross Profit | 25.3 | 36.1 | 64.3 | 77.6 | 72.9 | -6.1% |
| SG&A | 65.3 | 72.8 | 87.2 | 85.6 | 72.9 | -14.9% |
| EBITDA | -12.3 | -6.3 | 24.0 | 62.4 | 29.0 | -53.5% |
| Net Income | 306.2 | 60.5 | 33.8 | 31.9 | 11.0 | -65.5% |
Balance Sheet
|
|---|
| Cash | 445.0 | 309.2 | 93.4 | 98.0 | 137.3 | 40.1% |
| Short Term Debt | 24.7 | 30.0 | 35.9 | 45.0 | 0.0 | -100.0% |
| Long Term Debt | 143.2 | 115.0 | 82.1 | 35.0 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 102.2 | 124.6 | 22.6 | 18.3 | 15.4 | -16.0% |
Ratios
|
|---|
| Revenue growth | 163.6% | 17.3% | 44.8% | 27.2% | -11.1% | |
| EBITDA growth | -64.8% | -49.1% | -483.0% | 159.6% | -53.5% | |
| Gross Margin | 26.7% | 32.5% | 40.0% | 38.0% | 40.1% | 2.1% |
| EBITDA Margin | -13.0% | -5.7% | 15.0% | 30.5% | 16.0% | -14.6% |
| Net Income Margin | 323.4% | 54.5% | 21.1% | 15.6% | 6.1% | -9.5% |
| SG&A, % of revenue | 69.0% | 65.6% | 54.3% | 41.9% | 40.1% | -1.8% |
| CAPEX, % of revenue | 108.0% | 112.3% | 14.1% | 9.0% | 8.5% | -0.5% |
| ROIC | -3.6% | -2.4% | 0.4% | 3.6% | 0.7% | -2.9% |
| ROE | 49.9% | 7.0% | 3.6% | 3.3% | 1.1% | -2.1% |
| Net Debt/EBITDA | | | 1.0x | -0.3x | -4.7x | -4.4x |
Revenue and profitability
The company's Revenue dropped on 11.1% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 14.6 pp from 30.5% to 16.0% in 2015.
Gross Margin increased on 2.1 pp from 38.0% to 40.1% in 2015. SG&A as a % of Revenue decreased slightly on 1.8 pp from 41.9% to 40.1% in 2015.
Net Income marign decreased on 9.5 pp from 15.6% to 6.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Global Digital Creations Holdings Ltd had CAPEX/Revenue of 8.5%. Global Digital Creations Holdings Ltd showed big decline in CAPEX/Revenue of 104 pp from 112% in 2012 to 8.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 10.5%.Global Digital Creations Holdings Ltd invested a big chunk of EBITDA (53.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (0.69%) and ROE (1.14%). ROIC decreased on 2.9 pp from 3.6% to 0.69% in 2015. ROE decreased on 2.1 pp from 3.3% to 1.1% in 2015.
Leverage (Debt)
The company paid down all the debt in 2015. Cash jumped on 40.1% in 2015.
Appendix 1: Peers in Entertainment
Below you can find Global Digital Creations Holdings Ltd benchmarking vs. other companies in Entertainment 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 3D Digital Entertainment Ltd ($8078) | | -67.2% | 295.2% | 185.2% | -44.3% |
| Universe International Holdings Ltd ($1046) | | -42.2% | 4.3% | 159.4% | 46.3% |
| China Vanguard Group Ltd ($8156) | | -7.0% | -62.7% | 145.0% | 29.2% |
| China LotSynergy Holdings Ltd ($1371) | | 15.0% | 22.5% | 39.1% | -37.8% |
| Nan Hai Corp Ltd ($680) | 20.7% | -16.3% | 18.7% | 36.0% | |
| |
|---|
| Median (26 companies) | 20.0% | -0.7% | 11.0% | -1.8% | -2.7% |
|---|
| Global Digital Creations Holdings Ltd ($8271) | | 17.3% | 44.8% | 27.2% | -11.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Amax International Holdings Ltd ($959) | | | 92.1% | 98.6% | 96.6% |
| China Vanguard Group Ltd ($8156) | 65.0% | 63.8% | 88.2% | 93.8% | 95.2% |
| Cheung Wo International Holdings Ltd ($9) | 49.4% | -17.5% | 71.4% | 77.7% | |
| REXLot Holdings Ltd ($555) | 63.0% | 70.2% | 73.1% | 73.4% | |
| China LotSynergy Holdings Ltd ($1371) | 81.7% | 79.5% | 73.1% | 70.1% | 55.8% |
| |
|---|
| Median (22 companies) | 48.3% | 44.9% | 56.8% | 44.1% | 47.9% |
|---|
| Global Digital Creations Holdings Ltd ($8271) | 26.7% | 32.5% | 40.0% | 38.0% | 40.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cheung Wo International Holdings Ltd ($9) | 7.8% | -62.7% | -217.3% | 104.5% | |
| Neptune Group Ltd ($70) | 101.1% | 98.6% | 98.6% | 86.6% | 99.0% |
| Universe International Holdings Ltd ($1046) | 62.2% | 36.6% | 44.6% | 74.6% | 73.6% |
| China LotSynergy Holdings Ltd ($1371) | 61.2% | 53.3% | 60.9% | 56.1% | -31.0% |
| Haichang Holdings Ltd ($2255) | 46.9% | 55.0% | 44.5% | 46.3% | |
| |
|---|
| Median (26 companies) | 14.2% | 22.1% | 19.7% | 14.9% | -17.0% |
|---|
| Global Digital Creations Holdings Ltd ($8271) | -13.0% | -5.7% | 15.0% | 30.5% | 16.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| National Arts Entertainment and Culture Group Ltd ($8228) | 536.1% | 1,237.1% | 771.1% | 799.0% | 508.9% |
| Cheung Wo International Holdings Ltd ($9) | 44.7% | 90.3% | 465.2% | 383.2% | |
| Alibaba Pictures Group Ltd ($1060) | 0.5% | 16.1% | 17.2% | 34.8% | |
| Mei Ah Entertainment Group Ltd ($391) | 2.5% | 6.8% | 3.6% | 25.4% | 1.8% |
| Nan Hai Corp Ltd ($680) | 29.1% | 19.2% | 35.2% | 18.2% | |
| |
|---|
| Median (26 companies) | 7.2% | 8.7% | 6.6% | 4.7% | 8.1% |
|---|
| Global Digital Creations Holdings Ltd ($8271) | 108.0% | 112.3% | 14.1% | 9.0% | 8.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dynam Japan Holdings Co Ltd ($6889) | 22.5% | 23.8% | 25.4% | 21.8% | 10.5% |
| Neptune Group Ltd ($70) | 22.0% | 22.8% | 23.8% | 21.1% | 18.1% |
| China LotSynergy Holdings Ltd ($1371) | 18.0% | 15.5% | 16.9% | 14.8% | -9.8% |
| Pegasus Entertainment Holdings Ltd ($1326) | 94.5% | 82.1% | 18.5% | 10.3% | -21.3% |
| SMI Holdings Group Ltd ($198) | 5.8% | 1.3% | 8.4% | 9.9% | |
| |
|---|
| Median (27 companies) | 2.8% | -1.1% | 3.7% | -0.9% | -1.8% |
|---|
| Global Digital Creations Holdings Ltd ($8271) | -3.6% | -2.4% | 0.4% | 3.6% | 0.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nan Hai Corp Ltd ($680) | 25.2x | 80.8x | 3.5x | 20.8x | |
| Cheung Wo International Holdings Ltd ($9) | 28.3x | | | 19.1x | |
| REXLot Holdings Ltd ($555) | 0.4x | -0.0x | -0.2x | 7.2x | |
| Orange Sky Golden Harvest Entertainment Holdings Ltd ($1132) | -0.8x | 1.1x | 4.2x | 2.7x | |
| China 3D Digital Entertainment Ltd ($8078) | -11.9x | | -0.5x | 2.3x | |
| |
|---|
| Median (19 companies) | -0.1x | -0.1x | -0.6x | -0.0x | -0.7x |
|---|
| Global Digital Creations Holdings Ltd ($8271) | | | 1.0x | -0.3x | -4.7x |
