Digital Domain Holdings Ltd reports 461% Net Income decline and 38.0% Revenue decline
30/03/2016 • About Digital Domain Holdings Ltd (
$547) • By InTwits
Digital Domain Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Digital Domain Holdings Ltd doesn't have a profitable business model yet: 2015 ROIC is -17.5%
- The company operates at negative EBITDA Margin: -25.4%
- Digital Domain Holdings Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 is 0.0%. Average EBITDA Margin for the same period was -5.7%0
- Digital Domain Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 8.2%.
- CAPEX is quite volatile: 20.1 in 2015, 19.8 in 2014, 17.2 in 2013, 0.0050 in 2012, 0.26 in 2011
- The company has unprofitable business model: ROIC is at -17.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Digital Domain Holdings Ltd ($547) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 139.4 | 184.5 | 467.3 | 850.0 | 527.3 | -38.0% |
| Gross Profit | 13.9 | 16.7 | 69.2 | 149.4 | 84.2 | -43.6% |
| SG&A | | 22.4 | 201.1 | 228.5 | 280.1 | 22.6% |
| EBITDA | -7.3 | -5.1 | -23.0 | 46.3 | -133.7 | -388.6% |
| Net Income | 1.9 | 6.0 | -192.2 | 43.3 | -156.3 | -460.8% |
Balance Sheet
|
|---|
| Cash | 182.3 | 238.9 | 209.3 | 141.0 | 344.7 | 144.5% |
| Short Term Debt | 4.9 | 7.4 | 12.3 | 15.3 | 81.8 | 434.3% |
| Long Term Debt | 0.0 | 63.4 | 468.6 | 394.2 | 612.4 | 55.4% |
Cash flow
|
|---|
| Capex | 0.3 | 0.0 | 17.2 | 19.8 | 20.1 | 1.6% |
Ratios
|
|---|
| Revenue growth | 453.0% | 32.3% | 153.3% | 81.9% | -38.0% | |
| EBITDA growth | -59.4% | -30.5% | 351.1% | -301.2% | -388.6% | |
| Gross Margin | 10.0% | 9.1% | 14.8% | 17.6% | 16.0% | -1.6% |
| EBITDA Margin | -5.3% | -2.8% | -4.9% | 5.5% | -25.4% | -30.8% |
| Net Income Margin | 1.4% | 3.2% | -41.1% | 5.1% | -29.6% | -34.7% |
| SG&A, % of revenue | | 12.1% | 43.0% | 26.9% | 53.1% | 26.2% |
| CAPEX, % of revenue | 0.2% | 0.0% | 3.7% | 2.3% | 3.8% | 1.5% |
| ROIC | -2.2% | -1.5% | -22.5% | -5.9% | -17.5% | -11.6% |
| ROE | 0.6% | 1.8% | -68.9% | 17.8% | -33.2% | -51.0% |
| Net Debt/EBITDA | | | | 5.8x | | -5.8x |
Revenue and profitability
The company's Revenue dropped on 38.0% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 30.8 pp from 5.5% to -25.4% in 2015.
Gross Margin decreased slightly on 1.6 pp from 17.6% to 16.0% in 2015. SG&A as a % of Revenue surged on 26.2 pp from 26.9% to 53.1% in 2015.
Net Income marign dropped on 34.7 pp from 5.1% to -29.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
Digital Domain Holdings Ltd's CAPEX/Revenue was 3.8% in 2015. Digital Domain Holdings Ltd showed CAPEX/Revenue growth of 3.8 pp from 0.0027% in 2012 to 3.8% in 2015. Average CAPEX/Revenue for the last three years was 3.3%.
Return on investment
The company operates at negative ROIC (-17.50%) and ROE (-33.21%). ROIC dropped on 11.6 pp from -5.9% to -17.5% in 2015. ROE dropped on 51.0 pp from 17.8% to -33.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is . Net Debt / EBITDA dropped on 5.8x from 5.8x to in 2015. Debt surged on 69.5% in 2015 while cash jumped on 144% in 2015.
Appendix 1: Peers in Holding Companies-Divers
Below you can find Digital Domain Holdings Ltd benchmarking vs. other companies in Holding Companies-Divers 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 |
|---|
| CIAM Group Ltd ($378) | | -62.2% | 47.9% | -40.0% | 211.5% |
| New Century Group Hong Kong Ltd ($234) | | -68.9% | 326.7% | -70.3% | 118.2% |
| Greater China Holdings Ltd ($431) | | -35.8% | -72.1% | 67.3% | 110.3% |
| Heng Fai Enterprises Ltd ($185) | | 8.2% | -30.5% | -42.6% | 86.7% |
| China Primary Energy Holdings Ltd ($8117) | | -56.3% | -23.6% | 195.4% | 83.7% |
| |
|---|
| Median (36 companies) | 8.9% | 11.4% | 3.3% | 12.6% | 8.4% |
|---|
| Digital Domain Holdings Ltd ($547) | | 32.3% | 153.3% | 81.9% | -38.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| New Century Group Hong Kong Ltd ($234) | 76.7% | 27.3% | 85.2% | 82.8% | 91.5% |
| CIAM Group Ltd ($378) | | | | | 75.8% |
| Emperor International Holdings Ltd ($163) | 74.5% | 71.3% | 64.9% | 79.2% | 75.3% |
| Heng Fai Enterprises Ltd ($185) | 89.3% | 89.0% | 89.5% | 58.3% | 74.7% |
| Century Legend Holdings Ltd ($79) | 68.5% | 70.1% | 72.3% | 71.0% | 70.3% |
| |
|---|
| Median (32 companies) | 29.5% | 33.4% | 36.0% | 34.4% | 34.2% |
|---|
| Digital Domain Holdings Ltd ($547) | 10.0% | 9.1% | 14.8% | 17.6% | 16.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| New Century Group Hong Kong Ltd ($234) | 82.5% | -5.5% | 78.8% | 58.3% | 85.0% |
| Emperor International Holdings Ltd ($163) | 224.8% | 180.7% | 131.8% | 100.6% | 73.9% |
| Pioneer Global Group Ltd ($224) | 111.2% | -0.5% | -9.9% | -11.6% | 64.3% |
| C C Land Holdings Ltd ($1224) | 22.0% | 27.0% | 23.6% | 24.6% | 55.7% |
| Magnificent Estates ($201) | 42.1% | 45.5% | 47.8% | 53.0% | 40.6% |
| |
|---|
| Median (36 companies) | 6.3% | 2.8% | 2.8% | 7.4% | 4.3% |
|---|
| Digital Domain Holdings Ltd ($547) | -5.3% | -2.8% | -4.9% | 5.5% | -25.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Heng Fai Enterprises Ltd ($185) | 217.5% | 4.8% | 77.1% | 310.0% | 458.1% |
| Chinney Investments Ltd ($216) | 37.6% | 17.5% | 103.4% | 111.3% | 230.9% |
| China Investments Holdings Ltd ($132) | 20.7% | 4.8% | 81.9% | 382.2% | 222.5% |
| Goldin Properties Holdings Ltd ($283) | | 2,178.4% | 1,190.0% | 50.1% | 202.4% |
| Emperor International Holdings Ltd ($163) | 93.5% | 100.9% | 48.5% | 105.9% | 110.6% |
| |
|---|
| Median (36 companies) | 4.9% | 2.7% | 3.7% | 7.0% | 10.6% |
|---|
| Digital Domain Holdings Ltd ($547) | 0.2% | 0.0% | 3.7% | 2.3% | 3.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| C C Land Holdings Ltd ($1224) | 4.5% | 7.4% | 5.3% | 7.9% | 15.0% |
| Chinney Alliance Group Ltd ($385) | 3.4% | 6.4% | 8.1% | 13.6% | 15.0% |
| Top Spring International Holdings Ltd ($3688) | 27.9% | 15.6% | 6.9% | 7.3% | 8.0% |
| New Century Group Hong Kong Ltd ($234) | 8.6% | -1.7% | 11.7% | 1.7% | 7.3% |
| Chuang's China Investments Ltd ($298) | -0.9% | 22.9% | 1.5% | 2.2% | 6.1% |
| |
|---|
| Median (36 companies) | 0.6% | 0.1% | 0.2% | 0.8% | 0.2% |
|---|
| Digital Domain Holdings Ltd ($547) | -2.2% | -1.5% | -22.5% | -5.9% | -17.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chinney Investments Ltd ($216) | 111.3x | 10.3x | 63.7x | 48.6x | 93.7x |
| Carnival Group International Holdings Ltd ($996) | | | | 23.7x | |
| Van Shung Chong Holdings Ltd ($1001) | 3.4x | | 0.9x | 12.3x | 7.7x |
| Southeast Asia Properties & Finance Ltd ($252) | 6.8x | 6.7x | 5.7x | 9.2x | 4.3x |
| Code Agriculture Holdings Ltd ($8153) | 24.3x | 11.9x | 42.8x | 8.7x | |
| |
|---|
| Median (26 companies) | 3.0x | 2.5x | 3.1x | 2.9x | 3.0x |
|---|
| Digital Domain Holdings Ltd ($547) | | | | 5.8x | |
