Far East Horizon Ltd CAPEX surged on 103% in 2015 and Revenue jumped on 17.2%
30/03/2016 • About Far East Horizon Ltd (
$3360) • By InTwits
Far East Horizon Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Far East Horizon Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.0%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: 1,876 in 2015, 926 in 2014, 1,752 in 2013, 58.3 in 2012, 90.4 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.8%
- It operates with high leverage: Net Debt/EBITDA is 20.8x while industry average is 2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Far East Horizon Ltd ($3360) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,718 | 6,486 | 7,868 | 10,061 | 11,796 | 17.2% |
| Gross Profit | 2,503 | 3,578 | 4,978 | 5,954 | 7,024 | 18.0% |
| SG&A | 808 | 1,216 | 1,885 | 2,266 | 2,557 | 12.8% |
| EBITDA | 1,430 | 2,080 | 2,479 | 3,416 | 3,891 | 13.9% |
| Net Income | 1,108 | 1,519 | 1,913 | 2,332 | 2,576 | 10.5% |
Balance Sheet
|
|---|
| Cash | 4,166 | 1,503 | 2,673 | 3,318 | 2,501 | -24.6% |
| Short Term Debt | 12,083 | 18,924 | 27,284 | 30,273 | 41,700 | 37.7% |
| Long Term Debt | 17,561 | 17,828 | 29,271 | 41,505 | 41,729 | 0.5% |
Cash flow
|
|---|
| Capex | 90 | 58 | 1,752 | 926 | 1,876 | 102.6% |
Ratios
|
|---|
| Revenue growth | 113.2% | 37.5% | 21.3% | 27.9% | 17.2% | |
| EBITDA growth | 60.8% | 45.5% | 19.2% | 37.8% | 13.9% | |
| Gross Margin | 53.1% | 55.2% | 63.3% | 59.2% | 59.5% | 0.4% |
| EBITDA Margin | 30.3% | 32.1% | 31.5% | 34.0% | 33.0% | -1.0% |
| Net Income Margin | 23.5% | 23.4% | 24.3% | 23.2% | 21.8% | -1.3% |
| SG&A, % of revenue | 17.1% | 18.7% | 24.0% | 22.5% | 21.7% | -0.8% |
| CAPEX, % of revenue | 1.9% | 0.9% | 22.3% | 9.2% | 15.9% | 6.7% |
| ROIC | 4.7% | 4.6% | 4.0% | 4.1% | 3.8% | -0.3% |
| ROE | 17.1% | 13.7% | 14.2% | 15.2% | 13.3% | -1.8% |
| Net Debt/EBITDA | 17.8x | 16.9x | 21.7x | 20.0x | 20.8x | 0.8x |
Revenue and profitability
The company's Revenue surged on 17.2% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.97 pp from 34.0% to 33.0% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue decreased slightly on 0.85 pp from 22.5% to 21.7% in 2015.
Net Income marign decreased slightly on 1.3 pp from 23.2% to 21.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Far East Horizon Ltd had CAPEX/Revenue of 15.9%. CAPEX/Revenue surged on 15.0 pp from 0.90% in 2012 to 15.9% in 2015. Average CAPEX/Revenue for the last three years was 15.8%.
Return on investment
The company operates at good ROE (13.35%) while ROIC is low (3.78%). ROIC showed almost no change in 2015. ROE decreased slightly on 1.8 pp from 15.2% to 13.3% in 2015.
Leverage (Debt)
Debt level is 20.8x Net Debt / EBITDA and 21.4x Debt / EBITDA. Net Debt / EBITDA jumped on 0.8x from 20.0x to 20.8x in 2015. Debt jumped on 16.2% in 2015 while cash dropped on 24.6% in 2015.
Management team
Kong Fanxing is a Far East Horizon Ltd's CEO. Kong Fanxing has spent 9 years at the company. Far East Horizon Ltd's CFO is Wang Mingzhe. Wang Mingzhe has 9 years tenure at the company.
Appendix 1: Peers in Diversified Finan Serv
Below you can find Far East Horizon Ltd benchmarking vs. other companies in Diversified Finan Serv 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 Smarter Energy Group Holdings Ltd ($1004) | | -4.0% | -23.1% | -87.3% | 1,860.5% |
| Crown International Corp Ltd ($727) | | 225.8% | -75.0% | 117.4% | 802.5% |
| Global Strategic Group Ltd ($8007) | | -3.9% | 2.1% | 806.3% | 681.2% |
| Upbest Group Ltd ($335) | | -38.5% | -61.8% | 24.1% | 208.1% |
| GF Securities Co Ltd ($1776) | | 16.3% | 31.8% | 75.0% | 163.9% |
| |
|---|
| Median (63 companies) | 3.8% | 3.6% | 14.9% | 26.5% | 24.9% |
|---|
| Far East Horizon Ltd ($3360) | | 37.5% | 21.3% | 27.9% | 17.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Roma Group Ltd ($8072) | | | | 99.4% | 98.7% |
| First China Financial Network Holdings Ltd ($8123) | 98.6% | 93.4% | | 94.5% | 97.4% |
| China Smarter Energy Group Holdings Ltd ($1004) | -3.3% | 6.2% | 4.0% | 46.9% | 96.9% |
| Chinese Strategic Holdings Ltd ($8089) | 97.9% | 99.1% | 97.9% | 97.0% | 96.6% |
| Allied Group Ltd ($373) | 94.5% | 95.1% | 94.4% | 93.6% | 92.2% |
| |
|---|
| Median (10 companies) | 86.7% | 70.7% | 84.4% | 89.9% | 91.9% |
|---|
| Far East Horizon Ltd ($3360) | 53.1% | 55.2% | 63.3% | 59.2% | 59.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Smarter Energy Group Holdings Ltd ($1004) | -122.8% | -282.7% | -373.2% | -1,524.9% | 212.2% |
| China Aircraft Leasing Group Holdings Ltd ($1848) | 89.3% | 91.3% | 86.4% | 92.9% | 107.0% |
| Get Nice Holdings Ltd ($64) | 28.4% | 2.6% | 153.4% | 92.7% | 83.9% |
| Hong Kong Exchanges and Clearing Ltd ($388) | 83.5% | 81.6% | 73.4% | 75.7% | 82.1% |
| Hong Kong Finance Group Co Ltd ($1273) | 79.8% | 76.9% | 67.5% | 65.2% | 74.8% |
| |
|---|
| Median (64 companies) | 30.4% | 18.8% | 37.2% | 47.9% | 32.4% |
|---|
| Far East Horizon Ltd ($3360) | 30.3% | 32.1% | 31.5% | 34.0% | 33.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Aircraft Leasing Group Holdings Ltd ($1848) | 0.4% | 351.0% | 0.1% | 33.3% | 64.6% |
| Willie International Holdings Ltd ($273) | | | 0.3% | 0.8% | 58.0% |
| China Assurance Finance Group Ltd ($8090) | | 94.7% | 68.9% | 53.3% | 51.0% |
| AID Partners Capital Holdings Ltd ($8088) | 196.3% | 4.1% | 2.9% | 28.4% | 26.6% |
| Hongkong Chinese Ltd ($655) | | | | 0.1% | 25.6% |
| |
|---|
| Median (63 companies) | 2.3% | 2.1% | 1.8% | 1.1% | 1.5% |
|---|
| Far East Horizon Ltd ($3360) | 1.9% | 0.9% | 22.3% | 9.2% | 15.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 65.6% | 29.1% | 20.1% | 21.5% | 29.1% |
| China Smarter Energy Group Holdings Ltd ($1004) | -8.2% | -19.4% | -23.0% | -14.0% | 22.5% |
| Oi Wah Pawnshop Credit Holdings Ltd ($1319) | 30.4% | 32.7% | 20.7% | 14.0% | 15.3% |
| Emperor Capital Group Ltd ($717) | 5.1% | 5.1% | 12.8% | 13.1% | 14.6% |
| Roma Group Ltd ($8072) | | 19.6% | 43.7% | 107.8% | 13.3% |
| |
|---|
| Median (67 companies) | 4.8% | 3.9% | 4.2% | 4.9% | 3.6% |
|---|
| Far East Horizon Ltd ($3360) | 4.7% | 4.6% | 4.0% | 4.1% | 3.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hoifu Energy Group Ltd ($7) | | | | | 62.5x |
| South China Financial Holdings Ltd ($619) | | | | | 56.9x |
| Bright Smart Securities & Commodities Group Ltd ($1428) | 7.3x | 2.1x | 10.3x | 9.3x | 39.3x |
| Quam Ltd ($952) | 4.9x | 58.9x | 15.9x | 4.1x | 14.8x |
| China Aircraft Leasing Group Holdings Ltd ($1848) | 13.9x | 14.7x | 19.0x | 17.5x | 14.6x |
| |
|---|
| Median (49 companies) | -1.1x | -0.7x | 0.1x | -0.1x | -0.1x |
|---|
| Far East Horizon Ltd ($3360) | 17.8x | 16.9x | 21.7x | 20.0x | 20.8x |
