HC International Inc reports 72.0% Net Income decline and 5.2% Revenue decline
30/03/2016 • About HC International Inc (
$2280) • By InTwits
HC International Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- HC International Inc doesn't have a profitable business model yet: 2015 ROIC is 1.3%
- EBITDA Margin is quite volatile: 10.1% in 2015, 23.4% in 2014, 23.1% in 2013, 16.1% in 2012, 12.9% in 2011
- HC International Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.0%. At the same time it's a lot of higher than industry average of 7.5%.
- CAPEX is quite volatile: 25.2 in 2015, 239 in 2014, 240 in 2013, 46.9 in 2012, 66.1 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.3%
- It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is -19.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HC International Inc ($2280) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 438.4 | 548.6 | 837.7 | 966.6 | 916.1 | -5.2% |
| Gross Profit | 371.2 | 479.9 | 769.5 | 894.2 | 820.6 | -8.2% |
| SG&A | 320.2 | 394.8 | 579.1 | 678.2 | 742.9 | 9.5% |
| EBITDA | 56.5 | 88.3 | 193.8 | 225.7 | 92.6 | -59.0% |
| Net Income | 41.2 | 66.7 | 153.3 | 187.6 | 52.6 | -72.0% |
Balance Sheet
|
|---|
| Cash | 255.0 | 422.6 | 1,025.1 | 1,322.0 | 790.7 | -40.2% |
| Short Term Debt | 0.0 | 1.7 | 11.9 | 99.7 | 481.4 | 382.9% |
| Long Term Debt | 0.0 | 2.5 | 103.8 | 596.1 | 647.1 | 8.6% |
Cash flow
|
|---|
| Capex | 66.1 | 46.9 | 240.4 | 239.1 | 25.2 | -89.5% |
Ratios
|
|---|
| Revenue growth | 38.0% | 25.1% | 52.7% | 15.4% | -5.2% | |
| EBITDA growth | 235.2% | 56.3% | 119.4% | 16.5% | -59.0% | |
| Gross Margin | 84.7% | 87.5% | 91.9% | 92.5% | 89.6% | -2.9% |
| EBITDA Margin | 12.9% | 16.1% | 23.1% | 23.4% | 10.1% | -13.2% |
| Net Income Margin | 9.4% | 12.2% | 18.3% | 19.4% | 5.7% | -13.7% |
| SG&A, % of revenue | 73.0% | 72.0% | 69.1% | 70.2% | 81.1% | 10.9% |
| CAPEX, % of revenue | 15.1% | 8.5% | 28.7% | 24.7% | 2.7% | -22.0% |
| ROIC | 16.0% | 17.6% | 20.8% | 12.0% | 1.3% | -10.7% |
| ROE | 18.2% | 21.6% | 24.7% | 18.2% | 2.9% | -15.3% |
| Net Debt/EBITDA | -4.5x | -4.7x | -4.7x | -2.8x | 3.6x | 6.4x |
Revenue and profitability
The company's Revenue decreased on 5.2% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 13.2 pp from 23.4% to 10.1% in 2015.
Gross Margin decreased on 2.9 pp from 92.5% to 89.6% in 2015. SG&A as a % of Revenue surged on 10.9 pp from 70.2% to 81.1% in 2015.
Net Income marign dropped on 13.7 pp from 19.4% to 5.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.7% in 2015. CAPEX/Revenue decreased on 5.8 pp from 8.5% in 2012 to 2.7% in 2015. For the last three years the average CAPEX/Revenue was 18.7%.
Return on investment
The company operates at low ROIC (1.29%) and ROE (2.90%). ROIC dropped on 10.7 pp from 12.0% to 1.3% in 2015. ROE dropped on 15.3 pp from 18.2% to 2.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 12.2x. Net Debt / EBITDA surged on 6.4x from -2.8x to 3.6x in 2015. Debt surged on 62.2% in 2015 while cash dropped on 40.2% in 2015.
Appendix 1: Peers in Commercial Services
Below we provide HC International Inc benchmarking against other companies in Commercial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kai Yuan Holdings Ltd ($1215) | | 99.1% | 14.9% | -88.3% | 271.8% |
| China Smartpay Group Holdings Ltd ($8325) | | 60.0% | 274.7% | 75.6% | 124.5% |
| Celebrate International Holdings Ltd ($8212) | | -90.1% | 1,437.6% | -6.3% | 117.0% |
| Haier Healthwise Holdings Ltd ($348) | | -22.0% | -50.1% | -7.5% | 101.1% |
| CAR Inc ($699) | | 96.4% | 68.0% | 30.3% | 42.1% |
| |
|---|
| Median (60 companies) | -0.2% | 7.1% | 6.7% | 9.9% | 4.4% |
|---|
| HC International Inc ($2280) | | 25.1% | 52.7% | 15.4% | -5.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dingyi Group Investment Ltd ($508) | 76.5% | 75.8% | | 64.5% | 86.0% |
| Fu Shou Yuan International Group Ltd ($1448) | 81.6% | 80.5% | 80.4% | 80.0% | 77.6% |
| Nirvana Asia Ltd ($1438) | 65.6% | 68.3% | 69.6% | 70.5% | 75.7% |
| U Banquet Group Holding Ltd ($8107) | | | | 76.5% | 74.5% |
| Anxian Yuan China Holdings Ltd ($922) | 58.4% | 74.0% | 54.7% | 39.8% | 70.8% |
| |
|---|
| Median (55 companies) | 33.0% | 31.5% | 30.5% | 31.0% | 31.5% |
|---|
| HC International Inc ($2280) | 84.7% | 87.5% | 91.9% | 92.5% | 89.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zuoli Kechuang Micro-Finance Co Ltd ($6866) | | 61.6% | 84.9% | 75.9% | 80.9% |
| Shenzhen International Holdings Ltd ($152) | 69.3% | 60.2% | 65.8% | 97.1% | 73.6% |
| Yuexiu Transport Infrastructure Ltd ($1052) | 74.3% | 78.3% | 74.5% | 74.0% | 71.6% |
| CAR Inc ($699) | 31.6% | 43.6% | 30.1% | 43.1% | 67.4% |
| Jiangsu Expressway Co Ltd ($177) | 60.8% | 57.0% | 60.7% | 59.3% | 61.5% |
| |
|---|
| Median (60 companies) | 17.4% | 17.5% | 14.2% | 11.1% | 13.1% |
|---|
| HC International Inc ($2280) | 12.9% | 16.1% | 23.1% | 23.4% | 10.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Blue Sky Power Holdings Ltd ($6828) | 11.5% | 21.3% | 9.0% | 13.9% | 47.4% |
| COSCO Pacific Ltd ($1199) | 111.3% | 96.6% | 66.6% | 43.3% | 45.8% |
| Shenzhen International Holdings Ltd ($152) | 28.3% | 23.0% | 22.1% | 20.9% | 35.0% |
| Celebrate International Holdings Ltd ($8212) | 140.9% | 211.7% | 12.0% | 6.2% | 34.2% |
| China Maple Leaf Educational Systems Ltd ($1317) | 39.5% | 25.7% | 50.9% | 21.1% | 32.8% |
| |
|---|
| Median (60 companies) | 3.6% | 3.1% | 4.0% | 2.8% | 3.4% |
|---|
| HC International Inc ($2280) | 15.1% | 8.5% | 28.7% | 24.7% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 136.8% | 51.5% | 26.6% | 30.0% | 29.5% |
| 1010 Printing Group Ltd ($1127) | 14.4% | 13.5% | 20.8% | 17.8% | 19.9% |
| China Packaging Holdings Development Ltd ($1439) | 50.0% | 52.0% | 46.6% | 34.1% | 19.8% |
| CAR Inc ($699) | | 5.2% | 2.7% | 12.2% | 19.0% |
| eprint Group Ltd ($1884) | | 33.0% | 34.8% | 15.4% | 18.5% |
| |
|---|
| Median (60 companies) | 5.0% | 6.2% | 5.7% | 5.5% | 3.7% |
|---|
| HC International Inc ($2280) | 16.0% | 17.6% | 20.8% | 12.0% | 1.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Celebrate International Holdings Ltd ($8212) | | | | | 22.2x |
| Kai Yuan Holdings Ltd ($1215) | -15.6x | -143.8x | -0.7x | | 18.8x |
| Eagle Legend Asia Ltd ($936) | 4.3x | 4.0x | 4.0x | 3.3x | 6.2x |
| Sichuan Expressway Co Ltd ($107) | 1.8x | 2.7x | 3.8x | 4.3x | 5.5x |
| Yuexiu Transport Infrastructure Ltd ($1052) | 2.9x | 4.5x | 3.1x | 2.7x | 5.3x |
| |
|---|
| Median (40 companies) | -0.1x | -0.0x | -0.7x | -0.5x | -0.5x |
|---|
| HC International Inc ($2280) | -4.5x | -4.7x | -4.7x | -2.8x | 3.6x |
