Hua Lien International Holding Co Ltd reports 44.1% CAPEX decline and 23.4% Revenue decline
31/03/2016 • About Hua Lien International Holding Co Ltd (
$969) • By InTwits
Hua Lien International Holding Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hua Lien International Holding Co Ltd doesn't have a profitable business model yet: 2015 ROIC is -12.6%
- The company operates at negative EBITDA Margin: -17.7%
- EBITDA Margin is quite volatile: -17.7% in 2015, -19.2% in 2014, 3.7% in 2013, 16.9% in 2012, 31.1% in 2011
- Hua Lien International Holding Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.6%. At the same time it's a lot of higher than industry average of 11.3%.
- CAPEX is quite volatile: 213 in 2015, 380 in 2014, 228 in 2013, 128 in 2012, 0.046 in 2011
- The company has unprofitable business model: ROIC is at -12.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hua Lien International Holding Co Ltd ($969) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 195.1 | 649.5 | 561.9 | 478.3 | 366.3 | -23.4% |
| Gross Profit | 91.8 | 112.5 | 108.0 | 51.4 | 44.5 | -13.5% |
| SG&A | | | 94.2 | 109.9 | 124.9 | 13.7% |
| EBITDA | 60.7 | 109.6 | 21.1 | -91.9 | -64.9 | -29.3% |
| Net Income | -4.9 | -14.9 | -216.8 | -210.1 | -572.4 | 172.5% |
Balance Sheet
|
|---|
| Cash | 373.7 | 949.1 | 331.7 | 93.9 | 125.9 | 34.1% |
| Short Term Debt | 0.0 | 67.4 | 0.0 | 6.8 | 0.0 | -100.0% |
| Long Term Debt | 537.3 | 585.6 | 597.5 | 433.5 | 447.9 | 3.3% |
Cash flow
|
|---|
| Capex | 0.0 | 127.7 | 227.6 | 380.5 | 212.7 | -44.1% |
Ratios
|
|---|
| Revenue growth | -5.2% | 233.0% | -13.5% | -14.9% | -23.4% | |
| EBITDA growth | 56.9% | 80.6% | -80.8% | -536.4% | -29.3% | |
| Gross Margin | 47.0% | 17.3% | 19.2% | 10.8% | 12.2% | 1.4% |
| EBITDA Margin | 31.1% | 16.9% | 3.7% | -19.2% | -17.7% | 1.5% |
| Net Income Margin | -2.5% | -2.3% | -38.6% | -43.9% | -156.3% | -112.3% |
| SG&A, % of revenue | | | 16.8% | 23.0% | 34.1% | 11.1% |
| CAPEX, % of revenue | 0.0% | 19.7% | 40.5% | 79.6% | 58.1% | -21.5% |
| ROIC | 3.7% | 5.2% | -1.6% | -9.8% | -12.6% | -2.8% |
| ROE | -0.9% | -1.9% | -25.6% | -30.9% | -167.0% | -136.1% |
| Net Debt/EBITDA | 2.7x | -2.7x | 12.6x | | | 0.0x |
Revenue and profitability
The company's Revenue dropped on 23.4% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.5 pp from -19.2% to -17.7% in 2015.
Gross Margin increased slightly on 1.4 pp from 10.8% to 12.2% in 2015. SG&A as a % of Revenue jumped on 11.1 pp from 23.0% to 34.1% in 2015.
Net Income marign dropped on 112 pp from -43.9% to -156% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Hua Lien International Holding Co Ltd had CAPEX/Revenue of 58.1%. Hua Lien International Holding Co Ltd's CAPEX/Revenue surged on 38.4 pp from 19.7% in 2012 to 58.1% in 2015. It's average CAPEX/Revenue for the last three years was 59.4%.
Return on investment
The company operates at negative ROIC (-12.61%) and ROE (-167.04%). ROIC decreased on 2.8 pp from -9.8% to -12.6% in 2015. ROE dropped on 136 pp from -30.9% to -167% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -7.0x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2015. Debt increased slightly on 1.7% in 2015 while cash surged on 34.1% in 2015.
Appendix 1: Peers in Textiles
Below you can find Hua Lien International Holding Co Ltd benchmarking vs. other companies in Textiles 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 |
|---|
| Ping Shan Tea Group Ltd ($364) | | -25.9% | 63.7% | -45.7% | 71.6% |
| China Weaving Materials Holdings Ltd ($3778) | | -15.4% | -4.2% | -3.8% | 53.9% |
| Easyknit Enterprises Holdings Ltd ($616) | | 9.6% | 10.2% | 7.3% | 22.3% |
| Kingdom Holding Co Ltd ($528) | | 1.1% | 6.0% | 20.0% | 12.2% |
| Kam Hing International Holdings Ltd ($2307) | | 0.9% | -4.3% | 1.6% | 4.2% |
| |
|---|
| Median (21 companies) | | 0.1% | -4.2% | -3.8% | -5.4% |
|---|
| Hua Lien International Holding Co Ltd ($969) | | 233.0% | -13.5% | -14.9% | -23.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Art Textile Technology International Co Ltd ($565) | 13.9% | 9.4% | 11.8% | 18.0% | 81.8% |
| TAI Ping Carpet International Ltd ($146) | 40.4% | 41.0% | 45.4% | 46.7% | 46.6% |
| Texwinca Holdings Ltd ($321) | 33.7% | 29.6% | 30.9% | 33.3% | 34.1% |
| Yongsheng Advanced Materials Co Ltd ($3608) | 5.6% | 4.9% | 7.3% | 24.9% | 28.8% |
| CECEP COSTIN New Materials Group Ltd ($2228) | 30.3% | 31.1% | 32.5% | 32.5% | 28.3% |
| |
|---|
| Median (20 companies) | 15.3% | 17.1% | 16.6% | 16.3% | 17.4% |
|---|
| Hua Lien International Holding Co Ltd ($969) | 47.0% | 17.3% | 19.2% | 10.8% | 12.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Weiqiao Textile Co ($2698) | 10.2% | 17.5% | 20.2% | 21.4% | 30.8% |
| CECEP COSTIN New Materials Group Ltd ($2228) | 26.2% | 28.1% | 28.7% | 30.2% | 23.4% |
| Kingdom Holding Co Ltd ($528) | 29.3% | 26.3% | 25.3% | 24.8% | 23.0% |
| Yongsheng Advanced Materials Co Ltd ($3608) | 3.2% | 2.5% | 5.1% | 17.5% | 18.9% |
| Pacific Textiles Holdings Ltd ($1382) | 19.5% | 19.1% | 19.0% | 19.5% | 18.4% |
| |
|---|
| Median (20 companies) | 13.3% | 11.2% | 10.5% | 11.8% | 11.2% |
|---|
| Hua Lien International Holding Co Ltd ($969) | 31.1% | 16.9% | 3.7% | -19.2% | -17.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Art Textile Technology International Co Ltd ($565) | 2.6% | 1.0% | 1.9% | 3.9% | 105.3% |
| Kam Hing International Holdings Ltd ($2307) | 5.5% | 10.6% | 10.5% | 7.6% | 8.3% |
| TAI Ping Carpet International Ltd ($146) | 6.3% | 8.2% | 10.1% | 6.9% | 7.4% |
| Wang Tai Holdings Ltd ($1400) | 23.9% | 34.1% | 18.8% | 7.5% | 7.3% |
| Sijia Group Co ($1863) | 25.1% | 45.8% | 13.7% | 5.6% | 7.3% |
| |
|---|
| Median (20 companies) | 2.7% | 2.6% | 1.8% | 3.9% | 4.1% |
|---|
| Hua Lien International Holding Co Ltd ($969) | 0.0% | 19.7% | 40.5% | 79.6% | 58.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pacific Textiles Holdings Ltd ($1382) | 28.8% | 23.7% | 26.4% | 31.6% | 25.9% |
| Yongsheng Advanced Materials Co Ltd ($3608) | 7.9% | 6.2% | 13.2% | 15.4% | 19.6% |
| Kingdom Holding Co Ltd ($528) | 16.3% | 13.8% | 12.7% | 13.8% | 12.7% |
| CECEP COSTIN New Materials Group Ltd ($2228) | 24.2% | 22.3% | 20.1% | 17.6% | 11.0% |
| Texwinca Holdings Ltd ($321) | 15.5% | 8.3% | 5.3% | 5.5% | 8.1% |
| |
|---|
| Median (21 companies) | 7.7% | 5.2% | 5.3% | 4.4% | 4.9% |
|---|
| Hua Lien International Holding Co Ltd ($969) | 3.7% | 5.2% | -1.6% | -9.8% | -12.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Guangdong Tannery Ltd ($1058) | 8.9x | 6.5x | 5.8x | 11.6x | |
| Sijia Group Co ($1863) | -0.1x | 1.6x | 5.3x | 6.4x | |
| China Weaving Materials Holdings Ltd ($3778) | 1.3x | 3.6x | 3.0x | 5.3x | 5.5x |
| Co-Prosperity Holdings Ltd ($707) | 8.3x | 34.8x | | 4.5x | |
| Victory City International Holdings Ltd ($539) | 1.8x | 1.5x | 2.0x | 3.2x | 2.5x |
| |
|---|
| Median (20 companies) | 1.3x | 1.5x | 1.3x | 0.8x | 0.5x |
|---|
