VTech Holdings Ltd reports 8.4% Net Income decline in 2016 and 1.2% Revenue decline
17/05/2016 • About VTech Holdings Ltd (
$303) • By InTwits
VTech Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 12.8% in FY2016 vs. 13.4% in FY2015 vs. 13.2% in FY2012
- VTech Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 17.3%.
- CAPEX is quite volatile: 73.0 in 2016, 1,881 in 2015, 156 in 2014, 5,735 in 2013, 2,010 in 2012
- The company has highly profitable business model: ROIC is at 37.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
VTech Holdings Ltd ($303) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,785 | 1,858 | 1,899 | 1,880 | 1,857 | -1.2% |
| Gross Profit | 571 | 598 | 634 | 610 | 583 | -4.5% |
| SG&A | 306 | 317 | 349 | 334 | 324 | -2.9% |
| EBITDA | 236 | 253 | 258 | 252 | 238 | -5.7% |
| Net Income | 192 | 202 | 204 | 198 | 181 | -8.4% |
Balance Sheet
|
|---|
| Cash | 177 | 174 | 188 | 224 | 273 | 21.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 30 | 30 | 30 | 31 | 38 | 23.9% |
Ratios
|
|---|
| Revenue growth | 4.2% | 4.1% | 2.2% | -1.0% | -1.2% | |
| EBITDA growth | -5.8% | 7.3% | 2.0% | -2.2% | -5.7% | |
| Gross Margin | 32.0% | 32.2% | 33.4% | 32.5% | 31.4% | -1.1% |
| EBITDA Margin | 13.2% | 13.6% | 13.6% | 13.4% | 12.8% | -0.6% |
| Net Income Margin | 10.8% | 10.8% | 10.7% | 10.5% | 9.8% | -0.8% |
| SG&A, % of revenue | 17.1% | 17.1% | 18.4% | 17.8% | 17.5% | -0.3% |
| CAPEX, % of revenue | 1.7% | 1.6% | 1.6% | 1.6% | 2.1% | 0.4% |
| ROIC | 37.6% | 39.5% | 40.0% | 39.8% | 37.9% | -1.8% |
| ROE | 34.9% | 36.0% | 36.2% | 35.9% | 34.0% | -1.9% |
| Net Debt/EBITDA | -0.7x | -0.7x | -0.7x | -0.9x | -1.1x | -0.3x |
Revenue and profitability
VTech Holdings Ltd's Revenue decreased slightly on 1.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.60 pp from 13.4% to 12.8% in FY2016.
Gross Margin decreased slightly on 1.1 pp from 32.5% to 31.4% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased slightly on 0.77 pp from 10.5% to 9.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.1% in FY2016. VTech Holdings Ltd showed almost no change in CAPEX/Revenue from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 1.8%.
Return on investment
The company operates at high and attractive ROIC (37.94%) and ROE (34.04%). ROIC decreased slightly on 1.8 pp from 39.8% to 37.9% in FY2016. ROE decreased slightly on 1.9 pp from 35.9% to 34.0% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 21.8%.
Management team
The company's CEO is Wong Chi-Yun "Allan". Wong Chi-Yun "Allan" has 14 years tenure at the company.
Appendix 1: Peers in Telecommunications
Below we provide VTech Holdings Ltd benchmarking against other companies in Telecommunications 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 107.4% | -82.2% | 8,010.0% | |
| Hanny Holdings Ltd ($275) | 236.4% | 131.2% | -85.2% | 349.3% | |
| CCT Fortis Holdings Ltd ($138) | -24.1% | -55.3% | -71.3% | 207.1% | |
| Xi'an Haitian Antenna Technologies Co Ltd ($8227) | -8.5% | -45.9% | -56.2% | 111.6% | |
| China Trends Holdings Ltd ($8171) | 167.0% | -70.2% | -16.7% | 106.0% | |
| |
|---|
| Median (51 companies) | 8.9% | 8.3% | 9.7% | 7.9% | |
|---|
| VTech Holdings Ltd ($303) | | 4.1% | 2.2% | -1.0% | -1.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HKBN Ltd ($1310) | | 84.3% | 86.5% | 86.9% | |
| Netel Technology Holdings Ltd ($8256) | 27.9% | 42.1% | 54.9% | 72.3% | |
| Great World Co Holdings Ltd ($8003) | -11.0% | 43.0% | 45.5% | 67.9% | |
| APT Satellite Holdings Ltd ($1045) | 58.7% | 64.1% | 62.5% | 61.0% | |
| Cisco Systems Inc ($4333) | 61.2% | 60.6% | 58.9% | 60.4% | |
| |
|---|
| Median (48 companies) | 21.6% | 24.1% | 23.8% | 22.3% | |
|---|
| VTech Holdings Ltd ($303) | 32.0% | 32.2% | 33.4% | 32.5% | 31.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 86.5% | 85.8% | 81.6% | 82.4% | |
| APT Satellite Holdings Ltd ($1045) | 81.0% | 78.9% | 77.5% | 78.8% | |
| Synertone Communication Corp ($1613) | 44.9% | 48.5% | 49.4% | 51.5% | |
| HKBN Ltd ($1310) | | 39.2% | 40.1% | 39.0% | |
| HKT Trust & HKT Ltd ($6823) | 36.3% | 35.0% | 35.9% | 34.9% | |
| |
|---|
| Median (51 companies) | 7.6% | 5.5% | 5.3% | 9.1% | |
|---|
| VTech Holdings Ltd ($303) | 13.2% | 13.6% | 13.6% | 13.4% | 12.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| APT Satellite Holdings Ltd ($1045) | 74.3% | 2.5% | 27.2% | 115.8% | |
| Hong Kong Television Network Ltd ($1137) | 12,435.9% | 504.9% | 1,283.5% | 79.4% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 93.8% | 71.7% | 75.0% | 52.8% | |
| China Fiber Optic Network System Group Ltd ($3777) | 4.8% | 16.3% | 13.1% | 31.9% | |
| Directel Holdings Ltd ($8337) | 2.1% | 0.1% | 0.6% | 30.2% | |
| |
|---|
| Median (51 companies) | 2.4% | 3.0% | 3.2% | 2.6% | |
|---|
| VTech Holdings Ltd ($303) | 1.7% | 1.6% | 1.6% | 1.6% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telecom Service One Holdings Ltd ($8145) | 95.0% | 5.4% | 26.7% | 39.8% | |
| Coolpad Group Ltd ($2369) | 8.1% | 6.0% | 9.6% | 29.1% | |
| SmarTone Telecommunications Holdings Ltd ($315) | 37.2% | 23.1% | 12.8% | 17.7% | |
| TCL Communication Technology Holdings Ltd ($2618) | -1.6% | 6.0% | 17.2% | 13.4% | |
| Cisco Systems Inc ($4333) | 15.6% | 15.8% | 12.1% | 13.4% | |
| |
|---|
| Median (52 companies) | 7.1% | 5.7% | 5.7% | 5.4% | |
|---|
| VTech Holdings Ltd ($303) | 37.6% | 39.5% | 40.0% | 39.8% | 37.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CCT Land Holdings Ltd ($261) | 10.1x | 23.8x | 48.4x | 44.8x | |
| China Energine International Holdings Ltd ($1185) | | | 13.3x | 31.7x | |
| China Ground Source Energy Industry Group Ltd ($8128) | -1.6x | 3.5x | 14.3x | 11.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.0x | -1.3x | 12.5x | 7.6x | |
| China All Access Holdings Ltd ($633) | 0.9x | 1.8x | 5.2x | 5.6x | |
| |
|---|
| Median (37 companies) | -0.3x | 0.6x | 0.7x | 0.6x | |
|---|
| VTech Holdings Ltd ($303) | -0.7x | -0.7x | -0.7x | -0.9x | -1.1x |
