ITE Holdings Ltd Net Income dropped on 89.8% and EBITDA Margin decreased on 6.3 pp from 9.1% to 2.8%
15/06/2016 • About ITE Holdings Ltd (
$8092) • By InTwits
ITE Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 2.8% in FY2016, 9.1% in FY2015, 8.8% in FY2014, 4.0% in FY2013, -6.3% in FY2012
- ITE Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
- The company has potentially unprofitable business model: ROIC is at 4.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
ITE Holdings Ltd ($8092) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 25.903 | 28.365 | 22.902 | 29.395 | 24.169 | -17.8% |
| Gross Profit | 7.420 | 10.211 | 9.950 | 11.584 | 9.952 | -14.1% |
| SG&A | | | | 9.203 | 10.186 | 10.7% |
| EBITDA | -1.619 | 1.122 | 2.005 | 2.677 | 0.678 | -74.7% |
| Net Income | -1.841 | 1.062 | 2.070 | 3.244 | 0.329 | -89.8% |
Balance Sheet
|
|---|
| Cash | 2.306 | 5.485 | 7.197 | 7.501 | 6.121 | -18.4% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.013 | 0.439 | 0.046 | 0.047 | 0.074 | 57.9% |
Ratios
|
|---|
| Revenue growth | 10.6% | 9.5% | -19.3% | 28.4% | -17.8% | |
| EBITDA growth | -50.9% | -169.3% | 78.8% | 33.5% | -74.7% | |
| Gross Margin | 28.6% | 36.0% | 43.4% | 39.4% | 41.2% | 1.8% |
| EBITDA Margin | -6.3% | 4.0% | 8.8% | 9.1% | 2.8% | -6.3% |
| Net Income Margin | -7.1% | 3.7% | 9.0% | 11.0% | 1.4% | -9.7% |
| SG&A, % of revenue | | | | 31.3% | 42.1% | 10.8% |
| CAPEX, % of revenue | 0.1% | 1.5% | 0.2% | 0.2% | 0.3% | 0.1% |
| ROIC | -15.0% | 10.6% | 16.8% | 19.8% | 4.1% | -15.7% |
| ROE | -18.0% | 11.1% | 18.6% | 25.3% | 2.5% | -22.7% |
| Net Debt/EBITDA | | -4.9x | -3.6x | -2.8x | -9.0x | -6.2x |
Revenue and profitability
ITE Holdings Ltd's Revenue dropped on 17.8%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 6.3 pp from 9.1% to 2.8% in FY2016.
Gross Margin increased slightly on 1.8 pp from 39.4% to 41.2% in FY2016. SG&A as a % of Revenue surged on 10.8 pp from 31.3% to 42.1% in FY2016.
Net Income marign decreased on 9.7 pp from 11.0% to 1.4% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.31% in FY2016. ITE Holdings Ltd showed small CAPEX/Revenue decline of 1.2 pp from 1.5% in FY2013 to 0.31% in FY2016. It's average CAPEX/Revenue for the last three years was 0.22%.
Return on investment
The company operates at low ROIC (4.08%) and ROE (2.55%). ROIC dropped on 15.7 pp from 19.8% to 4.1% in FY2016. ROE dropped on 22.7 pp from 25.3% to 2.5% in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 18.4%.
Appendix 1: Peers in Software
Below you can find ITE Holdings Ltd benchmarking vs. other companies in Software 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Yunbo Digital Synergy Group Ltd ($8050) | -84.6% | 241.6% | -31.9% | 348.0% | |
| Pizu Group Holdings Ltd ($8053) | 40.3% | -42.9% | 1,742.9% | 157.9% | |
| China Eco-Farming Ltd ($8166) | -23.6% | -7.7% | 21.8% | 155.5% | |
| Aurum Pacific China Group Ltd ($8148) | | | 50.0% | 92.7% | |
| Kingsoft Corp Ltd ($3888) | 38.3% | 54.0% | 54.2% | 69.4% | |
| |
|---|
| Median (36 companies) | 17.1% | 13.2% | 21.8% | 5.5% | -2.6% |
|---|
| ITE Holdings Ltd ($8092) | | 9.5% | -19.3% | 28.4% | -17.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.4% | 97.4% | 98.4% | 98.3% | |
| Chanjet Information Technology Co Ltd ($1588) | 89.2% | 91.3% | 92.4% | 91.4% | |
| China Binary Sale Technology Ltd ($8255) | 63.5% | 68.5% | 67.7% | 85.9% | |
| Kingdee International Software Group Co Ltd ($268) | 65.0% | 75.3% | 82.5% | 81.5% | |
| Tian Ge Interactive Holdings Ltd ($1980) | 88.5% | 87.6% | 84.8% | 77.7% | |
| |
|---|
| Median (35 companies) | 46.5% | 43.1% | 42.1% | 43.6% | 64.0% |
|---|
| ITE Holdings Ltd ($8092) | 28.6% | 36.0% | 43.4% | 39.4% | 41.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| International Entertainment Corp ($1009) | 50.8% | 64.0% | 54.9% | 62.0% | |
| Sinosoft Technology Group Ltd ($1297) | 62.6% | 54.9% | 57.2% | 59.0% | |
| China Binary Sale Technology Ltd ($8255) | 35.1% | 35.4% | 44.4% | 50.5% | |
| Boyaa Interactive International Ltd ($434) | 38.5% | 25.8% | 30.7% | 47.6% | |
| TravelSky Technology Ltd ($696) | 38.1% | 35.8% | 31.9% | 41.1% | |
| |
|---|
| Median (36 companies) | 11.4% | 17.0% | 13.7% | 10.3% | 35.9% |
|---|
| ITE Holdings Ltd ($8092) | -6.3% | 4.0% | 8.8% | 9.1% | 2.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NetDragon Websoft Inc ($777) | 21.1% | 34.6% | 54.6% | 42.9% | |
| China Information Technology Development Ltd ($8178) | 4.1% | 1.1% | 0.5% | 40.7% | |
| Aurum Pacific China Group Ltd ($8148) | | 2.9% | 7.5% | 20.6% | |
| TravelSky Technology Ltd ($696) | 8.9% | 21.7% | 18.1% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 4.3% | 3.8% | 14.3% | 11.1% | |
| |
|---|
| Median (36 companies) | 1.5% | 2.0% | 3.6% | 2.4% | 9.2% |
|---|
| ITE Holdings Ltd ($8092) | 0.1% | 1.5% | 0.2% | 0.2% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pizu Group Holdings Ltd ($8053) | -21.8% | -13.4% | -6.8% | 120.0% | |
| IGG Inc ($8002) | | 55.9% | 41.4% | 25.9% | |
| Boyaa Interactive International Ltd ($434) | 75.3% | 21.3% | 20.0% | 21.4% | |
| Sinosoft Technology Group Ltd ($1297) | 34.0% | 21.9% | 20.2% | 20.8% | |
| China Binary Sale Technology Ltd ($8255) | 27.7% | 26.9% | 28.4% | 19.0% | |
| |
|---|
| Median (36 companies) | 5.6% | 5.8% | 3.3% | 2.0% | 20.0% |
|---|
| ITE Holdings Ltd ($8092) | -15.0% | 10.6% | 16.8% | 19.8% | 4.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Epicurean and Co Ltd ($8213) | 2.3x | 4.7x | 12.3x | 12.0x | |
| Sing Lee Software Group Ltd ($8076) | | | 6.2x | 4.4x | |
| Century Sage Scientific Holdings Ltd ($1450) | 0.2x | 0.0x | -0.2x | 1.8x | |
| Microsoft Corp ($4338) | | | 0.4x | 1.2x | 1.4x |
| Chinasoft International Ltd ($354) | -0.7x | 0.7x | 1.5x | 0.7x | |
| |
|---|
| Median (20 companies) | -1.1x | -1.5x | -1.3x | -0.7x | 1.4x |
|---|
| ITE Holdings Ltd ($8092) | | -4.9x | -3.6x | -2.8x | -9.0x |
