International Entertainment Corp reports 33.8% EBITDA decline in 2016 and 16.5 pp EBITDA Margin decline from 62.0% to 45.5%
24/06/2016 • About International Entertainment Corp (
$1009) • By InTwits
International Entertainment Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- International Entertainment Corp is a company in decline: FY2016 revenue growth was -9.8%, 5 years revenue CAGR was -4.2%
- International Entertainment Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 6.1%.
- CAPEX is quite volatile: 14.0 in FY2016, 7.2 in FY2015, 23.3 in FY2014, 18.8 in FY2013, 10.4 in FY2012
- The company has potentially unprofitable business model: ROIC is at 0.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
International Entertainment Corp ($1009) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 432.5 | 450.4 | 389.7 | 366.8 | 330.9 | -9.8% |
| Gross Profit | 219.5 | 228.6 | 173.2 | 160.0 | 154.4 | -3.5% |
| SG&A | 155.5 | 146.3 | 139.7 | 158.9 | 138.8 | -12.6% |
| EBITDA | 219.7 | 288.4 | 213.8 | 227.5 | 150.7 | -33.8% |
| Net Income | 60.1 | -23.4 | 114.7 | 45.9 | 31.7 | -31.0% |
Balance Sheet
|
|---|
| Cash | 1,300.2 | 1,379.0 | 1,645.9 | 1,591.5 | 1,179.5 | -25.9% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 20.1 | 23.7 | 23.8 | 14.9 | 10.9 | -26.7% |
Ratios
|
|---|
| Revenue growth | 5.6% | 4.1% | -13.5% | -5.9% | -9.8% | |
| EBITDA growth | -77.2% | 31.3% | -25.9% | 6.4% | -33.8% | |
| Gross Margin | 50.8% | 50.8% | 44.4% | 43.6% | 46.6% | 3.0% |
| EBITDA Margin | 50.8% | 64.0% | 54.9% | 62.0% | 45.5% | -16.5% |
| Net Income Margin | 13.9% | -5.2% | 29.4% | 12.5% | 9.6% | -2.9% |
| SG&A, % of revenue | 36.0% | 32.5% | 35.8% | 43.3% | 41.9% | -1.4% |
| CAPEX, % of revenue | 4.6% | 5.3% | 6.1% | 4.1% | 3.3% | -0.8% |
| ROIC | 1.4% | 3.5% | 1.2% | 2.2% | 0.5% | -1.7% |
| ROE | 2.7% | -1.3% | 6.2% | 2.5% | 2.0% | -0.5% |
| Net Debt/EBITDA | -5.9x | -4.8x | -7.7x | -7.0x | -7.8x | -0.8x |
Revenue and profitability
The company's Revenue decreased on 9.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 26.7 pp from 5.0% to 31.7% in FY2016.
Gross Margin increased on 3.0 pp from 43.6% to 46.6% in FY2016. SG&A as a % of Revenue decreased slightly on 1.4 pp from 43.3% to 41.9% in FY2016.
Net Income marign decreased on 2.9 pp from 12.5% to 9.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
International Entertainment Corp's CAPEX/Revenue was 3.3% in FY2016. The company's CAPEX/Revenue decreased slightly on 2.0 pp from 5.3% in FY2013 to 3.3% in FY2016. For the last three years the average CAPEX/Revenue was 4.5%.
Return on investment
The company operates at low ROIC (0.50%) and ROE (1.99%). ROIC decreased slightly on 1.7 pp from 2.2% to 0.50% in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 25.9%.
Appendix 1: Peers in Software
Below we provide International Entertainment Corp benchmarking against other companies in Software 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 |
|---|
| Yunbo Digital Synergy Group Ltd ($8050) | | 241.6% | -31.9% | 348.0% | 99.6% |
| Pizu Group Holdings Ltd ($8053) | | -42.9% | 1,742.9% | 157.9% | 235.2% |
| China Eco-Farming Ltd ($8166) | -23.6% | -7.7% | 21.8% | 155.5% | |
| ICO Group Ltd ($8140) | | -11.1% | -3.1% | 104.9% | 29.8% |
| Aurum Pacific China Group Ltd ($8148) | | | 50.0% | 92.7% | |
| |
|---|
| Median (37 companies) | 21.1% | 11.4% | 21.5% | 10.7% | 29.8% |
|---|
| International Entertainment Corp ($1009) | | 4.1% | -13.5% | -5.9% | -9.8% |
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 (36 companies) | 40.0% | 38.6% | 39.7% | 41.4% | 17.0% |
|---|
| International Entertainment Corp ($1009) | 50.8% | 50.8% | 44.4% | 43.6% | 46.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | |
| Kingdee International Software Group Co Ltd ($268) | 7.8% | 33.2% | 37.2% | 31.9% | |
| |
|---|
| Median (37 companies) | 8.5% | 10.9% | 9.1% | 9.1% | 2.8% |
|---|
| International Entertainment Corp ($1009) | 50.8% | 64.0% | 54.9% | 62.0% | 45.5% |
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 (37 companies) | 1.3% | 1.6% | 3.1% | 2.0% | 0.5% |
|---|
| International Entertainment Corp ($1009) | 4.6% | 5.3% | 6.1% | 4.1% | 3.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pizu Group Holdings Ltd ($8053) | -21.8% | -13.4% | -6.8% | 120.0% | 51.7% |
| ICO Group Ltd ($8140) | | 43.5% | 6.8% | 37.7% | 27.1% |
| 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% | |
| |
|---|
| Median (37 companies) | 5.6% | 6.7% | 6.8% | 2.3% | 9.9% |
|---|
| International Entertainment Corp ($1009) | 1.4% | 3.5% | 1.2% | 2.2% | 0.5% |
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 (21 companies) | -1.0x | -1.4x | -1.5x | -1.0x | 0.4x |
|---|
| International Entertainment Corp ($1009) | -5.9x | -4.8x | -7.7x | -7.0x | -7.8x |
