Zhi Cheng Holdings Ltd revenue dropped on 13.8% and EBITDA Margin dropped on 21.2 pp from -114% to -135%
25/06/2016 • About Zhi Cheng Holdings Ltd (
$8130) • By InTwits
Zhi Cheng Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhi Cheng Holdings Ltd doesn't have a profitable business model yet: FY2016 ROIC is -12.2%
- The company operates at negative EBITDA Margin: -135.2%
- Zhi Cheng Holdings Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -88.5% for the sames years0
- Zhi Cheng Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.7%. At the same time it's in pair with industry average of 9.7%.
- CAPEX is quite volatile: 0.88 in FY2016, 5.5 in FY2015, 1.6 in FY2014, 2.7 in FY2013, 2.2 in FY2012
- The company has unprofitable business model: ROIC is at -12.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Zhi Cheng Holdings Ltd ($8130) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 21.445 | 35.132 | 27.456 | 33.103 | 28.543 | -13.8% |
| Gross Profit | 9.840 | 14.416 | 17.573 | 6.495 | 4.098 | -36.9% |
| SG&A | | | 54.662 | 64.652 | 51.598 | -20.2% |
| EBITDA | -24.703 | -16.342 | -11.489 | -37.742 | -38.586 | |
| Net Income | -484.340 | -336.474 | -113.528 | -155.627 | -65.349 | |
Balance Sheet
|
|---|
| Cash | 100.480 | 24.886 | 5.815 | 4.252 | 226.503 | 5,227.0% |
| Short Term Debt | 0.513 | 0.373 | 0.000 | 0.000 | 8.877 | |
| Long Term Debt | 201.015 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 2.208 | 2.692 | 1.571 | 5.517 | 0.881 | -84.0% |
Ratios
|
|---|
| Revenue growth | 7.5% | 63.8% | -21.8% | 20.6% | -13.8% | |
| EBITDA growth | 24.2% | -33.8% | -29.7% | 228.5% | 2.2% | |
| Gross Margin | 45.9% | 41.0% | 64.0% | 19.6% | 14.4% | -5.3% |
| EBITDA Margin | -115.2% | -46.5% | -41.8% | -114.0% | -135.2% | -21.2% |
| Net Income Margin | -2,258.5% | -957.7% | -413.5% | -470.1% | -228.9% | 241.2% |
| SG&A, % of revenue | | | 199.1% | 195.3% | 180.8% | -14.5% |
| CAPEX, % of revenue | 10.3% | 7.7% | 5.7% | 16.7% | 3.1% | -13.6% |
| ROIC | -10.0% | -12.9% | -10.7% | -20.4% | -12.2% | 8.1% |
| ROE | -53.4% | -65.8% | -35.4% | -58.4% | -18.8% | 39.7% |
Revenue and profitability
Zhi Cheng Holdings Ltd's Revenue dropped on 13.8%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 21.2 pp from -114% to -135% in FY2016.
Gross Margin decreased on 5.3 pp from 19.6% to 14.4% in FY2016. SG&A as a % of Revenue dropped on 14.5 pp from 195% to 181% in FY2016.
Net Income marign surged on 241 pp from -470% to -229% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Zhi Cheng Holdings Ltd had CAPEX/Revenue of 3.1%. The company showed decline in CAPEX/Revenue of 4.6 pp from 7.7% in FY2013 to 3.1% in FY2016. For the last three years the average CAPEX/Revenue was 8.5%.
Return on investment
The company operates at negative ROIC (-12.23%) and ROE (-18.75%). ROIC increased on 8.1 pp from -20.4% to -12.2% in FY2016. ROE surged on 39.7 pp from -58.4% to -18.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt surged while cash surged on 5,227%.
Appendix 1: Peers in Telecommunications
Below you can find Zhi Cheng Holdings Ltd benchmarking vs. other companies in Telecommunications 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 |
|---|
| 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 (52 companies) | 8.9% | 8.1% | 9.8% | 6.1% | -1.2% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | | 63.8% | -21.8% | 20.6% | -13.8% |
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 (49 companies) | 23.6% | 24.3% | 25.0% | 23.6% | 31.4% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | 45.9% | 41.0% | 64.0% | 19.6% | 14.4% |
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 (52 companies) | 8.3% | 5.5% | 6.4% | 9.2% | 12.8% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | -115.2% | -46.5% | -41.8% | -114.0% | -135.2% |
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 (52 companies) | 2.1% | 2.9% | 2.9% | 2.6% | 2.1% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | 10.3% | 7.7% | 5.7% | 16.7% | 3.1% |
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% | 37.4% |
| VTech Holdings Ltd ($303) | 37.6% | 39.5% | 40.0% | 39.8% | 37.9% |
| Coolpad Group Ltd ($2369) | 8.1% | 6.0% | 9.6% | 29.1% | |
| Telecom Digital Holdings Ltd ($8336) | | 13.3% | 20.2% | 18.9% | 16.7% |
| SmarTone Telecommunications Holdings Ltd ($315) | 37.2% | 23.1% | 12.8% | 17.7% | |
| |
|---|
| Median (53 companies) | 7.7% | 6.0% | 6.6% | 6.3% | 37.4% |
|---|
| Zhi Cheng Holdings Ltd ($8130) | -10.0% | -12.9% | -10.7% | -20.4% | -12.2% |
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 (39 companies) | -0.3x | 0.6x | 0.7x | 0.6x | 0.1x |
|---|
