National Electronic Hldgs Net Debt / EBITDA surged on 22.8x from 19.9x to 42.7x in 2016 while Revenue dropped on 19.7%
27/06/2016 • About National Electronic Hldgs (
$213) • By InTwits
National Electronic Hldgs reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- National Electronic Hldgs doesn't have a profitable business model yet: FY2016 ROIC is 0.2%
- EBITDA Margin is quite volatile: 4.1% in FY2016, 9.8% in FY2015, 1.4% in FY2014, 3.0% in FY2013, 3.8% in FY2012
- National Electronic Hldgs has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.6%. At the same time it's a lot of higher than industry average of 12.6%.
- CAPEX is quite volatile: 54.2 in FY2016, 712 in FY2015, 83.5 in FY2014, 211 in FY2013, 44.6 in FY2012
- The company has potentially unprofitable business model: ROIC is at 0.2%
- It operates with high leverage: Net Debt/EBITDA is 42.7x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
National Electronic Hldgs ($213) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,295 | 1,168 | 1,171 | 1,432 | 1,149 | -19.7% |
| Gross Profit | 189 | 178 | 162 | 237 | 180 | -24.2% |
| SG&A | 192 | 191 | 222 | 162 | 174 | 7.6% |
| EBITDA | 50 | 35 | 16 | 141 | 47 | -66.8% |
| Net Income | 171 | 296 | 228 | 133 | 245 | 83.9% |
Balance Sheet
|
|---|
| Cash | 283 | 616 | 646 | 440 | 692 | 57.3% |
| Short Term Debt | 714 | 602 | 552 | 715 | 644 | -9.9% |
| Long Term Debt | 381 | 1,080 | 1,462 | 2,526 | 2,048 | -18.9% |
Cash flow
|
|---|
| Capex | 45 | 211 | 83 | 712 | 54 | -92.4% |
Ratios
|
|---|
| Revenue growth | 2.3% | -9.8% | 0.3% | 22.3% | -19.7% | |
| EBITDA growth | 100.3% | -29.0% | -54.4% | 774.9% | -66.8% | |
| Gross Margin | 14.6% | 15.2% | 13.8% | 16.6% | 15.7% | -0.9% |
| EBITDA Margin | 3.8% | 3.0% | 1.4% | 9.8% | 4.1% | -5.8% |
| Net Income Margin | 13.2% | 25.4% | 19.5% | 9.3% | 21.3% | 12.0% |
| SG&A, % of revenue | 14.8% | 16.4% | 18.9% | 11.3% | 15.1% | 3.8% |
| CAPEX, % of revenue | 3.4% | 18.1% | 7.1% | 49.7% | 4.7% | -45.0% |
| ROIC | 0.9% | 0.2% | -0.6% | 2.4% | 0.2% | -2.2% |
| ROE | 13.1% | 19.9% | 13.8% | 7.7% | 13.3% | 5.6% |
| Net Debt/EBITDA | 16.3x | 30.2x | 84.8x | 19.9x | 42.7x | 22.8x |
Revenue and profitability
National Electronic Hldgs's Revenue dropped on 19.7%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.8 pp from 9.8% to 4.1% in FY2016.
Gross Margin decreased slightly on 0.92 pp from 16.6% to 15.7% in FY2016. SG&A as a % of Revenue increased on 3.8 pp from 11.3% to 15.1% in FY2016.
Net Income marign jumped on 12.0 pp from 9.3% to 21.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 4.7% in FY2016. CAPEX/Revenue dropped on 13.3 pp from 18.1% in FY2013 to 4.7% in FY2016. It's average CAPEX/Revenue for the last three years was 20.5%.The company has spent a lot to CAPEX (116% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (13.27%) while ROIC is low (0.23%). ROIC decreased on 2.2 pp from 2.4% to 0.23% in FY2016. ROE increased on 5.6 pp from 7.7% to 13.3% in FY2016.
Leverage (Debt)
Debt level is 42.7x Net Debt / EBITDA and 57.4x Debt / EBITDA. Net Debt / EBITDA surged on 22.8x from 19.9x to 42.7x in FY2016. Debt dropped on 16.9% while cash jumped on 57.3%.
Appendix 1: Peers in Electronics
Below you can find National Electronic Hldgs benchmarking vs. other companies in Electronics 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 |
|---|
| GCL New Energy Holdings Ltd ($451) | 14.7% | -6.8% | 10.9% | 53.9% | |
| Tech Pro Technology Development Ltd ($3823) | 7.4% | -44.9% | -13.7% | 52.4% | |
| Nanjing Sample Technology Co Ltd ($1708) | 36.1% | 8.0% | 15.4% | 34.8% | |
| AAC Technologies Holdings Inc ($2018) | 54.8% | 28.9% | 9.7% | 32.2% | |
| Ningbo Wanhao Holdings Co Ltd ($8249) | 5.7% | 412.4% | -6.9% | 28.9% | |
| |
|---|
| Median (49 companies) | 1.6% | 4.1% | 7.2% | -0.2% | 4.7% |
|---|
| National Electronic Hldgs ($213) | | -9.8% | 0.3% | 22.3% | -19.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Advanced Card Systems Holdings Ltd ($8210) | 54.0% | 58.1% | 49.5% | 49.6% | |
| AAC Technologies Holdings Inc ($2018) | 44.2% | 42.7% | 41.4% | 41.5% | |
| TeleEye Holdings Ltd ($8051) | 44.0% | 42.1% | 38.5% | 37.0% | |
| Hi Sun Technology China Ltd ($818) | 28.1% | 37.4% | 33.3% | 34.7% | |
| Datronix Holdings Ltd ($889) | 32.9% | 32.0% | 34.1% | 34.6% | |
| |
|---|
| Median (47 companies) | 13.6% | 13.8% | 14.1% | 14.1% | 17.1% |
|---|
| National Electronic Hldgs ($213) | 14.6% | 15.2% | 13.8% | 16.6% | 15.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AAC Technologies Holdings Inc ($2018) | 35.8% | 35.8% | 34.9% | 34.8% | |
| GCL New Energy Holdings Ltd ($451) | 10.8% | 11.1% | 12.6% | 33.0% | |
| Daiwa Associate Holdings ($1037) | 2.4% | 3.8% | 2.8% | 25.6% | |
| Wasion Group Holdings Ltd ($3393) | 18.8% | 21.2% | 22.0% | 19.3% | |
| Tongda Group Holdings Ltd ($698) | 17.1% | 16.8% | 18.4% | 18.9% | |
| |
|---|
| Median (49 companies) | 7.4% | 7.6% | 5.4% | 4.8% | 2.1% |
|---|
| National Electronic Hldgs ($213) | 3.8% | 3.0% | 1.4% | 9.8% | 4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| GCL New Energy Holdings Ltd ($451) | 5.5% | 5.1% | 5.4% | 401.2% | |
| Irico Group Electronics Co Ltd ($438) | 39.9% | 30.4% | 17.4% | 25.8% | |
| Kingwell Group Ltd ($1195) | 8.6% | 5.4% | 5.3% | 21.4% | |
| AAC Technologies Holdings Inc ($2018) | 18.7% | 8.7% | 19.6% | 18.4% | |
| AKM Industrial Co Ltd ($1639) | 5.0% | 17.4% | 25.2% | 18.0% | |
| |
|---|
| Median (49 companies) | 3.9% | 3.0% | 3.7% | 2.9% | 1.3% |
|---|
| National Electronic Hldgs ($213) | 3.4% | 18.1% | 7.1% | 49.7% | 4.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AAC Technologies Holdings Inc ($2018) | 29.1% | 30.0% | 26.0% | 27.8% | |
| Cowell e Holdings Inc ($1415) | 12.5% | 27.1% | 24.4% | 25.8% | |
| Changhong Jiahua Holdings Ltd ($8016) | 29.6% | 17.7% | 15.1% | 16.7% | |
| Tongda Group Holdings Ltd ($698) | 15.2% | 13.5% | 16.5% | 16.3% | |
| Alltronics Holdings Ltd ($833) | 13.1% | 15.2% | 19.8% | 15.6% | |
| |
|---|
| Median (49 companies) | 4.6% | 4.1% | 3.7% | 2.4% | 3.3% |
|---|
| National Electronic Hldgs ($213) | 0.9% | 0.2% | -0.6% | 2.4% | 0.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| GCL New Energy Holdings Ltd ($451) | 2.9x | 2.6x | 1.7x | 17.4x | |
| Man Yue Technology Holdings Ltd ($894) | 2.1x | 2.7x | 3.3x | 6.5x | |
| Willas-Array Electronics Holdings Ltd ($854) | 2.2x | 2.6x | 5.7x | 5.4x | 14.1x |
| SAS Dragon Hldg Ltd ($1184) | 7.1x | 2.0x | 6.4x | 4.8x | |
| Trigiant Group Ltd ($1300) | 1.7x | 1.1x | 2.2x | 2.3x | |
| |
|---|
| Median (32 companies) | 1.0x | 1.1x | 0.8x | 0.2x | 2.6x |
|---|
| National Electronic Hldgs ($213) | 16.3x | 30.2x | 84.8x | 19.9x | 42.7x |
