Herald Holdings Ltd reports 134% EBITDA growth in 2016 and 20.9% Revenue growth
29/06/2016 • About Herald Holdings Ltd (
$114) • By InTwits
Herald Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Herald Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's in pair with industry average of 4.2%.
- CAPEX is quite volatile: 57.3 in FY2016, 32.8 in FY2015, 32.3 in FY2014, 75.0 in FY2013, 45.3 in FY2012
- The company has business model with low profitability: ROIC is at 9.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Herald Holdings Ltd ($114) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,400 | 1,345 | 1,340 | 1,265 | 1,529 | 20.9% |
| Gross Profit | 328 | 345 | 333 | 292 | 365 | 24.9% |
| SG&A | | 317 | 313 | 286 | 309 | 7.9% |
| EBITDA | 72 | 87 | 61 | 44 | 103 | 134.4% |
| Net Income | 22 | 23 | 26 | 16 | 39 | 140.6% |
Balance Sheet
|
|---|
| Cash | 242 | 184 | 197 | 172 | 176 | 2.2% |
| Short Term Debt | 0 | 16 | 12 | 9 | 5 | -42.1% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 45 | 75 | 32 | 33 | 57 | 74.5% |
Ratios
|
|---|
| Revenue growth | -13.8% | -3.9% | -0.4% | -5.6% | 20.9% | |
| EBITDA growth | -46.3% | 20.1% | -29.2% | -28.3% | 134.4% | |
| Gross Margin | 23.4% | 25.7% | 24.9% | 23.1% | 23.9% | 0.8% |
| EBITDA Margin | 5.2% | 6.4% | 4.6% | 3.5% | 6.7% | 3.3% |
| Net Income Margin | 1.6% | 1.7% | 2.0% | 1.3% | 2.6% | 1.3% |
| SG&A, % of revenue | | 23.6% | 23.4% | 22.6% | 20.2% | -2.4% |
| CAPEX, % of revenue | 3.2% | 5.6% | 2.4% | 2.6% | 3.7% | 1.2% |
| ROIC | 4.7% | 6.2% | 3.9% | 2.2% | 9.0% | 6.7% |
| ROE | 2.4% | 2.6% | 3.1% | 2.0% | 4.8% | 2.9% |
| Net Debt/EBITDA | -3.4x | -1.9x | -3.0x | -3.7x | -1.7x | 2.1x |
Revenue and profitability
The company's Revenue jumped on 20.9%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.3 pp from 3.5% to 6.7% in FY2016.
Gross Margin increased slightly on 0.78 pp from 23.1% to 23.9% in FY2016. SG&A as a % of Revenue decreased on 2.4 pp from 22.6% to 20.2% in FY2016.
Net Income marign increased slightly on 1.3 pp from 1.3% to 2.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Herald Holdings Ltd had CAPEX/Revenue of 3.7%. CAPEX/Revenue decreased slightly on 1.8 pp from 5.6% in FY2013 to 3.7% in FY2016. It's average CAPEX/Revenue for the last three years was 2.9%.To maintain this fast growth Herald Holdings Ltd invested a large share of EBITDA (55.5%) to CAPEX.
Return on investment
The company operates at low ROIC (8.97%) and ROE (4.80%). ROIC increased on 6.7 pp from 2.2% to 9.0% in FY2016. ROE increased on 2.9 pp from 2.0% to 4.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.7x and Debt / EBITDA is 0.0x. Net Debt / EBITDA surged on 2.1x from -3.7x to -1.7x in FY2016. Debt dropped on 42.1% while cash increased on 2.2%.
Appendix 1: Peers in Miscellaneous Manufactur
Below we provide Herald Holdings Ltd benchmarking against other companies in Miscellaneous Manufactur 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 |
|---|
| Karrie International Hldgs ($1050) | | 0.1% | -11.3% | 27.4% | 11.8% |
| Sunny Optical Technology Group Co Ltd ($2382) | 59.5% | 45.9% | 45.0% | 26.9% | |
| TK Group Holdings Ltd ($2283) | 40.2% | 9.3% | 11.8% | 20.0% | |
| AMCO United Holding Ltd ($2970) | | 10.8% | 53.9% | 16.8% | 31.1% |
| Yusei Holdings Ltd ($96) | 18.4% | -9.3% | 6.7% | 15.6% | |
| |
|---|
| Median (25 companies) | -1.8% | 0.1% | 8.2% | -4.8% | 50.4% |
|---|
| Herald Holdings Ltd ($114) | | -3.9% | -0.4% | -5.6% | 20.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Man Sang International Ltd ($938) | 42.4% | 32.8% | 60.3% | 78.6% | 56.4% |
| Time Watch Investments Ltd ($2033) | 60.2% | 60.6% | 65.0% | 68.1% | |
| China Environmental Energy Investment Ltd ($986) | 14.0% | 1.2% | 9.0% | 49.2% | 40.4% |
| Lee & Man Chemical Co Ltd ($746) | 34.3% | 35.7% | 41.9% | 39.6% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 33.2% | 35.1% | 37.4% | 38.7% | |
| |
|---|
| Median (24 companies) | 19.7% | 19.7% | 23.4% | 23.2% | 26.3% |
|---|
| Herald Holdings Ltd ($114) | 23.4% | 25.7% | 24.9% | 23.1% | 23.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lee & Man Chemical Co Ltd ($746) | 30.4% | 31.3% | 38.4% | 37.6% | |
| Man Sang International Ltd ($938) | 24.9% | 15.4% | 37.0% | 33.8% | 40.4% |
| IPE Group Ltd ($929) | 25.6% | 22.5% | 29.5% | 29.1% | |
| DeTeam Co Ltd ($65) | 8.0% | 3.9% | -1.3% | 24.3% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 18.4% | 19.8% | 20.6% | 24.2% | |
| |
|---|
| Median (25 companies) | 8.0% | 9.8% | 9.8% | 7.9% | 6.4% |
|---|
| Herald Holdings Ltd ($114) | 5.2% | 6.4% | 4.6% | 3.5% | 6.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Environmental Energy Investment Ltd ($986) | 6.1% | 0.4% | 17.9% | 47.6% | 6.2% |
| DeTeam Co Ltd ($65) | 6.7% | 47.0% | 5.6% | 33.1% | |
| Lee & Man Chemical Co Ltd ($746) | 5.8% | 51.1% | 33.7% | 22.8% | |
| China International Marine Containers Group Co Ltd ($2039) | 3.9% | 12.1% | 18.5% | 21.2% | |
| IPE Group Ltd ($929) | 6.3% | 13.3% | 12.3% | 13.3% | |
| |
|---|
| Median (25 companies) | 4.7% | 4.2% | 4.2% | 5.6% | 2.2% |
|---|
| Herald Holdings Ltd ($114) | 3.2% | 5.6% | 2.4% | 2.6% | 3.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Time Watch Investments Ltd ($2033) | 34.5% | 27.1% | 27.8% | 27.9% | |
| TK Group Holdings Ltd ($2283) | 36.8% | 31.1% | 29.4% | 27.6% | |
| Zhuzhou CSR Times Electric Co Ltd ($3898) | 16.9% | 17.7% | 20.0% | 21.1% | |
| Sunny Optical Technology Group Co Ltd ($2382) | 19.7% | 17.8% | 16.5% | 19.4% | |
| Yusei Holdings Ltd ($96) | 4.2% | 7.0% | 13.6% | 14.1% | |
| |
|---|
| Median (25 companies) | 3.2% | 3.6% | 4.4% | 1.5% | 7.4% |
|---|
| Herald Holdings Ltd ($114) | 4.7% | 6.2% | 3.9% | 2.2% | 9.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Continental Holdings Ltd ($513) | | 20.1x | 92.9x | 4,203.6x | |
| South China China Ltd ($413) | | 37.5x | 2,842.3x | 27.3x | |
| Launch Tech Co Ltd ($2488) | 7.6x | 2.4x | 3.9x | 14.5x | |
| China International Marine Containers Group Co Ltd ($2039) | 4.0x | 4.7x | 5.8x | 9.8x | |
| VS International Group Ltd ($1002) | 5.1x | 6.5x | 4.4x | 3.3x | |
| |
|---|
| Median (22 companies) | -0.2x | 0.2x | 0.1x | 0.4x | -1.0x |
|---|
| Herald Holdings Ltd ($114) | -3.4x | -1.9x | -3.0x | -3.7x | -1.7x |
