LK Technology Holdings Ltd EBITDA dropped on 24.9% and Revenue dropped on 10.3%
29/06/2016 • About LK Technology Holdings Ltd (
$558) • By InTwits
LK Technology Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- LK Technology Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.3%. At the same time it's a lot of higher than industry average of 6.2%.
- CAPEX is quite volatile: 74.5 in FY2016, 53.4 in FY2015, 32.8 in FY2014, 31.0 in FY2013, 16.9 in FY2012
- The company has potentially unprofitable business model: ROIC is at 2.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
LK Technology Holdings Ltd ($558) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,012 | 2,560 | 2,653 | 3,145 | 2,823 | -10.3% |
| Gross Profit | 826 | 636 | 690 | 819 | 700 | -14.5% |
| SG&A | | 570 | 620 | 705 | 676 | -4.1% |
| EBITDA | 351 | 222 | 231 | 284 | 213 | -24.9% |
| Net Income | 204 | 34 | 71 | 105 | 1 | -99.3% |
Balance Sheet
|
|---|
| Cash | 439 | 390 | 354 | 307 | 330 | 7.6% |
| Short Term Debt | 1,008 | 1,481 | 1,277 | 1,196 | 873 | -27.0% |
| Long Term Debt | 305 | 31 | 203 | 414 | 684 | 65.2% |
Cash flow
|
|---|
| Capex | 280 | 261 | 240 | 176 | 209 | 18.5% |
Ratios
|
|---|
| Revenue growth | 15.7% | -15.0% | 3.7% | 18.5% | -10.3% | |
| EBITDA growth | -22.7% | -36.8% | 3.9% | 23.2% | -24.9% | |
| Gross Margin | 27.4% | 24.9% | 26.0% | 26.0% | 24.8% | -1.2% |
| EBITDA Margin | 11.7% | 8.7% | 8.7% | 9.0% | 7.6% | -1.5% |
| Net Income Margin | 6.8% | 1.3% | 2.7% | 3.3% | 0.0% | -3.3% |
| SG&A, % of revenue | | 22.3% | 23.4% | 22.4% | 23.9% | 1.5% |
| CAPEX, % of revenue | 9.3% | 10.2% | 9.1% | 5.6% | 7.4% | 1.8% |
| ROIC | 8.7% | 3.1% | 3.2% | 4.5% | 2.7% | -1.8% |
| ROE | 12.6% | 2.0% | 4.1% | 5.8% | 0.0% | -5.8% |
| Net Debt/EBITDA | 2.5x | 5.1x | 4.9x | 4.6x | 5.7x | 1.2x |
Revenue and profitability
The company's Revenue dropped on 10.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 88.4 pp from -34.6% to 53.8% in FY2016.
Gross Margin decreased slightly on 1.2 pp from 26.0% to 24.8% in FY2016. SG&A as a % of Revenue increased slightly on 1.5 pp from 22.4% to 23.9% in FY2016.
Net Income marign decreased on 3.3 pp from 3.3% to 0.025% in FY2016.
Capital expenditures (CAPEX) and working capital investments
LK Technology Holdings Ltd's CAPEX/Revenue was 7.4% in FY2016. The company's CAPEX/Revenue decreased on 2.8 pp from 10.2% in FY2013 to 7.4% in FY2016. It's average CAPEX/Revenue for the last three years was 7.4%.The company invested a big chunk of EBITDA (97.9%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.67%) and ROE (0.04%). ROIC decreased slightly on 1.8 pp from 4.5% to 2.7% in FY2016. ROE decreased on 5.8 pp from 5.8% to 0.039% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.7x and Debt / EBITDA is 7.3x. Net Debt / EBITDA jumped on 1.2x from 4.6x to 5.7x in FY2016. Debt decreased on 3.3% while cash increased on 7.6%.
Appendix 1: Peers in Machinery-Diversified
Below you can find LK Technology Holdings Ltd benchmarking vs. other companies in Machinery-Diversified 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 |
|---|
| Shanghai Prime Machinery Co Ltd ($2345) | 2.6% | -8.9% | 37.3% | 52.8% | |
| North Asia Strategic Holdings Ltd ($8080) | | -29.1% | 23.7% | 42.6% | -3.9% |
| Huazhang Technology Holding Ltd ($1673) | 131.6% | 9.5% | 22.9% | 23.5% | |
| Sinoref Holdings Ltd ($1020) | -0.2% | -42.2% | 29.2% | 19.9% | |
| First Tractor Co Ltd ($38) | -1.7% | -4.2% | -18.4% | 6.9% | |
| |
|---|
| Median (20 companies) | -3.6% | -3.3% | -0.2% | -8.2% | -13.3% |
|---|
| LK Technology Holdings Ltd ($558) | | -15.0% | 3.7% | 18.5% | -10.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jingwei Textile Machinery ($350) | 49.1% | 51.7% | 54.9% | 65.5% | |
| Renheng Enterprise Holdings Ltd ($3628) | 44.3% | 44.8% | 45.4% | 48.9% | |
| Haitian International Holdings Ltd ($1882) | 30.1% | 31.6% | 32.4% | 33.0% | |
| CHTC Fong's Industries Co Ltd ($641) | 24.4% | 30.0% | 32.3% | 31.2% | |
| Good Friend International Holdings Inc ($2398) | 20.1% | 22.9% | 26.5% | 27.1% | |
| |
|---|
| Median (20 companies) | 24.1% | 22.1% | 19.3% | 20.8% | 14.6% |
|---|
| LK Technology Holdings Ltd ($558) | 27.4% | 24.9% | 26.0% | 26.0% | 24.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jingwei Textile Machinery ($350) | 24.0% | 26.9% | 28.0% | 28.5% | |
| Haitian International Holdings Ltd ($1882) | 19.7% | 20.7% | 21.9% | 22.8% | |
| Renheng Enterprise Holdings Ltd ($3628) | 24.7% | 23.9% | 20.7% | 17.3% | |
| Huazhang Technology Holding Ltd ($1673) | 11.6% | 11.2% | 12.5% | 11.3% | |
| Good Friend International Holdings Inc ($2398) | 6.7% | 9.1% | 12.9% | 9.9% | |
| |
|---|
| Median (20 companies) | 9.3% | 8.7% | 8.1% | 4.1% | -1.0% |
|---|
| LK Technology Holdings Ltd ($558) | 11.7% | 8.7% | 8.7% | 9.0% | 7.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wuxi Sunlit Science and Technology Co Ltd ($1289) | 2.3% | 10.1% | 7.8% | 31.9% | |
| Honghua Group Ltd ($196) | 11.5% | 14.6% | 6.8% | 27.3% | |
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 20.5% | 20.3% | 11.6% | 15.6% | |
| Shenji Group Kunming Machine Tool Co Ltd ($300) | 9.5% | 6.7% | 5.0% | 8.3% | |
| Haitian International Holdings Ltd ($1882) | 4.2% | 6.8% | 6.3% | 6.3% | |
| |
|---|
| Median (20 companies) | 4.2% | 3.9% | 4.4% | 2.3% | 1.3% |
|---|
| LK Technology Holdings Ltd ($558) | 9.3% | 10.2% | 9.1% | 5.6% | 7.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Haitian International Holdings Ltd ($1882) | 19.8% | 21.2% | 19.4% | 16.3% | |
| Huazhang Technology Holding Ltd ($1673) | 29.6% | 16.2% | 16.3% | 16.2% | |
| Jingwei Textile Machinery ($350) | 19.4% | 20.9% | 17.4% | 14.9% | |
| Good Friend International Holdings Inc ($2398) | 6.5% | 8.7% | 12.1% | 5.9% | |
| Shanghai Prime Machinery Co Ltd ($2345) | 2.5% | 2.8% | 2.5% | 5.8% | |
| |
|---|
| Median (20 companies) | 6.8% | 4.2% | 2.6% | 1.1% | -1.7% |
|---|
| LK Technology Holdings Ltd ($558) | 8.7% | 3.1% | 3.2% | 4.5% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shandong Molong Petroleum Machinery Co Ltd ($568) | 3.0x | 11.4x | 5.6x | 129.4x | |
| Honghua Group Ltd ($196) | 1.2x | 3.2x | 5.2x | 14.2x | |
| First Tractor Co Ltd ($38) | 0.5x | 2.5x | 9.2x | 6.3x | |
| Cosmos Machinery Enterprises Ltd ($118) | 2.2x | 1.7x | 2.1x | 3.9x | |
| CHTC Fong's Industries Co Ltd ($641) | | 2.2x | 2.5x | 3.5x | |
| |
|---|
| Median (15 companies) | -0.7x | -0.5x | -0.5x | 3.1x | 4.7x |
|---|
| LK Technology Holdings Ltd ($558) | 2.5x | 5.1x | 4.9x | 4.6x | 5.7x |
