CEC International Holdings Ltd reports 11.2% EBITDA decline in 2016 while 1.5% Revenue growth
29/07/2016 • About CEC International Holdings Ltd (
$759) • By InTwits
CEC International Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- CEC International Holdings Ltd doesn't have a profitable business model yet: FY2016 ROIC is 1.6%
- CEC International Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 38.3%.
- CAPEX is quite volatile: 68.5 in FY2016, 168 in FY2015, 77.9 in FY2014, 129 in FY2013, 70.2 in FY2012
- The company has potentially unprofitable business model: ROIC is at 1.6%
- It operates with high leverage: Net Debt/EBITDA is 6.0x while industry average is -2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
CEC International Holdings Ltd ($759) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 796 | 1,280 | 1,831 | 2,422 | 2,459 | 1.5% |
| Gross Profit | 188 | 357 | 547 | 771 | 821 | 6.5% |
| SG&A | | 120 | 136 | 155 | 159 | 2.1% |
| EBITDA | 62 | 57 | 103 | 114 | 101 | -11.2% |
| Net Income | 16 | 20 | 24 | 28 | -30 | -207.2% |
Balance Sheet
|
|---|
| Cash | 39 | 81 | 79 | 68 | 78 | 13.9% |
| Short Term Debt | 279 | 431 | 499 | 623 | 679 | 9.1% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 70 | 129 | 78 | 168 | 68 | -59.3% |
Ratios
|
|---|
| Revenue growth | 23.9% | 60.8% | 43.0% | 32.3% | 1.5% | |
| EBITDA growth | -12.8% | -8.1% | 80.2% | 10.4% | -11.2% | |
| Gross Margin | 23.6% | 27.9% | 29.9% | 31.8% | 33.4% | 1.6% |
| EBITDA Margin | 7.8% | 4.5% | 5.6% | 4.7% | 4.1% | -0.6% |
| Net Income Margin | 1.9% | 1.6% | 1.3% | 1.1% | -1.2% | -2.4% |
| SG&A, % of revenue | | 9.4% | 7.4% | 6.4% | 6.5% | 0.0% |
| CAPEX, % of revenue | 8.8% | 10.1% | 4.3% | 6.9% | 2.8% | -4.2% |
| ROIC | 2.7% | 0.9% | 4.3% | 3.5% | 1.6% | -1.9% |
| ROE | 3.3% | 4.1% | 4.6% | 5.1% | -5.6% | -10.7% |
| Net Debt/EBITDA | 3.9x | 6.1x | 4.1x | 4.9x | 6.0x | 1.1x |
Revenue and profitability
CEC International Holdings Ltd's Revenue increased slightly on 1.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 31.8 pp from 21.2% to 53.0% in FY2016.
Gross Margin increased slightly on 1.6 pp from 31.8% to 33.4% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased on 2.4 pp from 1.1% to -1.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
CEC International Holdings Ltd's CAPEX/Revenue was 2.8% in FY2016. The company's CAPEX/Revenue decreased on 7.3 pp from 10.1% in FY2013 to 2.8% in FY2016. It's average CAPEX/Revenue for the last three years was 4.7%.The company maintained rich investment policy and has spent a big chunk of EBITDA (67.9%) to CAPEX.
Return on investment
The company operates at low but positive ROIC (1.59%) and negative ROE (-5.60%). ROIC decreased slightly on 1.9 pp from 3.5% to 1.6% in FY2016. ROE dropped on 10.7 pp from 5.1% to -5.6% in FY2016.
Leverage (Debt)
Debt level is 6.0x Net Debt / EBITDA and 6.7x Debt / EBITDA. Net Debt / EBITDA jumped on 1.1x from 4.9x to 6.0x in FY2016. Debt increased on 9.1% while cash jumped on 13.9%.
Appendix 1: Peers in Electrical Compo&Equip
Below we provide CEC International Holdings Ltd benchmarking against other companies in Electrical Compo&Equip 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 |
|---|
| Applied Development Holdings Ltd ($519) | -29.1% | | | 850.5% | |
| Jimei International Entertainment Group Ltd ($1159) | 100.6% | 652.0% | -31.2% | 273.5% | |
| FDG Electric Vehicles Ltd ($729) | | -7.0% | 54.0% | 270.8% | 19.7% |
| Xinjiang Goldwind Science & Technology Co Ltd ($2208) | -12.0% | 8.7% | 44.1% | 69.8% | |
| Sun King Power Electronics Group ($580) | -6.0% | 29.0% | -30.1% | 51.2% | |
| |
|---|
| Median (33 companies) | -6.0% | 8.5% | 15.5% | 6.0% | 12.2% |
|---|
| CEC International Holdings Ltd ($759) | | 60.8% | 43.0% | 32.3% | 1.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Titans Energy Technology Group Co Ltd ($2188) | 41.4% | 27.3% | 33.7% | 36.6% | |
| Boer Power Holdings Ltd ($1685) | 36.8% | 36.0% | 35.3% | 35.7% | |
| Sun King Power Electronics Group ($580) | 25.4% | 30.0% | 30.8% | 34.1% | |
| China High Speed Transmission Equipment Group Co Ltd ($658) | 24.4% | 24.9% | 24.8% | 32.5% | |
| Johnson Electric Holdings Ltd ($179) | 27.3% | 28.0% | 29.5% | 29.6% | 26.4% |
| |
|---|
| Median (31 companies) | 18.8% | 17.4% | 16.2% | 16.2% | 33.0% |
|---|
| CEC International Holdings Ltd ($759) | 23.6% | 27.9% | 29.9% | 31.8% | 33.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shougang Concord Technology Holdings ($521) | 12.3% | 28.1% | 31.9% | 45.8% | |
| Boer Power Holdings Ltd ($1685) | 26.3% | 27.8% | 28.5% | 28.6% | |
| China High Speed Transmission Equipment Group Co Ltd ($658) | 20.2% | 19.2% | 20.8% | 26.3% | |
| China Titans Energy Technology Group Co Ltd ($2188) | 10.8% | -11.9% | 2.0% | 16.5% | |
| Sun King Power Electronics Group ($580) | 8.4% | 13.8% | 2.2% | 15.8% | |
| |
|---|
| Median (33 companies) | 8.3% | 7.3% | 3.8% | 6.6% | -37.6% |
|---|
| CEC International Holdings Ltd ($759) | 7.8% | 4.5% | 5.6% | 4.7% | 4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| FDG Electric Vehicles Ltd ($729) | 374.3% | 82.3% | 71.1% | 417.0% | 311.5% |
| Applied Development Holdings Ltd ($519) | 79.7% | | 1,285.3% | 89.8% | |
| Xinjiang Goldwind Science & Technology Co Ltd ($2208) | 23.1% | 50.7% | 13.5% | 22.8% | |
| Jimei International Entertainment Group Ltd ($1159) | 0.1% | 15.2% | 0.6% | 7.3% | |
| Coslight Technology International Group Co Ltd ($1043) | 9.3% | 11.4% | 11.5% | 5.7% | |
| |
|---|
| Median (33 companies) | 6.4% | 5.0% | 3.6% | 2.6% | 159.9% |
|---|
| CEC International Holdings Ltd ($759) | 8.8% | 10.1% | 4.3% | 6.9% | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Boer Power Holdings Ltd ($1685) | 18.0% | 17.0% | 21.2% | 19.5% | |
| Tianneng Power International Ltd ($819) | 20.0% | 4.5% | -3.6% | 14.9% | |
| Jiangnan Group Ltd ($1366) | 14.9% | 14.1% | 13.5% | 12.8% | |
| Xinjiang Goldwind Science & Technology Co Ltd ($2208) | 1.8% | 3.0% | 10.4% | 12.0% | |
| Johnson Electric Holdings Ltd ($179) | 11.7% | 11.6% | 12.7% | 11.2% | 7.4% |
| |
|---|
| Median (33 companies) | 2.8% | 3.0% | 0.7% | 2.7% | -1.3% |
|---|
| CEC International Holdings Ltd ($759) | 2.7% | 0.9% | 4.3% | 3.5% | 1.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wai Chi Holdings Co Ltd ($1305) | 3.4x | 3.1x | 2.0x | 11.8x | |
| Coslight Technology International Group Co Ltd ($1043) | 51.9x | 8.7x | 54.7x | 7.7x | |
| Guodian Technology & Environment Group Corp Ltd ($1296) | 6.3x | 7.6x | 6.8x | 6.9x | |
| Leoch International Technology Ltd ($842) | 9.3x | 16.3x | 4.7x | 5.0x | |
| Chaowei Power Holdings Ltd ($951) | 1.4x | 2.1x | 6.1x | 2.9x | |
| |
|---|
| Median (25 companies) | 1.5x | 0.6x | 2.0x | 0.6x | 0.8x |
|---|
| CEC International Holdings Ltd ($759) | 3.9x | 6.1x | 4.1x | 4.9x | 6.0x |
