Huazhang Technology Holding Ltd ROIC decreased on 3.4 pp from 16.2% to 12.8% in 2016 and EBITDA decreased slightly on 1.3%
14/09/2016 • About Huazhang Technology Holding Ltd (
$1673) • By InTwits
Huazhang Technology Holding Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 10.8% in FY2016 vs. 11.3% in FY2015 vs. 11.6% in FY2012
- Huazhang Technology Holding Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's in pair with industry average of 7.6%.
- CAPEX is quite volatile: 3.7 in FY2016, 18.4 in FY2015, 7.9 in FY2014, 1.2 in FY2013, 10.4 in FY2012
- The company has highly profitable business model: ROIC is at 12.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Huazhang Technology Holding Ltd ($1673) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 229.5 | 251.4 | 308.9 | 381.4 | 393.8 | 3.3% |
| Gross Profit | 64.3 | 71.7 | 86.2 | 94.3 | 97.1 | 3.0% |
| SG&A | 34.3 | 47.0 | 42.9 | 42.8 | 48.0 | 12.3% |
| EBITDA | 26.7 | 28.1 | 38.6 | 43.0 | 42.5 | -1.3% |
| Net Income | 19.1 | 17.7 | 28.5 | 34.5 | 34.2 | -0.9% |
Balance Sheet
|
|---|
| Cash | 43.8 | 75.9 | 91.9 | 46.9 | 74.1 | 57.9% |
| Short Term Debt | 26.2 | 15.8 | 24.1 | 26.2 | 5.4 | -79.5% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 10.4 | 1.2 | 7.9 | 18.4 | 3.7 | -79.7% |
Ratios
|
|---|
| Revenue growth | 131.6% | 9.5% | 22.9% | 23.5% | 3.3% | |
| EBITDA growth | 755.3% | 5.3% | 37.2% | 11.5% | -1.3% | |
| Gross Margin | 28.0% | 28.5% | 27.9% | 24.7% | 24.7% | -0.1% |
| EBITDA Margin | 11.6% | 11.2% | 12.5% | 11.3% | 10.8% | -0.5% |
| Net Income Margin | 8.3% | 7.0% | 9.2% | 9.0% | 8.7% | -0.4% |
| SG&A, % of revenue | 15.0% | 18.7% | 13.9% | 11.2% | 12.2% | 1.0% |
| CAPEX, % of revenue | 4.5% | 0.5% | 2.6% | 4.8% | 0.9% | -3.9% |
| ROIC | 29.6% | 16.2% | 16.3% | 16.2% | 12.8% | -3.4% |
| ROE | 33.5% | 13.9% | 15.3% | 16.9% | 12.8% | -4.0% |
| Net Debt/EBITDA | -0.7x | -2.1x | -1.8x | -0.5x | -1.6x | -1.1x |
Revenue and profitability
The company's Revenue increased on 3.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 26.7 pp from 5.0% to 31.7% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased slightly on 0.98 pp from 11.2% to 12.2% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.95% in FY2016. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 2.8%.
Return on investment
The company operates at good ROIC (12.77%) and ROE (12.83%). ROIC decreased on 3.4 pp from 16.2% to 12.8% in FY2016. ROE decreased on 4.0 pp from 16.9% to 12.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.6x and Debt / EBITDA is 0.1x. Net Debt / EBITDA dropped on 1.1x from -0.5x to -1.6x in FY2016. Debt dropped on 79.5% while cash jumped on 57.9%.
Appendix 1: Peers in Machinery-Diversified
Below we provide Huazhang Technology Holding Ltd benchmarking against other companies in Machinery-Diversified 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 |
|---|
| 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% |
| Sinoref Holdings Ltd ($1020) | -0.2% | -42.2% | 29.2% | 19.9% | |
| LK Technology Holdings Ltd ($558) | | -15.0% | 3.7% | 18.5% | -10.3% |
| First Tractor Co Ltd ($38) | -1.7% | -4.2% | -18.4% | 6.9% | |
| |
|---|
| Median (20 companies) | -5.2% | -4.7% | -0.2% | -8.2% | -11.8% |
|---|
| Huazhang Technology Holding Ltd ($1673) | | 9.5% | 22.9% | 23.5% | 3.3% |
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% | 17.0% |
|---|
| Huazhang Technology Holding Ltd ($1673) | 28.0% | 28.5% | 27.9% | 24.7% | 24.7% |
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% | |
| Good Friend International Holdings Inc ($2398) | 6.7% | 9.1% | 12.9% | 9.9% | |
| Shanghai Prime Machinery Co Ltd ($2345) | 7.8% | 8.9% | 7.7% | 9.2% | |
| |
|---|
| Median (20 companies) | 9.3% | 8.6% | 8.1% | 4.1% | 0.8% |
|---|
| Huazhang Technology Holding Ltd ($1673) | 11.6% | 11.2% | 12.5% | 11.3% | 10.8% |
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% | 4.3% | 4.6% | 2.3% | 2.4% |
|---|
| Huazhang Technology Holding Ltd ($1673) | 4.5% | 0.5% | 2.6% | 4.8% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Haitian International Holdings Ltd ($1882) | 19.8% | 21.2% | 19.4% | 16.3% | |
| 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% | |
| Renheng Enterprise Holdings Ltd ($3628) | 17.0% | 12.8% | 6.9% | 4.8% | |
| |
|---|
| Median (20 companies) | 6.8% | 3.6% | 2.6% | 1.1% | -0.0% |
|---|
| Huazhang Technology Holding Ltd ($1673) | 29.6% | 16.2% | 16.3% | 16.2% | 12.8% |
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 | |
| LK Technology Holdings Ltd ($558) | 2.5x | 5.1x | 4.9x | 4.6x | 5.7x |
| Cosmos Machinery Enterprises Ltd ($118) | 2.2x | 1.7x | 2.1x | 3.9x | |
| |
|---|
| Median (15 companies) | -0.6x | 0.2x | 0.2x | 3.1x | 5.2x |
|---|
| Huazhang Technology Holding Ltd ($1673) | -0.7x | -2.1x | -1.8x | -0.5x | -1.6x |
