Hong Kong Education International Investments Ltd CAPEX surged on 1,855% while Revenue decreased on 9.0%
26/09/2016 • About Hong Kong Education International Investments Ltd (
$1082) • By InTwits
Hong Kong Education International Investments Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Education International Investments Ltd is a company in decline: FY2016 revenue growth was -9.0%, 5 years revenue CAGR was -6.7%
- The company operates at negative EBITDA Margin: -15.3%
- Hong Kong Education International Investments Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -2.0% for the sames years0
- Hong Kong Education International Investments Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.2%. At the same time it's a lot of higher than industry average of 7.9%.
- CAPEX is quite volatile: 109 in FY2016, 5.6 in FY2015, 6.6 in FY2014, 76.0 in FY2013, 7.0 in FY2012
- The company has unprofitable business model: ROIC is at -6.3%
- It operates with high leverage: Net Debt/EBITDA is 11.3x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Education International Investments Ltd ($1082) key annual financial indicators
| mln. | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 318.7 | 248.3 | 235.8 | 208.4 | 189.8 | -9.0% |
| SG&A | | | 19.7 | 20.6 | 21.8 | 5.9% |
| EBITDA | 45.3 | -11.3 | -9.0 | -20.1 | -29.0 | |
| Net Income | 31.2 | -25.2 | -66.5 | 33.0 | -144.7 | -538.2% |
Balance Sheet
|
|---|
| Cash | 78.0 | 28.9 | 38.9 | 105.2 | 93.4 | -11.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 161.3 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 7.0 | 76.0 | 6.6 | 5.6 | 109.1 | 1,854.6% |
Ratios
|
|---|
| Revenue growth | 18.6% | -22.1% | -5.1% | -11.6% | -9.0% | |
| EBITDA growth | 35.3% | -125.0% | -20.8% | 124.3% | 44.3% | |
| EBITDA Margin | 14.2% | -4.6% | -3.8% | -9.6% | -15.3% | -5.6% |
| Net Income Margin | 9.8% | -10.2% | -28.2% | 15.8% | -76.3% | -92.1% |
| SG&A, % of revenue | | | 8.3% | 9.9% | 11.5% | 1.6% |
| CAPEX, % of revenue | 2.2% | 30.6% | 2.8% | 2.7% | 57.5% | 54.8% |
| ROIC | 31.5% | -10.6% | -7.5% | -9.2% | -6.3% | 2.8% |
| ROE | 38.4% | -14.1% | -32.5% | 12.0% | -32.3% | -44.3% |
| Net Debt/EBITDA | -1.7x | | | | | 0.0x |
Revenue and profitability
Hong Kong Education International Investments Ltd's Revenue decreased on 9.0%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 5.6 pp from -9.6% to -15.3% in FY2016.
SG&A as a % of Revenue increased slightly on 1.6 pp from 9.9% to 11.5% in FY2016.
Net Income marign dropped on 92.1 pp from 15.8% to -76.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 57.5% in FY2016. Hong Kong Education International Investments Ltd showed fast CAPEX/Revenue growth of 26.9 pp from 30.6% in FY2013 to 57.5% in FY2016. It's average CAPEX/Revenue for the last three years was 21.0%.
Return on investment
The company operates at negative ROIC (-6.33%) and ROE (-32.26%). ROIC increased on 2.8 pp from -9.2% to -6.3% in FY2016. ROE dropped on 44.3 pp from 12.0% to -32.3% in FY2016.
Leverage (Debt)
Debt level is 11.3x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2016. Debt jumped while cash dropped on 11.2%.
Appendix 1: Peers in Commercial Services
Below you can find Hong Kong Education International Investments Ltd benchmarking vs. other companies in Commercial Services 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 |
|---|
| Kai Yuan Holdings Ltd ($1215) | 99.1% | 14.9% | -88.3% | 271.8% | |
| China Seven Star Holdings Ltd ($245) | 6.7% | -81.8% | -39.3% | 195.3% | |
| China Smartpay Group Holdings Ltd ($8325) | | 274.7% | 75.6% | 124.5% | 79.5% |
| Celebrate International Holdings Ltd ($8212) | | 1,437.6% | -6.3% | 117.0% | -78.1% |
| Haier Healthwise Holdings Ltd ($348) | | -50.1% | -7.5% | 101.1% | -9.4% |
| |
|---|
| Median (67 companies) | 6.7% | 8.6% | 9.9% | 4.7% | 9.4% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | | -22.1% | -5.1% | -11.6% | -9.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HC International Inc ($2280) | 87.5% | 91.9% | 92.5% | 89.6% | |
| Winto Group Holdings Ltd ($8238) | 90.2% | 93.4% | 92.0% | 88.4% | |
| Dingyi Group Investment Ltd ($508) | 75.8% | | 64.5% | 86.0% | 89.6% |
| Fu Shou Yuan International Group Ltd ($1448) | 80.5% | 80.4% | 80.0% | 77.6% | |
| Nirvana Asia Ltd ($1438) | 68.3% | 69.6% | 70.5% | 75.7% | |
| |
|---|
| Median (62 companies) | 31.6% | 30.7% | 31.0% | 31.2% | 29.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Zuoli Kechuang Micro-Finance Co Ltd ($6866) | 61.6% | 84.9% | 75.9% | 80.9% | |
| Shenzhen International Holdings Ltd ($152) | 60.2% | 65.8% | 97.1% | 73.6% | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 78.3% | 74.5% | 74.0% | 71.6% | |
| CAR Inc ($699) | 43.6% | 30.1% | 43.1% | 67.4% | |
| Jiangsu Expressway Co Ltd ($177) | 57.0% | 60.7% | 59.3% | 61.5% | |
| |
|---|
| Median (67 companies) | 17.6% | 16.0% | 12.9% | 10.1% | 2.0% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 14.2% | -4.6% | -3.8% | -9.6% | -15.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Blue Sky Power Holdings Ltd ($6828) | 21.3% | 9.0% | 13.9% | 47.4% | |
| COSCO Pacific Ltd ($1199) | 96.6% | 66.6% | 43.3% | 45.8% | |
| Shenzhen International Holdings Ltd ($152) | 23.0% | 22.1% | 20.9% | 35.0% | |
| Celebrate International Holdings Ltd ($8212) | 211.7% | 12.0% | 6.2% | 34.2% | 18.6% |
| China Maple Leaf Educational Systems Ltd ($1317) | 25.7% | 50.9% | 21.1% | 32.8% | |
| |
|---|
| Median (67 companies) | 3.0% | 3.4% | 2.4% | 3.9% | 1.7% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 2.2% | 30.6% | 2.8% | 2.7% | 57.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bamboos Health Care Holdings Ltd ($8216) | | 71.1% | 50.1% | 58.3% | 40.0% |
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 51.5% | 26.6% | 30.0% | 29.5% | 19.8% |
| 1010 Printing Group Ltd ($1127) | 13.5% | 20.8% | 17.8% | 19.9% | |
| China Packaging Holdings Development Ltd ($1439) | 52.0% | 46.6% | 34.1% | 19.8% | |
| iOne Holdings Ltd ($982) | 12.5% | 11.1% | 9.4% | 19.2% | |
| |
|---|
| Median (67 companies) | 6.3% | 7.0% | 6.7% | 3.6% | 2.0% |
|---|
| Hong Kong Education International Investments Ltd ($1082) | 31.5% | -10.6% | -7.5% | -9.2% | -6.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Celebrate International Holdings Ltd ($8212) | | | | 22.2x | |
| Kai Yuan Holdings Ltd ($1215) | -143.8x | -0.7x | | 18.8x | |
| Eagle Legend Asia Ltd ($936) | 4.0x | 4.0x | 3.3x | 6.2x | |
| Sichuan Expressway Co Ltd ($107) | 2.7x | 3.8x | 4.3x | 5.5x | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 4.5x | 3.1x | 2.7x | 5.3x | |
| |
|---|
| Median (45 companies) | 0.0x | -0.7x | -0.8x | -0.6x | -2.4x |
|---|
