Kantone Holdings Ltd EBITDA jumped on 106% and EBITDA Margin surged on 31.8 pp from 21.2% to 53.0%
28/09/2016 • About Kantone Holdings Ltd (
$1059) • By InTwits
Kantone Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kantone Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
- The company has highly profitable business model: ROIC is at 17.4%
- It operates with high leverage: Net Debt/EBITDA is -0.1x while industry average is -2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kantone Holdings Ltd ($1059) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,429 | 1,953 | 2,720 | 2,544 | 2,090 | -17.8% |
| Gross Profit | 318 | 398 | 461 | 239 | 716 | 199.4% |
| SG&A | | 124 | 148 | 144 | 84 | -41.8% |
| EBITDA | 610 | 759 | 827 | 539 | 1,107 | 105.6% |
| Net Income | 80 | 77 | 2 | 9 | -12 | -231.8% |
Balance Sheet
|
|---|
| Cash | 116 | 84 | 67 | 196 | 74 | -62.1% |
| Short Term Debt | 29 | 8 | 17 | 5 | 4 | -22.1% |
| Long Term Debt | 0 | 17 | 14 | 9 | 4 | -57.8% |
Cash flow
|
|---|
| Capex | 10 | 10 | 10 | 12 | 10 | -13.3% |
Ratios
|
|---|
| Revenue growth | 6.6% | 36.7% | 39.3% | -6.5% | -17.8% | |
| EBITDA growth | 3.0% | 24.4% | 8.9% | -34.8% | 105.6% | |
| Gross Margin | 22.3% | 20.4% | 16.9% | 9.4% | 34.3% | 24.9% |
| EBITDA Margin | 42.7% | 38.9% | 30.4% | 21.2% | 53.0% | 31.8% |
| Net Income Margin | 5.6% | 4.0% | 0.1% | 0.4% | -0.6% | -0.9% |
| SG&A, % of revenue | | 6.3% | 5.4% | 5.7% | 4.0% | -1.7% |
| CAPEX, % of revenue | 0.7% | 0.5% | 0.4% | 0.5% | 0.5% | 0.0% |
| ROIC | 5.6% | 7.2% | 8.3% | 1.8% | 17.4% | 15.7% |
| ROE | 2.5% | 2.4% | 0.1% | 0.3% | -0.3% | -0.6% |
| Net Debt/EBITDA | -0.1x | -0.1x | -0.0x | -0.3x | -0.1x | 0.3x |
Revenue and profitability
The company's Revenue dropped on 17.8%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 31.8 pp from 21.2% to 53.0% in FY2016.
Gross Margin surged on 24.9 pp from 9.4% to 34.3% in FY2016. SG&A as a % of Revenue decreased slightly on 1.7 pp from 5.7% to 4.0% in FY2016.
Net Income marign decreased slightly on 0.91 pp from 0.35% to -0.56% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 0.48%. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 0.43%.
Return on investment
The company operates at low but positive ROIC (17.45%) and negative ROE (-0.34%). ROIC jumped on 15.7 pp from 1.8% to 17.4% in FY2016. ROE decreased slightly on 0.61 pp from 0.27% to -0.34% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 0.0x. Net Debt / EBITDA surged on 0.3x from -0.3x to -0.1x in FY2016. Debt dropped on 45.3% while cash dropped on 62.1%.
Appendix 1: Peers in Software
Below we provide Kantone Holdings Ltd benchmarking against other companies in Software 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 |
|---|
| Yunbo Digital Synergy Group Ltd ($8050) | | 241.6% | -31.9% | 348.0% | 99.6% |
| Pizu Group Holdings Ltd ($8053) | | -42.9% | 1,742.9% | 157.9% | 235.2% |
| China Eco-Farming Ltd ($8166) | -23.6% | -7.7% | 21.8% | 155.5% | |
| ICO Group Ltd ($8140) | | -11.1% | -3.1% | 104.9% | 29.8% |
| Aurum Pacific China Group Ltd ($8148) | | | 50.0% | 92.7% | |
| |
|---|
| Median (37 companies) | 19.9% | 11.1% | 20.9% | 10.7% | 2.5% |
|---|
| Kantone Holdings Ltd ($1059) | | 36.7% | 39.3% | -6.5% | -17.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.4% | 97.4% | 98.4% | 98.3% | |
| Chanjet Information Technology Co Ltd ($1588) | 89.2% | 91.3% | 92.4% | 91.4% | |
| China Binary Sale Technology Ltd ($8255) | 63.5% | 68.5% | 67.7% | 85.9% | |
| Kingdee International Software Group Co Ltd ($268) | 65.0% | 75.3% | 82.5% | 81.5% | |
| Tian Ge Interactive Holdings Ltd ($1980) | 88.5% | 87.6% | 84.8% | 77.7% | |
| |
|---|
| Median (36 companies) | 45.4% | 42.5% | 42.8% | 43.5% | 27.8% |
|---|
| Kantone Holdings Ltd ($1059) | 22.3% | 20.4% | 16.9% | 9.4% | 34.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| International Entertainment Corp ($1009) | 50.8% | 64.0% | 54.9% | 62.0% | 45.5% |
| Sinosoft Technology Group Ltd ($1297) | 62.6% | 54.9% | 57.2% | 59.0% | |
| China Binary Sale Technology Ltd ($8255) | 35.1% | 35.4% | 44.4% | 50.5% | |
| Boyaa Interactive International Ltd ($434) | 38.5% | 25.8% | 30.7% | 47.6% | |
| TravelSky Technology Ltd ($696) | 38.1% | 35.8% | 31.9% | 41.1% | |
| |
|---|
| Median (37 companies) | 8.5% | 10.9% | 9.1% | 9.1% | 2.4% |
|---|
| Kantone Holdings Ltd ($1059) | 42.7% | 38.9% | 30.4% | 21.2% | 53.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NetDragon Websoft Inc ($777) | 21.1% | 34.6% | 54.6% | 42.9% | |
| China Information Technology Development Ltd ($8178) | 4.1% | 1.1% | 0.5% | 40.7% | |
| Aurum Pacific China Group Ltd ($8148) | | 2.9% | 7.5% | 20.6% | |
| TravelSky Technology Ltd ($696) | 8.9% | 21.7% | 18.1% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 4.3% | 3.8% | 14.3% | 11.1% | |
| |
|---|
| Median (37 companies) | 1.4% | 1.8% | 3.5% | 2.2% | 0.8% |
|---|
| Kantone Holdings Ltd ($1059) | 0.7% | 0.5% | 0.4% | 0.5% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pizu Group Holdings Ltd ($8053) | -21.8% | -13.4% | -6.8% | 120.0% | 51.7% |
| ICO Group Ltd ($8140) | | 43.5% | 6.8% | 37.7% | 27.1% |
| IGG Inc ($8002) | | 55.9% | 41.4% | 25.9% | |
| Boyaa Interactive International Ltd ($434) | 75.3% | 21.3% | 20.0% | 21.4% | |
| Sinosoft Technology Group Ltd ($1297) | 34.0% | 21.9% | 20.2% | 20.8% | |
| |
|---|
| Median (37 companies) | 4.7% | 6.1% | 3.9% | 2.3% | 4.1% |
|---|
| Kantone Holdings Ltd ($1059) | 5.6% | 7.2% | 8.3% | 1.8% | 17.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Epicurean and Co Ltd ($8213) | 2.3x | 4.7x | 12.3x | 12.0x | 13.9x |
| Sing Lee Software Group Ltd ($8076) | | | 6.2x | 4.4x | |
| Century Sage Scientific Holdings Ltd ($1450) | 0.2x | 0.0x | -0.2x | 1.8x | |
| Microsoft Corp ($4338) | | | 0.4x | 1.2x | 1.4x |
| Chinasoft International Ltd ($354) | -0.7x | 0.7x | 1.5x | 0.7x | |
| |
|---|
| Median (21 companies) | -1.1x | -1.7x | -1.8x | -1.2x | 0.4x |
|---|
| Kantone Holdings Ltd ($1059) | -0.1x | -0.1x | -0.0x | -0.3x | -0.1x |
