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Mega Expo Holdings Ltd reports 1,648% CAPEX growth in 2016 while 14.9% Revenue decline

28/09/2016 • About Mega Expo Holdings Ltd ($1360) • By InTwits

Mega Expo Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Mega Expo Holdings Ltd doesn't have a profitable business model yet: FY2016 ROIC is -19.1%
  • EBITDA Margin is declining: -11.3% in FY2016 vs. 8.1% in FY2015 vs. 18.8% in FY2012
  • EBITDA Margin is quite volatile: -11.3% in FY2016, 8.1% in FY2015, 10.8% in FY2014, 16.0% in FY2013, 18.8% in FY2012
  • Mega Expo Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 6.5%.
  • CAPEX is quite volatile: 8.2 in FY2016, 0.47 in FY2015, 10.4 in FY2014, 1.7 in FY2013, 0.21 in FY2012
  • The company has unprofitable business model: ROIC is at -19.1%
  • It operates with high leverage: Net Debt/EBITDA is 0.8x while industry average is -1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Mega Expo Holdings Ltd ($1360) key annual financial indicators

mln. 201220132014201520162016/2015
Net Income25.
Balance Sheet
Short Term Debt0.
Long Term Debt0.
Cash flow
Revenue growth12.9%32.3%-6.7%-8.5%-14.9%
EBITDA growth-0.2%12.8%-37.1%-31.1%-218.6%
EBITDA Margin18.8%16.0%10.8%8.1%-11.3%-19.5%
Net Income Margin15.0%11.9%6.9%24.4%-42.0%-66.4%
SG&A, % of revenue13.7%11.9%-1.8%
CAPEX, % of revenue0.1%0.8%5.0%0.2%5.1%4.8%
Net Debt/EBITDA-1.0x-2.1x-6.1x-15.1x15.1x

Revenue and profitability

Mega Expo Holdings Ltd's Revenue dropped on 14.9%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 19.5 pp from 8.1% to -11.3% in FY2016.

SG&A as a % of Revenue decreased slightly on 1.8 pp from 13.7% to 11.9% in FY2016.

Net Income marign dropped on 66.4 pp from 24.4% to -42.0% in FY2016.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 5.1% in FY2016. CAPEX/Revenue increased on 4.3 pp from 0.77% in FY2013 to 5.1% in FY2016. For the last three years the average CAPEX/Revenue was 3.5%.

Return on investment

The company operates at negative ROIC (-19.07%) and ROE (-54.27%). ROIC dropped on 29.1 pp from 10.1% to -19.1% in FY2016. ROE dropped on 96.4 pp from 42.1% to -54.3% in FY2016.

Leverage (Debt)

The company has no debt. Cash dropped on 87.7%.

Appendix 1: Peers in Commercial Services

Below you can find Mega Expo Holdings 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%
Mega Expo Holdings Ltd ($1360)32.3%-6.7%-8.5%-14.9%

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%26.9%

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)17.5%14.9%12.9%10.1%1.0%
Mega Expo Holdings Ltd ($1360)18.8%16.0%10.8%8.1%-11.3%

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%3.8%2.4%3.9%1.7%
Mega Expo Holdings Ltd ($1360)0.1%0.8%5.0%0.2%5.1%

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%6.4%5.8%3.3%1.5%
Mega Expo Holdings Ltd ($1360)270.5%481.1%54.4%10.1%-19.1%

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-0.7x18.8x
Eagle Legend Asia Ltd ($936)4.0x4.0x3.3x6.2x
Sichuan Expressway Co Ltd ($107)2.7x3.8x4.3x5.5x
Yuexiu Transport Infrastructure Ltd ($1052)4.5x3.1x2.7x5.3x
Median (44 companies)0.0x-0.7x-0.6x-0.6x-2.4x
Mega Expo Holdings Ltd ($1360)-1.0x-2.1x-6.1x-15.1x