Eco-Tek Holdings Ltd reports 40.1% EBITDA decline in 2016 and 3.7% Revenue decline
19/01/2017 • About Eco-Tek Holdings Ltd (
$8169) • By InTwits
Eco-Tek Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Eco-Tek Holdings Ltd is a company in decline: FY2016 revenue growth was -3.7%, 5 years revenue CAGR was -14.9%
- EBITDA Margin is quite volatile: 8.6% in FY2016, 13.8% in FY2015, 2.3% in FY2014, 11.7% in FY2013, 3.7% in FY2012
- Eco-Tek Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 31.6%.
- CAPEX is quite volatile: 0.54 in FY2016, 1.5 in FY2015, 2.8 in FY2014, 2.8 in FY2013, 0.78 in FY2012
- The company has unprofitable business model: ROIC is at -0.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Eco-Tek Holdings Ltd ($8169) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 120.9 | 110.8 | 96.1 | 84.3 | 81.2 | -3.7% |
| Gross Profit | 24.6 | 31.0 | 26.0 | 30.6 | 20.9 | -31.6% |
| SG&A | | 22.6 | 24.1 | 25.7 | 25.7 | -0.2% |
| EBITDA | 4.5 | 13.0 | 2.2 | 11.6 | 7.0 | -40.1% |
| Net Income | -9.1 | -26.9 | -16.3 | 4.0 | -16.4 | -513.1% |
Balance Sheet
|
|---|
| Cash | 8.0 | 15.4 | 15.6 | 12.8 | 16.8 | 31.0% |
| Short Term Debt | 1.3 | 1.8 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 9.5 | 9.5 | 9.5 | 0.0% |
Cash flow
|
|---|
| Capex | 0.8 | 2.8 | 2.8 | 1.5 | 0.5 | -62.8% |
Ratios
|
|---|
| Revenue growth | -33.5% | -8.3% | -13.3% | -12.2% | -3.7% | |
| EBITDA growth | -75.8% | 187.8% | -83.3% | 437.0% | -40.1% | |
| Gross Margin | 20.4% | 28.0% | 27.1% | 36.3% | 25.8% | -10.5% |
| EBITDA Margin | 3.7% | 11.7% | 2.3% | 13.8% | 8.6% | -5.2% |
| Net Income Margin | -7.5% | -24.3% | -17.0% | 4.7% | -20.2% | -25.0% |
| SG&A, % of revenue | | 20.4% | 25.0% | 30.5% | 31.6% | 1.1% |
| CAPEX, % of revenue | 0.6% | 2.5% | 2.9% | 1.7% | 0.7% | -1.1% |
| ROIC | -2.7% | 1.0% | -4.0% | 2.9% | -0.3% | -3.2% |
| ROE | -5.8% | -19.5% | -14.0% | 3.6% | -16.6% | -20.3% |
| Net Debt/EBITDA | -1.5x | -1.0x | -2.8x | -0.3x | -1.0x | -0.8x |
Revenue and profitability
The company's Revenue decreased on 3.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 24.1 pp from -18.3% to 5.7% in FY2016.
Gross Margin dropped on 10.5 pp from 36.3% to 25.8% in FY2016. SG&A as a % of Revenue increased slightly on 1.1 pp from 30.5% to 31.6% in FY2016.
Net Income marign dropped on 25.0 pp from 4.7% to -20.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Eco-Tek Holdings Ltd had CAPEX/Revenue of 0.66%. CAPEX/Revenue decreased slightly on 1.8 pp from 2.5% in FY2013 to 0.66% in FY2016. Average CAPEX/Revenue for the last three years was 1.8%.
Return on investment
The company operates at negative ROIC (-0.33%) and ROE (-16.63%). ROIC decreased on 3.2 pp from 2.9% to -0.33% in FY2016. ROE dropped on 20.3 pp from 3.6% to -16.6% in FY2016.
Leverage (Debt)
Debt level is -1.0x Net Debt / EBITDA and 1.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.8x from -0.3x to -1.0x in FY2016. Debt didn't change in FY2016 while cash jumped on 31.0%.
Appendix 1: Peers in Environmental Control
Below we provide Eco-Tek Holdings Ltd benchmarking against other companies in Environmental Control 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 |
|---|
| Sky Forever Supply Chain Management Group Ltd ($8047) | | 446.4% | -62.3% | 12,494.5% | 1.5% |
| Pan Asia Environmental Protection Group Ltd ($556) | -13.7% | 43.1% | -1.8% | 85.0% | |
| CT Environmental Group Ltd ($1363) | -18.7% | 23.1% | 112.9% | 75.4% | |
| ELL Environmental Holdings Ltd ($1395) | 5.3% | 38.8% | 30.9% | 70.8% | |
| Ozner Water International Holding Ltd ($2014) | 183.9% | 38.5% | 27.2% | 45.7% | |
| |
|---|
| Median (24 companies) | 4.3% | 18.9% | 23.6% | 4.0% | 54.7% |
|---|
| Eco-Tek Holdings Ltd ($8169) | | -8.3% | -13.3% | -12.2% | -3.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| EverChina International Holdings Co Ltd ($202) | 51.8% | 53.4% | 95.3% | 95.4% | 93.5% |
| Ozner Water International Holding Ltd ($2014) | 64.5% | 67.8% | 65.4% | 58.9% | |
| CT Environmental Group Ltd ($1363) | 65.8% | 63.1% | 56.4% | 49.9% | |
| Kangda International Environmental Co Ltd ($6136) | 44.2% | 38.3% | 40.0% | 47.6% | |
| China Water Affairs Group Ltd ($855) | 44.0% | 43.1% | 41.8% | 47.3% | 47.1% |
| |
|---|
| Median (23 companies) | 39.0% | 30.6% | 32.2% | 32.7% | 23.4% |
|---|
| Eco-Tek Holdings Ltd ($8169) | 20.4% | 28.0% | 27.1% | 36.3% | 25.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CT Environmental Group Ltd ($1363) | 63.6% | 62.8% | 58.7% | 64.6% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 57.5% | 56.6% | 57.8% | 57.9% | |
| China Everbright International Ltd ($257) | 44.6% | 40.7% | 43.6% | 44.1% | |
| China Water Affairs Group Ltd ($855) | 38.2% | 38.1% | 37.1% | 40.3% | 40.2% |
| Kangda International Environmental Co Ltd ($6136) | 37.1% | 33.6% | 32.4% | 36.6% | |
| |
|---|
| Median (24 companies) | 17.9% | 10.8% | 5.1% | 15.5% | -21.3% |
|---|
| Eco-Tek Holdings Ltd ($8169) | 3.7% | 11.7% | 2.3% | 13.8% | 8.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Chaoyue Group Ltd ($147) | | 18.1% | 9.2% | 100.9% | 1.4% |
| Ozner Water International Holding Ltd ($2014) | 94.9% | 102.2% | 148.5% | 90.9% | |
| Integrated Waste Solutions Group Holdings Ltd ($923) | 13.2% | 10.6% | 41.7% | 88.1% | 36.5% |
| Green Energy Group Ltd ($979) | 169.0% | 270.8% | 41.9% | 59.0% | |
| CT Environmental Group Ltd ($1363) | 65.0% | 27.1% | 51.4% | 40.5% | |
| |
|---|
| Median (23 companies) | 12.9% | 13.0% | 8.8% | 7.7% | 10.0% |
|---|
| Eco-Tek Holdings Ltd ($8169) | 0.6% | 2.5% | 2.9% | 1.7% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CT Environmental Group Ltd ($1363) | 25.9% | 20.5% | 20.8% | 20.1% | |
| China Everbright International Ltd ($257) | 10.4% | 11.2% | 10.5% | 10.8% | |
| Sound Global Ltd ($967) | 12.8% | 11.5% | 10.8% | 9.3% | |
| Baguio Green Group Ltd ($1397) | 20.1% | 29.2% | 9.6% | 9.0% | |
| Tianjin Capital Environmental Protection Group Co Ltd ($1065) | 7.1% | 6.8% | 7.8% | 8.8% | |
| |
|---|
| Median (24 companies) | 3.9% | 6.8% | 4.9% | 5.2% | -6.8% |
|---|
| Eco-Tek Holdings Ltd ($8169) | -2.7% | 1.0% | -4.0% | 2.9% | -0.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kangda International Environmental Co Ltd ($6136) | 4.4x | 5.1x | 4.8x | 5.2x | |
| China Water Affairs Group Ltd ($855) | 2.6x | 2.7x | 3.2x | 3.4x | 3.0x |
| Dynagreen Environmental Protection Group Co Ltd ($1330) | 3.2x | | | 3.2x | |
| Sound Global Ltd ($967) | -0.1x | 0.3x | 1.9x | 2.8x | |
| China Everbright International Ltd ($257) | 2.1x | 0.5x | 1.5x | 2.6x | |
| |
|---|
| Median (15 companies) | 2.3x | 0.4x | 1.5x | 1.8x | 3.0x |
|---|
| Eco-Tek Holdings Ltd ($8169) | -1.5x | -1.0x | -2.8x | -0.3x | -1.0x |
