Hua Hong Semiconductor Ltd reports 20.6% EBITDA growth in 2016 and 11.0% Revenue growth
14/02/2017 • About Hua Hong Semiconductor Ltd (
$1347) • By InTwits
Hua Hong Semiconductor Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hua Hong Semiconductor Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.6%. At the same time it's in pair with industry average of 20.9%.
- CAPEX is quite volatile: 173 in FY2016, 182 in FY2015, 76.1 in FY2014, 32.2 in FY2013, 51.4 in FY2012
- The company has business model with low profitability: ROIC is at 9.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hua Hong Semiconductor Ltd ($1347) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 571.5 | 584.7 | 664.6 | 650.1 | 721.4 | 11.0% |
| Gross Profit | 117.9 | 125.4 | 197.8 | 201.4 | 220.3 | 9.4% |
| SG&A | 41.0 | 38.1 | 61.5 | 64.6 | 104.2 | 61.2% |
| EBITDA | 219.7 | 173.9 | 209.4 | 195.2 | 235.4 | 20.6% |
| Net Income | 59.7 | 61.8 | 93.1 | 112.5 | 128.8 | 14.5% |
Balance Sheet
|
|---|
| Cash | 218.2 | 317.0 | 646.8 | 510.4 | 341.3 | -33.1% |
| Short Term Debt | 99.8 | 101.5 | 81.7 | 42.8 | 1.9 | -95.6% |
| Long Term Debt | 318.0 | 265.0 | 183.0 | 137.9 | 90.8 | -34.2% |
Cash flow
|
|---|
| Capex | 51.4 | 32.2 | 76.1 | 181.9 | 172.6 | -5.1% |
Ratios
|
|---|
| Revenue growth | -6.3% | 2.3% | 13.7% | -2.2% | 11.0% | |
| EBITDA growth | -14.0% | -20.8% | 20.4% | -6.8% | 20.6% | |
| Gross Margin | 20.6% | 21.5% | 29.8% | 31.0% | 30.5% | -0.4% |
| EBITDA Margin | 38.5% | 29.7% | 31.5% | 30.0% | 32.6% | 2.6% |
| Net Income Margin | 10.4% | 10.6% | 14.0% | 17.3% | 17.9% | 0.5% |
| SG&A, % of revenue | 7.2% | 6.5% | 9.2% | 9.9% | 14.4% | 4.5% |
| CAPEX, % of revenue | 9.0% | 5.5% | 11.4% | 28.0% | 23.9% | -4.1% |
| ROIC | 5.3% | 4.8% | 7.8% | 6.7% | 9.1% | 2.4% |
| ROE | 6.4% | 6.1% | 7.4% | 7.6% | 8.6% | 1.0% |
| Net Debt/EBITDA | 0.9x | 0.3x | -1.8x | -1.7x | -1.1x | 0.6x |
Revenue and profitability
Hua Hong Semiconductor Ltd's Revenue jumped on 11.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 27.2 pp from 18.0% to -9.2% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased on 4.5 pp from 9.9% to 14.4% in FY2016.
Net Income marign increased slightly on 0.55 pp from 17.3% to 17.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Hua Hong Semiconductor Ltd had CAPEX/Revenue of 23.9%. CAPEX/Revenue jumped on 18.4 pp from 5.5% in FY2013 to 23.9% in FY2016. Average CAPEX/Revenue for the last three years was 21.1%.To maintain this fast growth the company invested a large share of EBITDA (73.3%) to CAPEX.
Return on investment
The company operates at low ROIC (9.10%) and ROE (8.65%). ROIC increased on 2.4 pp from 6.7% to 9.1% in FY2016. ROE increased slightly on 1.0 pp from 7.6% to 8.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 0.4x. Net Debt / EBITDA surged on 0.6x from -1.7x to -1.1x in FY2016. Debt dropped on 48.7% while cash dropped on 33.1%.
Appendix 1: Peers in Semiconductors
Below you can find Hua Hong Semiconductor Ltd benchmarking vs. other companies in Semiconductors 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 |
|---|
| Phoenitron Holdings Ltd ($8066) | -7.2% | 4.0% | 243.8% | 405.3% | |
| Jun Yang Solar Power Investments Ltd ($397) | -81.0% | 256.8% | 1.1% | 168.9% | |
| Honbridge Holdings Ltd ($8137) | -76.4% | -97.5% | 608.9% | 57.0% | |
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 15.5% | 16.0% | 3.3% | 23.2% | |
| Shunfeng International Clean Energy Ltd ($1165) | -46.3% | 44.4% | 275.6% | 22.4% | |
| |
|---|
| Median (22 companies) | -12.2% | 3.8% | 10.4% | 0.5% | 7.3% |
|---|
| Hua Hong Semiconductor Ltd ($1347) | | 2.3% | 13.7% | -2.2% | 11.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jun Yang Solar Power Investments Ltd ($397) | 87.3% | 79.3% | 53.8% | 73.8% | |
| Intel Corp ($4335) | 62.1% | 59.8% | 63.7% | 62.6% | 60.9% |
| PacMOS Technologies Holdings Ltd ($1010) | 68.8% | 65.7% | 65.7% | 57.5% | |
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 47.7% | 48.7% | 47.5% | 52.9% | |
| Shenzhen Mingwah Aohan High Technology Corp Ltd ($8301) | 26.1% | 26.7% | 16.3% | 52.8% | |
| |
|---|
| Median (22 companies) | 24.5% | 26.7% | 31.9% | 32.1% | 41.7% |
|---|
| Hua Hong Semiconductor Ltd ($1347) | 20.6% | 21.5% | 29.8% | 31.0% | 30.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Ruifeng Renewable Energy Ltd ($527) | 9.1% | 37.2% | 88.0% | 78.3% | |
| Intel Corp ($4335) | 41.5% | 38.6% | 42.8% | 41.0% | 34.8% |
| Jun Yang Solar Power Investments Ltd ($397) | -218.5% | -16.7% | -9.9% | 35.0% | |
| Semiconductor Manufacturing International Corp ($981) | 34.3% | 35.5% | 34.5% | 33.3% | |
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 26.5% | 23.9% | 25.4% | 26.8% | |
| |
|---|
| Median (22 companies) | 7.4% | 6.1% | -0.9% | 3.9% | 23.5% |
|---|
| Hua Hong Semiconductor Ltd ($1347) | 38.5% | 29.7% | 31.5% | 30.0% | 32.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Heng Xin China Holdings Ltd ($8046) | 16.1% | 4.1% | 11.9% | 110.8% | |
| Jun Yang Solar Power Investments Ltd ($397) | 671.1% | 25.9% | 78.9% | 104.2% | |
| China Ruifeng Renewable Energy Ltd ($527) | 5.5% | 35.9% | 10.6% | 60.9% | |
| Semiconductor Manufacturing International Corp ($981) | 23.5% | 35.1% | 33.2% | 55.0% | |
| Hanergy Thin Film Power Group Ltd ($566) | 1.3% | 2.8% | 4.8% | 32.0% | |
| |
|---|
| Median (22 companies) | 4.4% | 4.1% | 5.7% | 5.2% | 2.3% |
|---|
| Hua Hong Semiconductor Ltd ($1347) | 9.0% | 5.5% | 11.4% | 28.0% | 23.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 25.5% | 22.7% | 21.1% | 20.9% | |
| Intel Corp ($4335) | 23.7% | 17.1% | 20.6% | 17.7% | 14.5% |
| Applied Materials Inc ($4336) | 4.0% | 4.6% | 15.9% | 15.2% | 19.1% |
| ASM Pacific Technology Ltd ($522) | 12.3% | 9.2% | 21.9% | 13.7% | |
| Shunfeng International Clean Energy Ltd ($1165) | -13.0% | 1.5% | 17.4% | 5.0% | |
| |
|---|
| Median (22 companies) | -2.2% | -0.4% | -0.5% | -1.1% | 2.5% |
|---|
| Hua Hong Semiconductor Ltd ($1347) | 5.3% | 4.8% | 7.8% | 6.7% | 9.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Solargiga Energy Holdings Ltd ($757) | | 13.8x | 4.4x | 9.0x | |
| China Ruifeng Renewable Energy Ltd ($527) | 16.4x | 6.9x | 4.9x | 7.3x | |
| Shunfeng International Clean Energy Ltd ($1165) | | 25.8x | 3.4x | 5.7x | |
| Semiconductor Manufacturing International Corp ($981) | 1.3x | 1.0x | 1.0x | 0.5x | |
| Intel Corp ($4335) | 0.2x | 0.4x | 0.5x | 0.3x | 1.0x |
| |
|---|
| Median (11 companies) | 0.1x | 0.7x | 0.5x | 0.2x | 0.5x |
|---|
| Hua Hong Semiconductor Ltd ($1347) | 0.9x | 0.3x | -1.8x | -1.7x | -1.1x |
