Hong Kong Exchanges and Clearing Ltd reports 27.5% Net Income decline and 8.4 pp EBITDA Margin decline from 82.1% to 73.7%
27/02/2017 • About Hong Kong Exchanges and Clearing Ltd (
$388) • By InTwits
Hong Kong Exchanges and Clearing Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Exchanges and Clearing Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.0%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 1,348 in 2016, 1,027 in 2015, 749 in 2014, 547 in 2013, 799 in 2012
- The company has highly profitable business model: ROIC is at 19.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Exchanges and Clearing Ltd ($388) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 6,432 | 8,131 | 9,127 | 12,233 | 10,398 | -15.0% |
| SG&A | 19 | 29 | 53 | 41 | | -100.0% |
| EBITDA | 5,251 | 5,966 | 6,911 | 10,049 | 7,668 | -23.7% |
| Net Income | 4,084 | 4,552 | 5,165 | 7,956 | 5,769 | -27.5% |
Balance Sheet
|
|---|
| Cash | 4,035 | 6,531 | 8,067 | 12,744 | 9,286 | -27.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 6,615 | 6,921 | 7,026 | 3,409 | 3,422 | 0.4% |
Cash flow
|
|---|
| Capex | 1,042 | 797 | 665 | 710 | 620 | -12.7% |
Ratios
|
|---|
| Revenue growth | -12.6% | 26.4% | 12.2% | 34.0% | -15.0% | |
| EBITDA growth | -14.5% | 13.6% | 15.8% | 45.4% | -23.7% | |
| EBITDA Margin | 81.6% | 73.4% | 75.7% | 82.1% | 73.7% | -8.4% |
| Net Income Margin | 63.5% | 56.0% | 56.6% | 65.0% | 55.5% | -9.6% |
| SG&A, % of revenue | 0.3% | 0.4% | 0.6% | 0.3% | | -0.3% |
| CAPEX, % of revenue | 16.2% | 9.8% | 7.3% | 5.8% | 6.0% | 0.2% |
| ROIC | 29.1% | 20.1% | 21.5% | 29.1% | 19.3% | -9.9% |
| ROE | 30.3% | 23.9% | 24.8% | 31.1% | 18.6% | -12.6% |
| Net Debt/EBITDA | 0.5x | 0.1x | -0.2x | -0.9x | -0.8x | 0.2x |
Revenue and profitability
Hong Kong Exchanges and Clearing Ltd's Revenue dropped on 15.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 8.4 pp from 82.1% to 73.7% in 2016.
Net Income marign decreased on 9.6 pp from 65.0% to 55.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
Hong Kong Exchanges and Clearing Ltd's CAPEX/Revenue was 6.0% in 2016. CAPEX/Revenue decreased on 3.8 pp from 9.8% in 2013 to 6.0% in 2016. It's average CAPEX/Revenue for the last three years was 6.4%.
Return on investment
The company operates at good ROIC (19.26%) and ROE (18.59%). ROIC decreased on 9.9 pp from 29.1% to 19.3% in 2016. ROE dropped on 12.6 pp from 31.1% to 18.6% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.8x and Debt / EBITDA is 0.4x. Net Debt / EBITDA surged on 0.2x from -0.9x to -0.8x in 2016. Debt showed almost no change in 2016 while cash dropped on 27.1%.
Appendix 1: Peers in Diversified Finan Serv
Below we provide Hong Kong Exchanges and Clearing Ltd benchmarking against other companies in Diversified Finan Serv 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 |
|---|
| China Smarter Energy Group Holdings Ltd ($1004) | | -23.1% | -87.3% | 1,860.5% | 25.3% |
| Crown International Corp Ltd ($727) | | -75.0% | 117.4% | 802.5% | -25.1% |
| Global Strategic Group Ltd ($8007) | -3.9% | 2.1% | 806.3% | 681.2% | |
| Upbest Group Ltd ($335) | | -61.8% | 24.1% | 208.1% | -63.4% |
| GF Securities Co Ltd ($1776) | 16.3% | 31.8% | 75.0% | 163.9% | |
| |
|---|
| Median (64 companies) | 8.5% | 14.9% | 27.6% | 24.0% | 18.1% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | | 26.4% | 12.2% | 34.0% | -15.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Roma Group Ltd ($8072) | | | 99.4% | 98.7% | |
| First China Financial Network Holdings Ltd ($8123) | 93.4% | | 94.5% | 97.4% | |
| China Smarter Energy Group Holdings Ltd ($1004) | 6.2% | 4.0% | 46.9% | 96.9% | 98.4% |
| Chinese Strategic Holdings Ltd ($8089) | 99.1% | 97.9% | 97.0% | 96.6% | |
| Allied Group Ltd ($373) | 95.1% | 94.4% | 93.6% | 92.2% | |
| |
|---|
| Median (12 companies) | 64.2% | 75.1% | 88.2% | 90.3% | 69.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Smarter Energy Group Holdings Ltd ($1004) | -282.7% | -373.2% | -1,524.9% | 212.2% | 55.6% |
| China Aircraft Leasing Group Holdings Ltd ($1848) | 91.3% | 86.4% | 92.9% | 107.0% | |
| Get Nice Holdings Ltd ($64) | 2.6% | 153.4% | 92.7% | 83.9% | 84.5% |
| Hong Kong Finance Group Co Ltd ($1273) | 76.9% | 67.5% | 65.2% | 74.8% | 70.3% |
| Haitong International Securities Group Ltd ($665) | 34.9% | 45.7% | 59.9% | 71.4% | |
| |
|---|
| Median (66 companies) | 18.8% | 36.2% | 47.2% | 31.4% | 50.8% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 81.6% | 73.4% | 75.7% | 82.1% | 73.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Aircraft Leasing Group Holdings Ltd ($1848) | 351.0% | 0.1% | 33.3% | 64.6% | |
| Willie International Holdings Ltd ($273) | | 0.3% | 0.8% | 58.0% | |
| China Assurance Finance Group Ltd ($8090) | 94.7% | 68.9% | 53.3% | 51.0% | |
| AID Partners Capital Holdings Ltd ($8088) | 4.1% | 2.9% | 28.4% | 26.6% | |
| Hongkong Chinese Ltd ($655) | | | 0.1% | 25.6% | 0.1% |
| |
|---|
| Median (65 companies) | 1.9% | 1.8% | 1.1% | 1.5% | 1.5% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 16.2% | 9.8% | 7.3% | 5.8% | 6.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Smarter Energy Group Holdings Ltd ($1004) | -19.4% | -23.0% | -14.0% | 22.5% | 2.1% |
| Oi Wah Pawnshop Credit Holdings Ltd ($1319) | 32.7% | 20.7% | 14.0% | 15.3% | 12.5% |
| Emperor Capital Group Ltd ($717) | 5.1% | 12.8% | 13.1% | 14.6% | 12.4% |
| Roma Group Ltd ($8072) | 19.6% | 43.7% | 107.8% | 13.3% | 9.8% |
| Orient Securities International Holdings Ltd ($8001) | 10.6% | 13.3% | 12.1% | 12.4% | |
| |
|---|
| Median (69 companies) | 3.9% | 4.0% | 4.8% | 3.5% | 4.2% |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 29.1% | 20.1% | 21.5% | 29.1% | 19.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hoifu Energy Group Ltd ($7) | | | | 62.5x | |
| South China Financial Holdings Ltd ($619) | | | | 56.9x | |
| Bright Smart Securities & Commodities Group Ltd ($1428) | 2.1x | 10.3x | 9.3x | 39.3x | 4.3x |
| Far East Horizon Ltd ($3360) | 16.9x | 21.7x | 20.0x | 20.8x | |
| Quam Ltd ($952) | 58.9x | 15.9x | 4.1x | 14.8x | -18.0x |
| |
|---|
| Median (49 companies) | -0.7x | 0.2x | 0.1x | 0.0x | 0.5x |
|---|
| Hong Kong Exchanges and Clearing Ltd ($388) | 0.5x | 0.1x | -0.2x | -0.9x | -0.8x |
