Hong Kong Aircraft Engineering Co Ltd Net Income jumped on 110% in 2016 while EBITDA Margin decreased on 3.2 pp from 8.5% to 5.3%
14/03/2017 • About Hong Kong Aircraft Engineering Co Ltd (
$44) • By InTwits
Hong Kong Aircraft Engineering Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Aircraft Engineering Co Ltd doesn't have a profitable business model yet: FY2016 ROIC is 1.0%
- EBITDA Margin is quite volatile: 5.3% in FY2016, 8.5% in FY2015, 9.7% in FY2014, 9.5% in FY2013, 16.0% in FY2012
- Hong Kong Aircraft Engineering Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. 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 potentially unprofitable business model: ROIC is at 1.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Aircraft Engineering Co Ltd ($44) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,830 | 7,387 | 11,927 | 12,095 | 13,760 | 13.8% |
| EBITDA | 932 | 704 | 1,158 | 1,029 | 734 | -28.7% |
| Net Income | 822 | 625 | 573 | 464 | 975 | 110.1% |
Balance Sheet
|
|---|
| Cash | 1,413 | 2,318 | 2,289 | 1,399 | 1,299 | -7.1% |
| Short Term Debt | 262 | 902 | 1,623 | 181 | 203 | 12.2% |
| Long Term Debt | 1,422 | 1,655 | 3,318 | 3,956 | 3,486 | -11.9% |
Cash flow
|
|---|
| Capex | 364 | 558 | 664 | 702 | 717 | 2.1% |
Ratios
|
|---|
| Revenue growth | 12.7% | 26.7% | 61.5% | 1.4% | 13.8% | |
| EBITDA growth | 1.6% | -24.5% | 64.5% | -11.1% | -28.7% | |
| EBITDA Margin | 16.0% | 9.5% | 9.7% | 8.5% | 5.3% | -3.2% |
| Net Income Margin | 14.1% | 8.5% | 4.8% | 3.8% | 7.1% | 3.2% |
| CAPEX, % of revenue | 6.2% | 7.6% | 5.6% | 5.8% | 5.2% | -0.6% |
| ROIC | 5.0% | 2.3% | 4.5% | 3.4% | 1.0% | -2.4% |
| ROE | 14.0% | 10.6% | 9.4% | 7.8% | 16.2% | 8.4% |
| Net Debt/EBITDA | 0.3x | 0.3x | 2.3x | 2.7x | 3.3x | 0.6x |
Revenue and profitability
The company's Revenue surged on 13.8%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.2 pp from 8.5% to 5.3% in FY2016.
Net Income marign increased on 3.2 pp from 3.8% to 7.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Hong Kong Aircraft Engineering Co Ltd's CAPEX/Revenue was 5.2% in FY2016. Hong Kong Aircraft Engineering Co Ltd's CAPEX/Revenue decreased on 2.3 pp from 7.6% in FY2013 to 5.2% in FY2016. Average CAPEX/Revenue for the last three years was 5.5%.To secure this fast growth the company invested a large share of EBITDA (97.7%) to CAPEX.
Return on investment
The company operates at good ROE (16.18%) while ROIC is low (0.97%). ROIC decreased on 2.4 pp from 3.4% to 0.97% in FY2016. ROE increased on 8.4 pp from 7.8% to 16.2% in FY2016.
Leverage (Debt)
Debt level is 3.3x Net Debt / EBITDA and 5.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 2.7x to 3.3x in FY2016. Debt dropped on 10.8% while cash decreased on 7.1%.
Management team
Tang Kin Wing "Augustus" is a the company's CEO. Tang Kin Wing "Augustus" has spent 10 years at the company.
Appendix 1: Peers in Engineering&Construction
Below you can find Hong Kong Aircraft Engineering Co Ltd benchmarking vs. other companies in Engineering&Construction 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 |
|---|
| CNQC International Holdings Ltd ($1240) | 21.6% | 91.0% | 103.7% | 807.4% | |
| China National Culture Group Ltd ($745) | | -76.8% | -55.8% | 592.3% | 86.7% |
| Vision Fame International Holding Ltd ($1315) | | 45.9% | -10.5% | 105.6% | 40.9% |
| Sino Credit Holdings Ltd ($628) | | | | 97.4% | -40.3% |
| Grand Ming Group Holdings Ltd ($1271) | | -26.9% | -37.4% | 74.8% | 14.3% |
| |
|---|
| Median (44 companies) | 19.1% | 24.0% | 20.8% | 10.8% | 4.4% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | | 26.7% | 61.5% | 1.4% | 13.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 66.4% | 62.1% | 62.4% | 61.1% | |
| Huayu Expressway Group Ltd ($1823) | 43.6% | 65.6% | 64.0% | 58.9% | |
| Broad Greenstate International Co Ltd ($1253) | 20.1% | 28.7% | 35.8% | 36.7% | |
| Sam Woo Construction Group Ltd ($3822) | 33.2% | 27.3% | 33.6% | 36.0% | 19.8% |
| China National Culture Group Ltd ($745) | 0.9% | 12.1% | 10.3% | 32.3% | 19.2% |
| |
|---|
| Median (40 companies) | 17.0% | 16.5% | 15.8% | 16.0% | 10.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huayu Expressway Group Ltd ($1823) | 46.2% | 73.8% | 77.1% | 76.2% | |
| HNA Infrastructure Company Ltd ($357) | 62.8% | 63.7% | 62.8% | 61.7% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 31.2% | 20.6% | 36.2% | 60.9% | |
| Beijing Capital International Airport Co Ltd ($694) | 53.4% | 52.9% | 50.3% | 51.6% | |
| China National Culture Group Ltd ($745) | -30.4% | -72.7% | -279.2% | 45.3% | -14.6% |
| |
|---|
| Median (44 companies) | 9.9% | 11.2% | 9.2% | 8.8% | 3.1% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 16.0% | 9.5% | 9.7% | 8.5% | 5.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HNA Infrastructure Company Ltd ($357) | 36.8% | 5.7% | 85.4% | 155.4% | |
| Grand Ming Group Holdings Ltd ($1271) | 0.0% | 16.1% | 8.7% | 33.8% | 14.0% |
| Beijing Capital International Airport Co Ltd ($694) | 3.5% | 6.6% | 7.2% | 28.2% | |
| NEW Concepts Holdings Ltd ($2221) | 1.7% | 1.2% | 3.1% | 20.5% | 0.3% |
| Louis XIII Holdings Ltd ($577) | 1.2% | 29.5% | 9.3% | 16.1% | 47.3% |
| |
|---|
| Median (44 companies) | 2.2% | 2.5% | 1.7% | 2.0% | 1.7% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 6.2% | 7.6% | 5.6% | 5.8% | 5.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| In Construction Holdings Ltd ($1500) | | 52.8% | 37.0% | 49.4% | 40.4% |
| Chun Sing Engineering Holdings Ltd ($2277) | | 98.3% | 54.9% | 43.7% | 21.6% |
| NEW Concepts Holdings Ltd ($2221) | | 51.0% | 78.8% | 39.0% | 23.3% |
| Sam Woo Construction Group Ltd ($3822) | | 28.2% | 28.7% | 33.5% | 18.3% |
| Ngai Shun Holdings Ltd ($1246) | 68.8% | 77.2% | 45.2% | 31.0% | -2.9% |
| |
|---|
| Median (46 companies) | 6.5% | 6.1% | 5.3% | 5.6% | 1.9% |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 5.0% | 2.3% | 4.5% | 3.4% | 1.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Deson Development International Holdings ($262) | 3.8x | 4.9x | 13.7x | 47.0x | |
| Hsin Chong Construction Group Ltd ($404) | 1.8x | 8.0x | 10.2x | 41.7x | |
| China Resources and Transportation Group Ltd ($269) | | | 66.7x | 29.7x | |
| CNC Holdings Ltd ($8356) | | 22.0x | 21.9x | 24.3x | 2.7x |
| Louis XIII Holdings Ltd ($577) | 0.8x | -12.5x | -23.2x | 19.1x | |
| |
|---|
| Median (38 companies) | 0.9x | 0.2x | 0.2x | 0.7x | 0.0x |
|---|
| Hong Kong Aircraft Engineering Co Ltd ($44) | 0.3x | 0.3x | 2.3x | 2.7x | 3.3x |
