HK Electric Investments & HK Electric Investments Ltd Debt dropped on 16.0% in 2016 and EBITDA showed almost no change
21/03/2017 • About HK Electric Investments & HK Electric Investments Ltd (
$2638) • By InTwits
HK Electric Investments & HK Electric Investments Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 70.4% in FY2016 vs. 71.7% in FY2015 vs. 72.6% in FY2012
- The company has potentially unprofitable business model: ROIC is at 5.0%
- It operates with high leverage: Net Debt/EBITDA is 4.9x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HK Electric Investments & HK Electric Investments Ltd ($2638) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 10,400 | 10,209 | 10,504 | 11,210 | 11,420 | 1.9% |
| Gross Profit | 6,247 | 5,987 | 5,672 | 6,021 | 6,051 | 0.5% |
| EBITDA | 7,547 | 7,919 | 7,698 | 8,035 | 8,034 | -0.0% |
| Net Income | 4,542 | 5,180 | 3,201 | 3,591 | 3,599 | 0.2% |
Balance Sheet
|
|---|
| Cash | 8 | 1,060 | 3,236 | 5,977 | 316 | -94.7% |
| Short Term Debt | 5,316 | 503 | 520 | 900 | 335 | -62.8% |
| Long Term Debt | 11,169 | 10,962 | 47,349 | 46,317 | 39,344 | -15.1% |
Cash flow
|
|---|
| Capex | 2,605 | | 1,662 | 2,237 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 2.1% | -1.8% | 2.9% | 6.7% | 1.9% | |
| EBITDA growth | 1.9% | 4.9% | -2.8% | 4.4% | -0.0% | |
| Gross Margin | 60.1% | 58.6% | 54.0% | 53.7% | 53.0% | -0.7% |
| EBITDA Margin | 72.6% | 77.6% | 73.3% | 71.7% | 70.4% | -1.3% |
| Net Income Margin | 43.7% | 50.7% | 30.5% | 32.0% | 31.5% | -0.5% |
| CAPEX, % of revenue | 25.0% | | 15.8% | 20.0% | | -20.0% |
| ROIC | 15.5% | 17.7% | 7.3% | 4.9% | 5.0% | 0.1% |
| ROE | 32.2% | 38.7% | 10.4% | 7.3% | 7.3% | -0.0% |
| Net Debt/EBITDA | 2.2x | 1.3x | 5.8x | 5.1x | 4.9x | -0.2x |
Revenue and profitability
The company's Revenue increased slightly on 1.9%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 71.7% to 70.4% in FY2016.
Gross Margin decreased slightly on 0.72 pp from 53.7% to 53.0% in FY2016.
Net Income marign decreased slightly on 0.52 pp from 32.0% to 31.5% in FY2016.
Return on investment
The company operates at low ROIC (5.04%) and ROE (7.28%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.9x and Debt / EBITDA is 4.9x. Net Debt / EBITDA dropped on 0.2x from 5.1x to 4.9x in FY2016. Debt dropped on 16.0% while cash dropped on 94.7%.
Management team
The company's CEO Wan Chi Tin has spent 5 years at the company.
Appendix 1: Peers in Electric
Below we provide HK Electric Investments & HK Electric Investments Ltd benchmarking against other companies in Electric 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 |
|---|
| Huaneng Renewables Corp Ltd ($958) | 26.0% | 46.7% | 4.1% | 19.6% | |
| CGN Power Co Ltd ($1816) | | -1.2% | 19.3% | 12.3% | 41.4% |
| Huadian Fuxin Energy Corp Ltd ($816) | 56.0% | 16.7% | 4.9% | 10.4% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | | 28.9% | -7.9% | 7.8% | 3.5% |
| China Power New Energy Development Co Ltd ($735) | -2.3% | 20.3% | 7.2% | 2.6% | |
| |
|---|
| Median (15 companies) | 8.8% | 11.8% | 7.2% | -3.5% | 1.0% |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | | -1.8% | 2.9% | 6.7% | 1.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Power Assets Holdings Ltd ($6) | 60.0% | 63.5% | 85.6% | 99.4% | 99.5% |
| China Power New Energy Development Co Ltd ($735) | 73.3% | 70.8% | 72.0% | 74.9% | |
| CGN Power Co Ltd ($1816) | 46.5% | 46.9% | 48.6% | 47.9% | 43.7% |
| Tianjin Development Hldgs Ltd ($882) | 8.5% | 5.0% | 18.7% | 18.6% | |
| CNNC International Ltd ($2302) | 9.0% | 12.3% | 7.6% | 2.7% | -8.0% |
| |
|---|
| Median (5 companies) | 27.8% | 46.9% | 37.9% | 47.9% | 43.7% |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 60.1% | 58.6% | 54.0% | 53.7% | 53.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huaneng Renewables Corp Ltd ($958) | 94.0% | 80.5% | 91.3% | 93.1% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | 90.5% | 82.8% | 87.0% | 82.4% | |
| Power Assets Holdings Ltd ($6) | 66.2% | 68.0% | 2,533.1% | 71.2% | -84.2% |
| CGN Power Co Ltd ($1816) | 66.0% | 62.6% | 60.5% | 59.4% | 52.9% |
| China Power New Energy Development Co Ltd ($735) | 54.6% | 51.6% | 54.5% | 55.1% | |
| |
|---|
| Median (15 companies) | 28.5% | 33.9% | 34.1% | 41.9% | 29.9% |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 72.6% | 77.6% | 73.3% | 71.7% | 70.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerchina Holdings Ltd ($622) | 24.1% | 28.3% | 3.8% | 321.6% | |
| Huaneng Renewables Corp Ltd ($958) | 163.4% | 124.0% | 217.8% | 171.9% | |
| China Power New Energy Development Co Ltd ($735) | 82.2% | 80.1% | 119.5% | 99.0% | |
| Huadian Fuxin Energy Corp Ltd ($816) | 62.2% | 54.3% | 91.8% | 96.0% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | 157.1% | 81.7% | 106.3% | 93.4% | |
| |
|---|
| Median (15 companies) | 31.9% | 28.3% | 18.9% | 21.3% | 12.3% |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 25.0% | | 15.8% | 20.0% | |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CLP Holdings Ltd ($2) | 7.0% | 4.8% | 8.5% | 12.8% | 10.1% |
| China Resources Power Holdings Co Ltd ($836) | 7.7% | 9.7% | 8.0% | 11.0% | |
| China Power International Development Ltd ($2380) | 5.7% | 7.5% | 8.0% | 10.1% | |
| Huadian Power International Corp Ltd ($1071) | 5.0% | 8.4% | 10.4% | 10.0% | |
| Amber Energy Ltd ($90) | 5.4% | 4.6% | 3.6% | 8.6% | |
| |
|---|
| Median (15 companies) | 5.0% | 5.8% | 6.0% | 5.5% | 5.2% |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 15.5% | 17.7% | 7.3% | 4.9% | 5.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CGN Meiya Power Holdings Co Ltd ($1811) | 9.1x | 8.1x | 4.3x | 8.6x | 6.5x |
| China Datang Corp Renewable Power Co Ltd ($1798) | 9.1x | 8.2x | 8.7x | 8.5x | |
| CGN Power Co Ltd ($1816) | 6.5x | 6.7x | 7.8x | 8.4x | 9.3x |
| China Power New Energy Development Co Ltd ($735) | 4.8x | 5.5x | 6.4x | 7.9x | |
| Huadian Fuxin Energy Corp Ltd ($816) | 6.9x | 6.2x | 6.5x | 7.4x | |
| |
|---|
| Median (13 companies) | 6.2x | 5.8x | 4.9x | 5.2x | 6.5x |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 2.2x | 1.3x | 5.8x | 5.1x | 4.9x |
