CK Hutchison Holdings Ltd reports 72.2% Net Income decline and almost no change in EBITDA Margin of 20.4%
22/03/2017 • About CK Hutchison Holdings Ltd (
$1) • By InTwits
CK Hutchison Holdings Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 20.4% in 2016, 20.3% in 2015, 75.1% in 2014, 89.0% in 2013, 74.5% in 2012
- CK Hutchison Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 105.3%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: 20,046 in 2016, 22,494 in 2015, 7,867 in 2014, 168 in 2013, 126 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.3%
- It operates with high leverage: Net Debt/EBITDA is 2.9x while industry average is -40.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
CK Hutchison Holdings Ltd ($1) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 19,199 | 17,013 | 1,562 | 166,760 | 259,842 | 55.8% |
| EBITDA | 14,303 | 15,147 | 1,173 | 33,864 | 52,971 | 56.4% |
| Net Income | 32,036 | 35,260 | 53,869 | 118,570 | 33,008 | -72.2% |
Balance Sheet
|
|---|
| Cash | 21,167 | 33,197 | 29,437 | 121,171 | 156,270 | 29.0% |
| Short Term Debt | 5,098 | 2,438 | 18,352 | 33,016 | 71,880 | 117.7% |
| Long Term Debt | 43,001 | 39,452 | 19,522 | 275,363 | 235,543 | -14.5% |
Cash flow
|
|---|
| Capex | 126 | 168 | 7,867 | 22,494 | 20,046 | -10.9% |
Ratios
|
|---|
| Revenue growth | -41.8% | -11.4% | -90.8% | 10,576.1% | 55.8% | |
| EBITDA growth | 0.1% | 5.9% | -92.3% | 2,787.0% | 56.4% | |
| EBITDA Margin | 74.5% | 89.0% | 75.1% | 20.3% | 20.4% | 0.1% |
| Net Income Margin | 166.9% | 207.3% | 3,448.7% | 71.1% | 12.7% | -58.4% |
| CAPEX, % of revenue | 0.7% | 1.0% | 503.6% | 13.5% | 7.7% | -5.8% |
| ROIC | 3.7% | 3.7% | 0.2% | 3.7% | 4.3% | 0.6% |
| ROE | 10.0% | 10.2% | 14.3% | 30.1% | 8.4% | -21.7% |
| Net Debt/EBITDA | 1.9x | 0.6x | 7.2x | 5.5x | 2.9x | -2.7x |
Revenue and profitability
The company's Revenue jumped on 55.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.77 pp from 9.8% to 10.5% in 2016.
Net Income marign dropped on 58.4 pp from 71.1% to 12.7% in 2016.
Capital expenditures (CAPEX) and working capital investments
CK Hutchison Holdings Ltd's CAPEX/Revenue was 7.7% in 2016. CAPEX/Revenue increased on 6.7 pp from 0.99% in 2013 to 7.7% in 2016. It's average CAPEX/Revenue for the last three years was 175%.
Return on investment
The company operates at low ROIC (4.26%) and ROE (8.38%). ROIC increased slightly on 0.60 pp from 3.7% to 4.3% in 2016. ROE dropped on 21.7 pp from 30.1% to 8.4% in 2016.
Leverage (Debt)
Debt level is 2.9x Net Debt / EBITDA and 5.8x Debt / EBITDA. Net Debt / EBITDA dropped on 2.7x from 5.5x to 2.9x in 2016. Debt showed almost no change in 2016 while cash surged on 29.0%.
Valuation
The company's trades at EV/EBITDA 9.9x and P/E 11.3x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 15.9x with the industry average at 22.8x.
Appendix 1: Peers in Investment Companies
Below we provide CK Hutchison Holdings Ltd benchmarking against other companies in Investment Companies 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 |
|---|
| UBA Investments Ltd ($768) | | | -32.2% | 4,559.4% | |
| Capital VC Ltd ($2324) | | | 489.2% | 861.9% | |
| Prosperity Investment Holdings Ltd ($310) | | 20.9% | -48.8% | 559.5% | |
| China Innovation Investment Ltd ($1217) | | | | 517.9% | |
| China Assets Holdings Ltd ($170) | | | 9.5% | 182.2% | |
| |
|---|
| Median (22 companies) | -14.8% | 5.5% | 25.4% | 72.3% | 46.1% |
|---|
| CK Hutchison Holdings Ltd ($1) | | -11.4% | -90.8% | 10,576.1% | 55.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Properties Investment Holdings Ltd ($736) | 47.5% | 40.8% | 46.2% | 87.2% | 44.8% |
| City e-Solutions Ltd ($557) | 81.1% | 81.5% | 81.6% | 79.1% | |
| Eternity Investment Ltd ($764) | | | 86.6% | 48.2% | |
| AVIC Joy Holdings HK Ltd ($260) | 19.5% | 20.9% | 14.0% | 16.3% | |
| Infinity Financial Group Holdings Ltd ($1152) | 19.0% | 17.5% | 22.4% | 15.8% | |
| |
|---|
| Median (7 companies) | 30.2% | 19.2% | 22.4% | 16.3% | 44.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital VC Ltd ($2324) | | 36.7% | 93.1% | 99.3% | |
| Harmony Asset Ltd ($428) | 39.8% | | | 95.7% | |
| Unity Investments Holdings Ltd ($913) | | 89.0% | 90.8% | 95.7% | |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | | 101.3% | 85.9% | 85.8% | 90.3% |
| China Development Bank International Investment Ltd ($1062) | -74.4% | 26.1% | 69.2% | 85.6% | |
| |
|---|
| Median (25 companies) | 7.1% | -7.8% | 1.9% | 2.9% | 4.3% |
|---|
| CK Hutchison Holdings Ltd ($1) | 74.5% | 89.0% | 75.1% | 20.3% | 20.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Properties Investment Holdings Ltd ($736) | 55.3% | 3.0% | 20.8% | 58.1% | 23.8% |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | | 13.7% | 17.1% | 39.8% | 9.3% |
| Heritage International Holdings Ltd ($412) | | 10.9% | 7.4% | 37.9% | 3.5% |
| Opes Asia Development Ltd ($810) | | 11.3% | 76.1% | 25.0% | |
| Infinity Financial Group Holdings Ltd ($1152) | 0.5% | 0.6% | 7.7% | 8.0% | |
| |
|---|
| Median (25 companies) | 1.1% | 0.6% | 0.2% | 0.9% | 4.5% |
|---|
| CK Hutchison Holdings Ltd ($1) | 0.7% | 1.0% | 503.6% | 13.5% | 7.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital VC Ltd ($2324) | | | 21.8% | 100.7% | -17.2% |
| Harmony Asset Ltd ($428) | 3.2% | -13.7% | -15.4% | 88.0% | |
| Build King Holdings Ltd ($240) | -2.5% | 3.5% | 13.4% | 18.3% | 23.2% |
| Unity Investments Holdings Ltd ($913) | -36.2% | 26.4% | 47.4% | 17.5% | |
| UBA Investments Ltd ($768) | -22.2% | -1.9% | -8.6% | 13.2% | -6.1% |
| |
|---|
| Median (39 companies) | -3.1% | -2.4% | -4.8% | -2.2% | -3.5% |
|---|
| CK Hutchison Holdings Ltd ($1) | 3.7% | 3.7% | 0.2% | 3.7% | 4.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | | 12.5x | 9.5x | 11.2x | 10.2x |
| COL Capital Ltd ($383) | | | 2.4x | 3.8x | |
| China Financial International Investments Ltd ($721) | | | | 2.4x | |
| Harmony Asset Ltd ($428) | -3.2x | | | -0.1x | |
| Capital VC Ltd ($2324) | | 2.2x | -1.2x | -0.2x | |
| |
|---|
| Median (15 companies) | -1.7x | -0.2x | -0.6x | -0.9x | -2.2x |
|---|
| CK Hutchison Holdings Ltd ($1) | 1.9x | 0.6x | 7.2x | 5.5x | 2.9x |
