CK Hutchison Holdings Ltd reports 18.1% CAPEX growth in 2017 while 4.4% Revenue decline
16/03/2018 • About CK Hutchison Holdings Ltd (
$1) • By InTwits
CK Hutchison Holdings Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 21.0% in 2017, 20.4% in 2016, 20.3% in 2015, 75.1% in 2014, 89.0% in 2013
- CK Hutchison Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 107.1%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: 23,670 in 2017, 20,046 in 2016, 22,494 in 2015, 7,867 in 2014, 168 in 2013
- The company has potentially unprofitable business model: ROIC is at 3.9%
- It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is -10.3x
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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 17,013 | 1,562 | 166,760 | 259,842 | 248,515 | -4.4% |
| EBITDA | 15,147 | 1,173 | 33,864 | 52,971 | 52,206 | -1.4% |
| Net Income | 35,260 | 53,869 | 118,570 | 33,008 | 35,100 | 6.3% |
Balance Sheet
|
|---|
| Cash | 33,197 | 29,437 | 121,171 | 156,270 | 160,470 | 2.7% |
| Short Term Debt | 2,438 | 18,352 | 33,016 | 71,880 | 21,712 | -69.8% |
| Long Term Debt | 39,452 | 19,522 | 275,363 | 235,543 | 313,419 | 33.1% |
Cash flow
|
|---|
| Capex | 168 | 7,867 | 22,494 | 20,046 | 23,670 | 18.1% |
Ratios
|
|---|
| Revenue growth | -11.4% | -90.8% | 10,576.1% | 55.8% | -4.4% | |
| EBITDA growth | 5.9% | -92.3% | 2,787.0% | 56.4% | -1.4% | |
| EBITDA Margin | 89.0% | 75.1% | 20.3% | 20.4% | 21.0% | 0.6% |
| Net Income Margin | 207.3% | 3,448.7% | 71.1% | 12.7% | 14.1% | 1.4% |
| CAPEX, % of revenue | 1.0% | 503.6% | 13.5% | 7.7% | 9.5% | 1.8% |
| ROIC | 3.7% | 0.2% | 3.7% | 4.3% | 3.9% | -0.4% |
| ROE | 10.2% | 14.3% | 30.1% | 8.4% | 8.5% | 0.1% |
| Net Debt/EBITDA | 0.6x | 7.2x | 5.5x | 2.9x | 3.3x | 0.5x |
Revenue and profitability
CK Hutchison Holdings Ltd's Revenue decreased on 4.4%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Net Income marign increased slightly on 1.4 pp from 12.7% to 14.1% in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 the company had CAPEX/Revenue of 9.5%. CK Hutchison Holdings Ltd's CAPEX/Revenue dropped on 494 pp from 504% in 2014 to 9.5% in 2017. Average CAPEX/Revenue for the last three years was 10.2%.
Return on investment
The company operates at low ROIC (3.90%) and ROE (8.52%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 6.4x. Net Debt / EBITDA jumped on 0.5x from 2.9x to 3.3x in 2017. Debt increased on 9.0% while cash increased on 2.7%.
Valuation
CK Hutchison Holdings Ltd's trades at EV/EBITDA 10.3x and P/E 10.4x.
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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Heritage International Holdings Ltd ($412) | | -38.9% | -68.4% | 2,454.4% | |
| China Properties Investment Holdings Ltd ($736) | 30.0% | -51.2% | 130.2% | 171.0% | |
| Lee Hing Development Ltd ($68) | -66.2% | 171.5% | -63.0% | 78.0% | |
| COL Capital Ltd ($383) | | | -46.7% | 59.6% | |
| China Investment & Finance Group Ltd ($1226) | -66.1% | | | 32.7% | |
| |
|---|
| Median (9 companies) | 5.5% | 25.4% | 72.3% | 32.7% | |
|---|
| CK Hutchison Holdings Ltd ($1) | | -90.8% | 10,576.1% | 55.8% | -4.4% |
Top companies by Gross margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Heritage International Holdings Ltd ($412) | | | | 55.4% | |
| China Properties Investment Holdings Ltd ($736) | 40.8% | 46.2% | 87.2% | 44.8% | |
| Build King Holdings Ltd ($240) | 6.0% | 6.8% | 6.0% | 7.6% | |
| |
|---|
| Median (3 companies) | 19.2% | 22.4% | 16.3% | 44.8% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Lee Hing Development Ltd ($68) | -79.6% | 66.1% | -26.8% | 863.9% | |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | 101.3% | 85.9% | 85.8% | 90.3% | |
| China Investment & Finance Group Ltd ($1226) | -138.9% | | 19.3% | 65.8% | |
| OP Financial Investments Ltd ($1140) | -2.6% | 8.1% | | 21.2% | |
| Build King Holdings Ltd ($240) | 1.4% | 2.3% | 2.7% | 4.3% | |
| |
|---|
| Median (9 companies) | -7.8% | 1.9% | 2.9% | 4.3% | |
|---|
| CK Hutchison Holdings Ltd ($1) | 89.0% | 75.1% | 20.3% | 20.4% | 21.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| China Properties Investment Holdings Ltd ($736) | 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% | |
| China Investment Development Ltd ($204) | 0.1% | | | 5.7% | |
| COL Capital Ltd ($383) | | 1.2% | 3.5% | 5.5% | |
| Heritage International Holdings Ltd ($412) | 10.9% | 7.4% | 37.9% | 3.5% | |
| |
|---|
| Median (8 companies) | 0.6% | 0.2% | 0.9% | 4.5% | |
|---|
| CK Hutchison Holdings Ltd ($1) | 1.0% | 503.6% | 13.5% | 7.7% | 9.5% |
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Lee Hing Development Ltd ($68) | -1.0% | 1.9% | -0.4% | 26.9% | |
| Build King Holdings Ltd ($240) | 3.5% | 13.4% | 18.3% | 23.2% | |
| China Development Bank International Investment Ltd ($1062) | 1.3% | 4.2% | 9.7% | 6.4% | |
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | 3.6% | 3.5% | 3.0% | 3.3% | |
| China Investment & Finance Group Ltd ($1226) | -2.7% | -14.7% | 0.6% | 3.1% | |
| |
|---|
| Median (22 companies) | -2.4% | -4.8% | -2.2% | -3.5% | |
|---|
| CK Hutchison Holdings Ltd ($1) | 3.7% | 0.2% | 3.7% | 4.3% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Langham Hospitality Investments and Langham Hospitality Investments Ltd ($1270) | 12.5x | 9.5x | 11.2x | 10.2x | |
| Lee Hing Development Ltd ($68) | | 2.7x | | 0.6x | |
| Build King Holdings Ltd ($240) | -6.4x | -4.2x | -4.8x | -2.2x | |
| China Investment & Finance Group Ltd ($1226) | | | -14.1x | -9.3x | |
| OP Financial Investments Ltd ($1140) | | -143.3x | | -77.2x | |
| |
|---|
| Median (5 companies) | -0.2x | -0.6x | -0.9x | -2.2x | |
|---|
| CK Hutchison Holdings Ltd ($1) | 0.6x | 7.2x | 5.5x | 2.9x | 3.3x |
