International Entertainment Corp EBITDA dropped on 846% and EBITDA Margin dropped on 55.9 pp from 4.2% to -51.7%
23/09/2020 • About International Entertainment Corp (
$1009) • By InTwits
International Entertainment Corp reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- International Entertainment Corp is a company in decline: FY2020 revenue growth was -39.6%, 5 years revenue CAGR was -9.2%
- The company operates at negative EBITDA Margin: -51.7%
- International Entertainment Corp spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.4%. Average EBITDA Margin for the same period was 1.1%
- International Entertainment Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.8%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 35 HKDm in FY2020, 114 HKDm in FY2019, 10 HKDm in FY2018, 20 HKDm in FY2017, 11 HKDm in FY2016
- In the last 5 years the company invested considerably less than D&A: 189 HKDm vs. 252 HKDm. In FY2020 this situation was still the same: CAPEX was 35 while D&A was 111
- The company has unprofitable business model: ROIC is -8.8%
- It operates with high leverage: Net Debt/EBITDA is 16.8x while industry average is -2.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
International Entertainment Corp's Revenue dropped on 39.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 12.9 pp from -0.46% to 12.4% in FY2020.
Gross Margin decreased on 6.4 pp from 71.8% to 65.4% in FY2020. During the last 5 years Gross Margin topped in FY2018 at 76.0% and was declining since that time. SG&A as a % of Revenue increased on 3.7 pp from 52.3% to 55.9% in FY2020. SG&A as a % of Revenue grew at 3.2 pp per annum in the last 5 years.
Net Income margin dropped on 103 pp from -20.6% to -123% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 International Entertainment Corp had CAPEX/Revenue of 15.2%. CAPEX/Revenue increased on 8.4 pp from 6.8% in FY2017 to 15.2% in FY2020. It's average level of CAPEX/Revenue for the last three years was 16.3%.
Accounts receivable as a % of Revenue decreased on 5.9 pp from 9.0% to 3.1% in FY2020. Inventories as a % of Revenue showed almost no change at 0.81% in FY2020. Accounts payable as a % of Revenue dropped on 14.8 pp from 19.3% to 4.5% in FY2020.
Return on investment
The company operates at negative ROIC (-8.8%) and ROE (-14.4%). ROIC decreased on 6.3 pp from -2.5% to -8.8% in FY2020. ROE dropped on 10.7 pp from -3.7% to -14.4% in FY2020. ROIC stuck to a declining trend at -1.9 pp per annum in the last 5 years. ROE followed a declining trend at -3.5 pp per annum in FY2016-FY2020.
Leverage (Debt)
Debt level is 16.8x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 20.6% while cash surged on 116%.
International Entertainment Corp has no short term refinancing risk: cash is higher than short term debt (2,492.9%).
Average interest expence charged on company's debt was 4.7% in FY2020.
Management team
The company has 285 employees. The number of employees dropped on 54.7%. Average revenue per employee in FY2020 was 796,368 HKD and it jumped on 33.2%.
Financial and operational results
FY ended 31/03/2020
International Entertainment Corp ($1009) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 330.9 | 290.7 | 296.4 | 376.0 | 227.0 | -39.6% |
| Gross Profit | 154.4 | 216.7 | 225.2 | 270.0 | 148.5 | -45.0% |
| SG&A | 138.8 | 139.9 | 153.6 | 196.5 | 126.9 | -35.4% |
| EBITDA | 150.7 | -8.2 | -24.2 | 15.7 | -117.3 | -846.2% |
| EBIT | | -38.2 | -52.2 | -67.2 | -228.6 | |
| Interest expence | | 8.2 | 16.7 | 23.2 | 23.6 | 1.5% |
| Tax | | 32.6 | 3.3 | 14.2 | -6.5 | -145.4% |
| Net Income | 31.7 | -31.5 | -67.3 | -77.5 | -279.6 | |
| Stock Based Compensation | | | 5.4 | | | |
Balance Sheet
|
|---|
| Cash | 1,179.5 | 303.7 | 696.6 | 288.8 | 623.2 | 115.8% |
| Accounts Receivable | | 21.9 | 22.4 | 34.0 | 7.1 | -79.3% |
| Inventory | | 2.2 | 1.9 | 2.7 | 1.8 | -32.7% |
| Accounts Payable | | 6.5 | 5.3 | 20.4 | 3.5 | -82.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 25.0 | |
| Long Term Debt | 0.0 | 336.4 | 339.1 | 416.3 | 476.9 | 14.6% |
Cash flow
|
|---|
| Capex | 10.9 | 19.7 | 10.0 | 113.5 | 34.5 | -69.6% |
Ratios
|
|---|
| Revenue growth | -9.8% | -12.2% | 1.9% | 26.9% | -39.6% | |
| EBITDA growth | -33.8% | -105.5% | 194.3% | -164.9% | -846.2% | |
|
|---|
| Gross Margin | 46.6% | 74.5% | 76.0% | 71.8% | 65.4% | -6.4% |
| EBITDA Margin | 45.5% | -2.8% | -8.2% | 4.2% | -51.7% | -55.9% |
| EBIT Margin | | -13.1% | -17.6% | -17.9% | -100.7% | -82.8% |
| SG&A, % of revenue | 41.9% | 48.1% | 51.8% | 52.3% | 55.9% | 3.7% |
| SBC, % of revenue | | | 1.8% | | |
| Net Income Margin | 9.6% | -10.8% | -22.7% | -20.6% | -123.2% | -102.6% |
| CAPEX, % of revenue | 3.3% | 6.8% | 3.4% | 30.2% | 15.2% | -15.0% |
|
|---|
| ROIC | 0.5% | -1.8% | -2.1% | -2.5% | -8.8% | -6.3% |
| ROE | 2.0% | -2.0% | -3.4% | -3.7% | -14.4% | -10.7% |
| Net Debt/EBITDA | -7.8x | | | 8.1x | |
| Interest expence / Average debt | | 4.9% | 4.9% | 6.2% | 4.7% | -1.5% |
People
|
|---|
| Employees | | 298 | 311 | 629 | 285 | -54.7% |
| Revenue/Employee, th. HKD | | 976 | 953 | 598 | 796 | 33.2% |
Peers in Software
Below you can find International Entertainment Corp benchmarking vs. other companies in Software 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | -17.8% | -93.3% | -2.9% | 5.3% | - |
| |
|---|
| Median (1 company) | 21.3% | -43.7% | 5.7% | 5.3% | - |
|---|
| International Entertainment Corp ($1009) | - | -12.2% | 1.9% | 26.9% | -39.6% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | 34.3% | 51.8% | 55.6% | 58.5% | - |
| |
|---|
| Median (1 company) | 36.5% | 58.2% | 60.4% | 58.5% | - |
|---|
| International Entertainment Corp ($1009) | 46.6% | 74.5% | 76.0% | 71.8% | 65.4% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | 53.0% | -1,235.9% | -1,196.9% | 5.7% | - |
| |
|---|
| Median (1 company) | 2.8% | -597.7% | -577.2% | 5.7% | - |
|---|
| International Entertainment Corp ($1009) | 45.5% | -2.8% | -8.2% | 4.2% | -51.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | 0.5% | 5.1% | 4.6% | 4.6% | - |
| |
|---|
| Median (1 company) | 0.5% | 6.7% | 7.5% | 4.6% | - |
|---|
| International Entertainment Corp ($1009) | 3.3% | 6.8% | 3.4% | 30.2% | 15.2% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | 17.4% | -68.6% | -187.8% | 2.2% | - |
| |
|---|
| Median (1 company) | 4.8% | -25.6% | -84.2% | 2.2% | - |
|---|
| International Entertainment Corp ($1009) | 0.5% | -1.8% | -2.1% | -2.5% | -8.8% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Kantone Holdings Ltd ($1059) | -0.1x | - | - | -10.1x | - |
| |
|---|
| Median (1 company) | -0.1x | 2.2x | 1.6x | -10.1x | - |
|---|
| International Entertainment Corp ($1009) | -7.8x | - | - | 8.1x | - |
