Mega Expo Holdings Ltd reports 29.0% Net Income growth in 2020 while 4.3% Revenue decline
25/09/2020 • About Mega Expo Holdings Ltd (
$1360) • By InTwits
Mega Expo Holdings Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 48.8% in FY2020, 39.5% in FY2019, 47.6% in FY2018, -6.0% in FY2017, -11.3% in FY2016
- Mega Expo Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 1 m in FY2020, 2 m in FY2019, 0 m in FY2018, 6 m in FY2017, 8 m in FY2016
- In the last 5 years the company invested considerably less than D&A: 17 m vs. 58 m. In FY2020 this situation was still the same: CAPEX was 1 while D&A was 21
- The company has highly profitable business model: ROIC is 25.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.7x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Mega Expo Holdings Ltd's Revenue decreased on 4.3%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 9.3 pp from 39.5% to 48.8% in FY2020. EBITDA Margin followed a growing trend at 16.6 pp per annum in the last 5 years.
Gross Margin dropped on 14.8 pp from 66.5% to 51.7% in FY2020. SG&A as a % of Revenue decreased on 7.0 pp from 22.7% to 15.7% in FY2020. Stock Based Compensation (SBC) as a % of Revenue decreased on 7.3 pp from 10.0% to 2.7% in FY2020.
Net Income margin increased on 6.4 pp from 18.4% to 24.9% in FY2020. The efficient tax rate was 33.2% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.16% in FY2020. The company showed decline in CAPEX/Revenue of 5.6 pp from 5.8% in FY2017 to 0.16% in FY2020. Average CAPEX/Revenue for the last three years was 0.18%.
Accounts receivable as a % of Revenue increased on 2.7 pp from 29.7% to 32.5% in FY2020. Inventories as a % of Revenue increased slightly on 0.67 pp from 0.37% to 1.0% in FY2020. Accounts payable as a % of Revenue increased on 8.3 pp from 13.7% to 22.0% in FY2020.
Return on investment
The company operates at high and attractive ROIC (25.6%) and ROE (22.1%). ROIC decreased on 7.3 pp from 32.9% to 25.6% in FY2020. ROE showed almost no change in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 40.6% and was declining since that time. During the last 5 years ROE topped in FY2018 at 33.6% and was declining since that time.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 0.6x to 0.7x in FY2020. Debt decreased on 8.1% while cash dropped on 35.5%.
Mega Expo Holdings Ltd has short term refinancing risk: cash is only 43.9% of short term debt.
Management team
At the end of financial year the company had 154 employees. The number of employees dropped on 16.3%. Average revenue per employee in FY2020 was 3,578,649 and it jumped on 14.3%.
Financial and operational results
FY ended 30/06/2020
Mega Expo Holdings Ltd ($1360) key annual financial indicators| mln. | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 160.3 | 102.9 | 254.1 | 576.1 | 551.1 | -4.3% |
| Gross Profit | | 54.3 | 116.3 | 383.3 | 285.2 | -25.6% |
| SG&A | 19.1 | 58.5 | 52.8 | 130.6 | 86.7 | -33.7% |
| EBITDA | -18.2 | -6.2 | 121.0 | 227.7 | 269.0 | 18.2% |
| EBIT | | -21.6 | 110.3 | 216.0 | 248.4 | 15.0% |
| Tax | | -5.7 | -22.4 | 88.5 | 68.1 | -23.1% |
| Net Income | -67.3 | -36.4 | 90.7 | 106.3 | 137.1 | 29.0% |
| Stock Based Compensation | | | 6.2 | 57.4 | 14.9 | -74.1% |
Balance Sheet
|
|---|
| Cash | 28.4 | 54.6 | 171.2 | 213.0 | 137.4 | -35.5% |
| Accounts Receivable | | 3.9 | 109.8 | 171.3 | 178.9 | 4.4% |
| Inventory | | | 3.4 | 2.2 | 5.8 | 166.6% |
| Accounts Payable | | | 9.6 | 26.4 | 58.6 | 121.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 313.4 | |
| Long Term Debt | 0.0 | 0.0 | 2.6 | 347.9 | 6.3 | -98.2% |
Cash flow
|
|---|
| Capex | 8.2 | 5.9 | 0.1 | 2.0 | 0.9 | -55.6% |
| Acquisitions | | | | 29.9 | | |
Ratios
|
|---|
| Revenue growth | -14.9% | -35.8% | 146.8% | 126.8% | -4.3% | |
| EBITDA growth | -218.6% | -65.8% | -2,047.5% | 88.2% | 18.2% | |
|
|---|
| Gross Margin | | 52.7% | 45.8% | 66.5% | 51.7% | -14.8% |
| EBITDA Margin | -11.3% | -6.0% | 47.6% | 39.5% | 48.8% | 9.3% |
| EBIT Margin | | -21.0% | 43.4% | 37.5% | 45.1% | 7.6% |
| SG&A, % of revenue | 11.9% | 56.8% | 20.8% | 22.7% | 15.7% | -7.0% |
| SBC, % of revenue | | | 2.4% | 10.0% | 2.7% | -7.3% |
| Net Income Margin | -42.0% | -35.4% | 35.7% | 18.4% | 24.9% | 6.4% |
| CAPEX, % of revenue | 5.1% | 5.8% | 0.0% | 0.3% | 0.2% | -0.2% |
|
|---|
| ROIC | -19.1% | -18.3% | 40.6% | 32.9% | 25.6% | -7.3% |
| ROE | -54.3% | -30.8% | 33.6% | 22.6% | 22.1% | -0.5% |
| Net Debt/EBITDA | | | -1.4x | 0.6x | 0.7x | 0.1x |
People
|
|---|
| Employees | | 23 | 75 | 184 | 154 | -16.3% |
| Revenue/Employee, th. | | 4,476 | 3,387 | 3,131 | 3,579 | 14.3% |
Peers in Commercial Services
Below we provide Mega Expo Holdings Ltd benchmarking against other companies in Commercial Services 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Yat Sing Holdings Ltd ($3708) | -3.0% | 5.2% | -13.6% | -6.3% | - |
| |
|---|
| Median (1 company) | 6.5% | 5.2% | -13.6% | -6.3% | - |
|---|
| Mega Expo Holdings Ltd ($1360) | - | -35.8% | 146.8% | 126.8% | -4.3% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Yat Sing Holdings Ltd ($3708) | 9.2% | 8.8% | 9.4% | 7.5% | - |
| |
|---|
| Median (1 company) | 33.2% | 8.8% | 9.4% | 7.5% | - |
|---|
| Mega Expo Holdings Ltd ($1360) | - | 52.7% | 45.8% | 66.5% | 51.7% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Yat Sing Holdings Ltd ($3708) | 4.0% | 1.6% | 1.8% | -1.7% | - |
| |
|---|
| Median (1 company) | 5.8% | 1.6% | 1.8% | -1.7% | - |
|---|
| Mega Expo Holdings Ltd ($1360) | -11.3% | -6.0% | 47.6% | 39.5% | 48.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Yat Sing Holdings Ltd ($3708) | 0.3% | 0.2% | 0.1% | 0.0% | - |
| |
|---|
| Median (1 company) | 2.3% | 0.2% | 0.1% | 0.0% | - |
|---|
| Mega Expo Holdings Ltd ($1360) | 5.1% | 5.8% | 0.0% | 0.3% | 0.2% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Yat Sing Holdings Ltd ($3708) | 10.5% | 3.9% | 2.6% | -4.3% | - |
| |
|---|
| Median (1 company) | 3.8% | 3.9% | 2.6% | -4.3% | - |
|---|
| Mega Expo Holdings Ltd ($1360) | -19.1% | -18.3% | 40.6% | 32.9% | 25.6% |
