China Vanguard Group Ltd reports 281% revenue growth in FY2020 and 27.5 pp EBITDA Margin decline from -57.2% to -84.7%
29/09/2020 • About China Vanguard Group Ltd (
$8156) • By InTwits
China Vanguard Group Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -84.7%
- China Vanguard Group Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 5.6%. Average EBITDA Margin for the same period was -135.2%
- China Vanguard Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.0%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 23 HKDm in FY2020, 0 HKDm in FY2019, 0 HKDm in FY2018, 5 HKDm in FY2017, 9 HKDm in FY2016
- The company has unprofitable business model: ROIC is -67.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 281%. Revenue decline was slowing down on average by 80.2 pp per annum in FY2016-FY2020. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 27.5 pp from -57.2% to -84.7% in FY2020.
Gross Margin dropped on 27.6 pp from 54.5% to 26.9% in FY2020. SG&A as a % of Revenue dropped on 91.9 pp from 133% to 41.0% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -78.5 pp per annum in FY2016-FY2020.
Net Income margin surged on 10.5 pp from -108% to -97.1% in FY2020. Net Income margin stuck to a growing trend at 156 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 14.1% in FY2020. The company's CAPEX/Revenue decreased on 3.5 pp from 17.6% in FY2017 to 14.1% in FY2020.
Accounts receivable as a % of Revenue dropped on 32.4 pp from 45.9% to 13.5% in FY2020. Inventories as a % of Revenue increased on 4.1 pp from 0.37% to 4.5% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -56.8x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2020. Debt jumped on 15.9% while cash increased slightly on 1.5%.
China Vanguard Group Ltd has short term refinancing risk: cash is only 7.0% of short term debt.
Average interest expence charged on company's debt was 17.1% in FY2020.
Management team
Insider ownership is 0.31%. Insider ownership didn't change in 2020.
The company has 213 employees. The number of employees surged on 261%. Average revenue per employee in FY2020 was 779,033 HKD and it increased on 5.7%.
Financial and operational results
FY ended 30/06/2020
China Vanguard Group Ltd ($8156) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 34.7 | 26.4 | 25.3 | 43.5 | 165.9 | 281.4% |
| Gross Profit | 31.5 | 13.4 | 15.7 | 23.7 | 44.7 | 88.4% |
| SG&A | 113.2 | 91.2 | 81.7 | 57.8 | 68.0 | 17.6% |
| EBITDA | -25.2 | -159.3 | -49.9 | -24.9 | -140.5 | |
| EBIT | | -168.7 | -62.6 | -36.0 | -148.3 | |
| Interest expence | | 13.3 | 12.6 | 11.9 | 17.8 | 48.7% |
| Tax | | -2.8 | -1.8 | -2.3 | -1.4 | |
| Net Income | -206.8 | -175.0 | -61.0 | -46.8 | -161.1 | |
| Stock Based Compensation | | 8.4 | 0.0 | | 8.3 | |
Balance Sheet
|
|---|
| Cash | 33.0 | 14.3 | 4.7 | 6.6 | 6.7 | 1.5% |
| Accounts Receivable | | 15.4 | 7.9 | 20.0 | 22.4 | 12.0% |
| Inventory | | 1.7 | 0.5 | 0.2 | 7.5 | 4,561.9% |
| Short Term Debt | 0.0 | 89.5 | 89.6 | 89.5 | 95.9 | 7.2% |
| Long Term Debt | 0.0 | 0.3 | 0.2 | 0.0 | 7.8 | |
Cash flow
|
|---|
| Capex | 9.2 | 4.7 | 0.5 | 0.0 | 23.4 | |
Ratios
|
|---|
| Revenue growth | -72.0% | -23.9% | -3.8% | 71.6% | 281.4% | |
| EBITDA growth | -188.9% | 531.0% | -68.7% | -50.1% | 464.4% | |
|
|---|
| Gross Margin | 91.0% | 51.0% | 62.0% | 54.5% | 26.9% | -27.6% |
| EBITDA Margin | -72.8% | -604.2% | -196.7% | -57.2% | -84.7% | -27.5% |
| EBIT Margin | | -640.1% | -247.1% | -82.8% | -89.3% | -6.6% |
| SG&A, % of revenue | 326.8% | 346.1% | 322.2% | 132.9% | 41.0% | -91.9% |
| SBC, % of revenue | | 31.9% | 0.1% | | 5.0% |
| Net Income Margin | -596.6% | -664.0% | -240.8% | -107.6% | -97.1% | 10.5% |
| CAPEX, % of revenue | 26.5% | 17.6% | 1.8% | 0.0% | 14.1% | |
|
|---|
| ROIC | -10.2% | -90.8% | -46.0% | -19.5% | -67.8% | -48.3% |
| ROE | -85.8% | | | | | |
| Interest expence / Average debt | | 29.6% | 14.0% | 13.3% | 17.1% | 3.8% |
People
|
|---|
| Insider ownership | | 0.3% | 0.3% | 0.3% | 0.3% | 0.0% |
| Employees | | 151 | 118 | 59 | 213 | 261.0% |
| Revenue/Employee, th. HKD | | 175 | 215 | 737 | 779 | 5.7% |
Peers in Entertainment
Below we provide China Vanguard Group Ltd benchmarking against other companies in Entertainment 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 |
|---|
| Universe International Holdings Ltd ($1046) | - | 2,520.4% | -55.7% | -28.8% | 267.7% |
| Pegasus Entertainment Holdings Ltd ($1326) | - | -49.5% | 21.7% | 143.3% | -30.3% |
| |
|---|
| Median (2 companies) | 6.9% | 0.6% | -3.0% | 57.2% | 118.7% |
|---|
| China Vanguard Group Ltd ($8156) | - | -23.9% | -3.8% | 71.6% | 281.4% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Universe International Holdings Ltd ($1046) | -635.1% | 55.0% | 52.9% | 24.9% | 45.7% |
| Pegasus Entertainment Holdings Ltd ($1326) | 41.9% | 51.5% | 50.4% | 39.3% | 37.3% |
| |
|---|
| Median (2 companies) | 30.9% | 53.3% | 51.6% | 32.1% | 41.5% |
|---|
| China Vanguard Group Ltd ($8156) | 91.0% | 51.0% | 62.0% | 54.5% | 26.9% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Pegasus Entertainment Holdings Ltd ($1326) | 3.7% | -17.4% | -59.6% | -0.5% | 12.4% |
| Universe International Holdings Ltd ($1046) | -1,418.4% | -42.1% | -51.3% | -187.3% | -11.7% |
| |
|---|
| Median (2 companies) | -10.2% | -17.4% | -51.3% | -93.9% | 0.4% |
|---|
| China Vanguard Group Ltd ($8156) | -72.8% | -604.2% | -196.7% | -57.2% | -84.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Universe International Holdings Ltd ($1046) | 21.9% | 0.7% | 6.7% | 6.2% | - |
| Pegasus Entertainment Holdings Ltd ($1326) | 0.3% | 13.9% | 37.1% | 2.5% | 2.5% |
| |
|---|
| Median (2 companies) | 2.5% | 6.3% | 6.7% | 4.3% | 2.5% |
|---|
| China Vanguard Group Ltd ($8156) | 26.5% | 17.6% | 1.8% | 0.0% | 14.1% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Pegasus Entertainment Holdings Ltd ($1326) | -0.7% | -14.7% | -84.6% | -5.0% | -7.1% |
| Universe International Holdings Ltd ($1046) | -17.0% | -11.7% | -5.0% | -17.9% | -7.7% |
| |
|---|
| Median (2 companies) | -4.3% | -11.7% | -5.0% | -11.4% | -7.4% |
|---|
| China Vanguard Group Ltd ($8156) | -10.2% | -90.8% | -46.0% | -19.5% | -67.8% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Pegasus Entertainment Holdings Ltd ($1326) | -4.4x | - | - | - | 16.8x |
| |
|---|
| Median (1 company) | -0.4x | -0.6x | -1.1x | - | 16.8x |
|---|
