Solartech International Hldgs Ltd revenue decreased on 9.1% while EBITDA Margin surged on 36.8 pp from -73.4% to -36.6%
29/09/2020 • About Solartech International Hldgs Ltd (
$1166) • By InTwits
Solartech International Hldgs Ltd reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Solartech International Hldgs Ltd is a company in decline: FY2020 revenue growth was -9.1%, 5 years revenue CAGR was -18.1%
- The company operates at negative EBITDA Margin: -36.6%
- Solartech International Hldgs Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 1.3% while average EBITDA Margin was -23.9% for the sames years
- Solartech International Hldgs Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's in pair with industry average of 4.4%
- CAPEX is quite volatile: 10 HKDm in FY2020, 37 HKDm in FY2019, 4 HKDm in FY2018, 6 HKDm in FY2017, 28 HKDm in FY2016
- The company has unprofitable business model: ROIC is -9.3%
- It operates with high leverage: Net Debt/EBITDA is 16.2x while industry average is 0.0x
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 decreased on 9.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 36.8 pp from -73.4% to -36.6% in FY2020.
Gross Margin increased slightly on 1.1 pp from 10.0% to 11.1% in FY2020. Gross Margin grew at 1.1 pp per annum in the last 5 years. SG&A as a % of Revenue dropped on 10.5 pp from 45.7% to 35.2% in FY2020. Stock Based Compensation (SBC) as a % of Revenue decreased on 2.1 pp from 2.7% to 0.53% in FY2020.
Net Income margin jumped on 45.9 pp from -95.2% to -49.3% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.3% in FY2020. Solartech International Hldgs Ltd showed CAPEX/Revenue growth of 2.1 pp from 1.3% in FY2017 to 3.3% in FY2020. It's average level of CAPEX/Revenue for the last three years was 5.3%.
Inventories as a % of Revenue increased slightly on 0.95 pp from 7.2% to 8.1% in FY2020.
Return on investment
The company operates at negative ROIC (-9.3%) and ROE (-13.3%). ROIC increased on 7.9 pp from -17.2% to -9.3% in FY2020. ROE jumped on 10.6 pp from -23.9% to -13.3% in FY2020.
Leverage (Debt)
Debt level is 16.2x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt increased on 8.0% while cash increased on 6.0%.
Solartech International Hldgs Ltd has short term refinancing risk: cash is only 54.7% of short term debt.
Average interest expence charged on company's debt was 8.0% in FY2020.
Management team
Insider ownership is 1.0%. Insider ownership didn't change in 2020.
At the end of financial year the company had 500 employees. The number of employees didn't change in 2020. Average revenue per employee in FY2020 was 576,542 HKD and it decreased on 9.1%.
Financial and operational results
FY ended 30/06/2020
Solartech International Hldgs Ltd ($1166) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 741.0 | 442.5 | 395.4 | 317.1 | 288.3 | -9.1% |
| Gross Profit | 49.7 | 36.5 | 37.8 | 31.6 | 32.0 | 1.3% |
| SG&A | 150.0 | 147.4 | 103.8 | 145.0 | 101.5 | -30.0% |
| EBITDA | -46.8 | -17.9 | -119.4 | -232.8 | -105.6 | |
| EBIT | | -40.5 | -139.4 | -250.3 | -121.2 | |
| Interest expence | | 7.3 | 8.4 | 13.2 | 14.9 | 12.8% |
| Tax | | 7.2 | 5.4 | 5.5 | -1.1 | -120.0% |
| Net Income | -274.9 | -70.2 | -85.6 | -302.0 | -142.3 | |
| Stock Based Compensation | | 17.9 | | 8.4 | 1.5 | -82.0% |
Balance Sheet
|
|---|
| Cash | 199.2 | 72.1 | 92.2 | 60.0 | 63.7 | 6.0% |
| Inventory | | 26.2 | 31.7 | 22.7 | 23.4 | 2.9% |
| Short Term Debt | 116.3 | 121.8 | 126.1 | 158.1 | 116.5 | -26.3% |
| Long Term Debt | 96.9 | 0.0 | 0.0 | 14.0 | 69.3 | 394.8% |
Cash flow
|
|---|
| Capex | 27.6 | 5.6 | 3.6 | 37.0 | 9.7 | -73.9% |
Ratios
|
|---|
| Revenue growth | -5.3% | -40.3% | -10.7% | -19.8% | -9.1% | |
| EBITDA growth | -40.9% | -61.6% | 565.3% | 95.0% | -54.7% | |
|
|---|
| Gross Margin | 6.7% | 8.3% | 9.6% | 10.0% | 11.1% | 1.1% |
| EBITDA Margin | -6.3% | -4.1% | -30.2% | -73.4% | -36.6% | 36.8% |
| EBIT Margin | | -9.2% | -35.3% | -78.9% | -42.0% | 36.9% |
| SG&A, % of revenue | 20.2% | 33.3% | 26.3% | 45.7% | 35.2% | -10.5% |
| SBC, % of revenue | | 4.0% | | 2.7% | 0.5% | -2.1% |
| Net Income Margin | -37.1% | -15.9% | -21.7% | -95.2% | -49.3% | 45.9% |
| CAPEX, % of revenue | 3.7% | 1.3% | 0.9% | 11.7% | 3.3% | -8.3% |
|
|---|
| ROIC | -4.0% | -2.4% | -8.7% | -17.2% | -9.3% | 7.9% |
| ROE | -18.7% | -4.9% | -5.9% | -23.9% | -13.3% | 10.6% |
| Interest expence / Average debt | | 4.4% | 6.8% | 8.9% | 8.0% | -0.8% |
People
|
|---|
| Insider ownership | | 1.0% | 1.0% | 1.0% | 1.0% | 0.0% |
| Employees | | 600 | 500 | 500 | 500 | 0.0% |
| Revenue/Employee, th. HKD | | 738 | 791 | 634 | 577 | -9.1% |
Peers in Electrical Compo&Equip
Below we provide Solartech International Hldgs Ltd benchmarking against other companies in Electrical Compo&Equip 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 |
|---|
| Applied Development Holdings Ltd ($519) | - | 87.5% | -73.8% | 354.5% | 1,360.1% |
| |
|---|
| Median (1 company) | 3.1% | 87.5% | -73.8% | 354.5% | 1,360.1% |
|---|
| Solartech International Hldgs Ltd ($1166) | - | -40.3% | -10.7% | -19.8% | -9.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Applied Development Holdings Ltd ($519) | - | - | - | - | 10.1% |
| |
|---|
| Median (1 company) | 28.6% | - | - | - | 10.1% |
|---|
| Solartech International Hldgs Ltd ($1166) | 6.7% | 8.3% | 9.6% | 10.0% | 11.1% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Applied Development Holdings Ltd ($519) | 11.8% | 2,015.5% | 570.1% | -377.5% | -100.6% |
| |
|---|
| Median (1 company) | 8.9% | 2,015.5% | 570.1% | -377.5% | -100.6% |
|---|
| Solartech International Hldgs Ltd ($1166) | -6.3% | -4.1% | -30.2% | -73.4% | -36.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Applied Development Holdings Ltd ($519) | 683.8% | 0.1% | 1.0% | 4.0% | 0.2% |
| |
|---|
| Median (1 company) | 10.0% | 0.1% | 1.0% | 4.0% | 0.2% |
|---|
| Solartech International Hldgs Ltd ($1166) | 3.7% | 1.3% | 0.9% | 11.7% | 3.3% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Applied Development Holdings Ltd ($519) | 0.0% | 21.2% | 1.1% | -3.4% | -15.2% |
| |
|---|
| Median (1 company) | 1.6% | 21.2% | 1.1% | -3.4% | -15.2% |
|---|
| Solartech International Hldgs Ltd ($1166) | -4.0% | -2.4% | -8.7% | -17.2% | -9.3% |
