Art Textile Technology International Co Ltd Net Debt / EBITDA surged on 82.8x from 3.9x to 86.8x in 2020 while Revenue dropped on 24.7%
30/09/2020 • About Art Textile Technology International Co Ltd (
$565) • By InTwits
Art Textile Technology International Co Ltd reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 3.7% in FY2020 vs. 59.5% in FY2019 vs. 67.2% in FY2016
- EBITDA Margin is quite volatile: 3.7% in FY2020, 59.5% in FY2019, 91.3% in FY2018, 101.8% in FY2017, 67.2% in FY2016
- Art Textile Technology International Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 6 HKDm in FY2020, 1 HKDm in FY2019, 2 HKDm in FY2018, 8 HKDm in FY2017, 12 HKDm in FY2016
- The company has potentially unprofitable business model: ROIC is 0.1%
- It operates with high leverage: Net Debt/EBITDA is 86.8x while industry average is 7.4x
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 dropped on 24.7%. Revenue pursued a declining trend in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.3 pp from 39.5% to 48.8% in FY2020. During the last 5 years EBITDA Margin topped in FY2017 at 102% and was declining since that time.
Gross Margin decreased on 9.8 pp from 69.9% to 60.1% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2019 at 69.9%. SG&A as a % of Revenue increased on 6.2 pp from 12.6% to 18.8% in FY2020.
Net Income margin dropped on 45.6 pp from 26.4% to -19.2% in FY2020. Net Income margin followed a declining trend in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 4.1%. Art Textile Technology International Co Ltd showed almost no change in CAPEX/Revenue from FY2017 to FY2020. For the last three years the average CAPEX/Revenue was 1.8%. The company has spent a lot to CAPEX (111% of EBITDA) which didn't stop revenue from falling. During the last 5 years CAPEX as a % of Revenue bottomed in FY2019 at 0.59%.
Return on investment
The company operates at low but positive ROIC (0.1%) and negative ROE (-2.1%). ROIC decreased on 3.7 pp from 3.8% to 0.081% in FY2020. ROE decreased on 5.9 pp from 3.8% to -2.1% in FY2020. During the last 5 years ROIC topped in FY2017 at 6.4% and was declining since that time. ROE followed a declining trend in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 86.8x and Debt / EBITDA is 158.6x. Net Debt / EBITDA surged on 82.8x from 3.9x to 86.8x in FY2020. Debt surged on 74.7% while cash surged on 1,194%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2018 at 3.4x and was growing since that time.
Art Textile Technology International Co Ltd has questionable short term financial stability: Interest coverage ratio (ICR) is only 0.041x. Art Textile Technology International Co Ltd has no short term refinancing risk: cash is higher than short term debt (487.2%).
Average interest expence paid by the company was 6.7% in FY2020.
Management team
35.9% of the company is owned by insiders. Insider ownership didn't change in 2020.
The company has 143 employees. The number of employees dropped on 10.1%. Average revenue per employee in FY2020 was 1,115,713 HKD and it dropped on 16.2%.
Financial and operational results
FY ended 30/06/2020
Art Textile Technology International Co Ltd ($565) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 140.0 | 185.4 | 199.2 | 211.8 | 159.5 | -24.7% |
| Gross Profit | 91.2 | 125.8 | 138.1 | 148.1 | 95.9 | -35.2% |
| SG&A | 20.0 | 26.8 | 27.0 | 26.7 | 29.9 | 12.1% |
| EBITDA | 94.0 | 188.7 | 181.9 | 126.0 | 5.8 | -95.4% |
| EBIT | | 186.6 | 179.3 | 122.8 | 2.5 | -97.9% |
| Interest expence | | 40.5 | 32.7 | 29.4 | 61.8 | 110.2% |
| Tax | | | 33.8 | 16.5 | -22.5 | -236.5% |
| Net Income | 441.3 | 91.1 | 67.6 | 55.9 | -30.7 | -154.8% |
| Stock Based Compensation | | | 54.0 | | | |
Balance Sheet
|
|---|
| Cash | 62.3 | 30.5 | 18.1 | 32.4 | 419.1 | 1,194.4% |
| Short Term Debt | 367.3 | 70.1 | 85.7 | 89.8 | 86.0 | -4.2% |
| Long Term Debt | 701.3 | 608.0 | 543.1 | 439.8 | 839.1 | 90.8% |
Cash flow
|
|---|
| Capex | 11.7 | 8.0 | 1.6 | 1.2 | 6.5 | 420.8% |
Ratios
|
|---|
| Revenue growth | 551.4% | 32.4% | 7.4% | 6.3% | -24.7% | |
| EBITDA growth | -1,466.2% | 100.7% | -3.6% | -30.7% | -95.4% | |
|
|---|
| Gross Margin | 65.1% | 67.8% | 69.3% | 69.9% | 60.1% | -9.8% |
| EBITDA Margin | 67.2% | 101.8% | 91.3% | 59.5% | 3.7% | -55.8% |
| EBIT Margin | | 100.6% | 90.0% | 58.0% | 1.6% | -56.4% |
| SG&A, % of revenue | 14.3% | 14.4% | 13.5% | 12.6% | 18.8% | 6.2% |
| SBC, % of revenue | | | 27.1% | | |
| Net Income Margin | 315.1% | 49.1% | 33.9% | 26.4% | -19.2% | -45.6% |
| CAPEX, % of revenue | 8.3% | 4.3% | 0.8% | 0.6% | 4.1% | 3.5% |
|
|---|
| ROIC | 2.7% | 6.4% | 5.9% | 3.8% | 0.1% | -3.7% |
| ROE | 36.4% | 7.0% | 4.8% | 3.8% | -2.1% | -5.9% |
| Net Debt/EBITDA | 10.7x | 3.4x | 3.4x | 3.9x | 86.8x | 82.8x |
| Interest coverage ratio (ICR) | | 4.6x | 5.5x | 4.2x | 0.0x | -4.1x |
| Interest expence / Average debt | | 4.6% | 5.0% | 5.1% | 6.7% | 1.6% |
People
|
|---|
| Insider ownership | | 35.9% | 35.9% | 35.9% | 35.9% | 0.0% |
| Employees | | 161 | 170 | 159 | 143 | -10.1% |
| Revenue/Employee, th. HKD | | 1,152 | 1,172 | 1,332 | 1,116 | -16.2% |
Peers in Textiles
Below you can find Art Textile Technology International Co Ltd benchmarking vs. other companies in Textiles 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 |
|---|
| TAI Ping Carpet International Ltd ($146) | 0.6% | -66.2% | 21.1% | 1.3% | - |
| |
|---|
| Median (1 company) | -0.1% | -66.2% | 21.1% | 1.3% | - |
|---|
| Art Textile Technology International Co Ltd ($565) | - | 32.4% | 7.4% | 6.3% | -24.7% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TAI Ping Carpet International Ltd ($146) | - | 47.6% | 54.3% | 54.6% | - |
| |
|---|
| Median (1 company) | 21.7% | 47.6% | 54.3% | 54.6% | - |
|---|
| Art Textile Technology International Co Ltd ($565) | 65.1% | 67.8% | 69.3% | 69.9% | 60.1% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TAI Ping Carpet International Ltd ($146) | - | -29.2% | -3.2% | 9.9% | - |
| |
|---|
| Median (1 company) | 14.8% | -29.2% | -3.2% | 9.9% | - |
|---|
| Art Textile Technology International Co Ltd ($565) | 67.2% | 101.8% | 91.3% | 59.5% | 3.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TAI Ping Carpet International Ltd ($146) | - | 23.2% | 9.8% | 2.7% | - |
| |
|---|
| Median (1 company) | 3.7% | 23.2% | 9.8% | 2.7% | - |
|---|
| Art Textile Technology International Co Ltd ($565) | 8.3% | 4.3% | 0.8% | 0.6% | 4.1% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TAI Ping Carpet International Ltd ($146) | - | -22.8% | -8.1% | -1.3% | - |
| |
|---|
| Median (1 company) | 9.5% | -22.8% | -8.1% | -1.3% | - |
|---|
| Art Textile Technology International Co Ltd ($565) | 2.7% | 6.4% | 5.9% | 3.8% | 0.1% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TAI Ping Carpet International Ltd ($146) | - | - | - | -0.6x | - |
| |
|---|
| Median (1 company) | -0.6x | - | - | -0.6x | - |
|---|
| Art Textile Technology International Co Ltd ($565) | 10.7x | 3.4x | 3.4x | 3.9x | 86.8x |
