Kantone Holdings Ltd reports 13.0% EBITDA growth in 2020 and 0.61 pp EBITDA Margin growth from 5.7% to 6.3%
30/09/2020 • About Kantone Holdings Ltd (
$1059) • By InTwits
Kantone Holdings Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Kantone Holdings Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -84.7%
- The company has potentially unprofitable business model: ROIC is 2.8%
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 increased on 2.1%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.61 pp from 5.7% to 6.3% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2017 at -1,236% and was growing since that time.
Gross Margin decreased slightly on 2.0 pp from 58.5% to 56.6% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2019 at 58.5%. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin increased slightly on 0.94 pp from 1.7% to 2.6% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at -1,247% and was growing since that time.
Return on investment
The company operates at low ROIC (2.8%) and ROE (6.4%). ROIC increased slightly on 0.58 pp from 2.2% to 2.8% in FY2020. ROE increased on 2.9 pp from 3.5% to 6.4% in FY2020. During the last 5 years ROIC bottomed in FY2018 at -188% and was growing since that time. During the last 5 years ROE bottomed in FY2018 at -188% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -9.8x and Debt / EBITDA is 0.4x. Debt surged while cash surged on 14.5%.
Kantone Holdings Ltd has no short term refinancing risk: cash is higher than short term debt (4,385.5%).
Financial and operational results
Kantone Holdings Ltd ($1059) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,090 | 141 | 137 | 144 | 147 | 2.1% |
| Gross Profit | 716 | 73 | 76 | 84 | 83 | -1.4% |
| SG&A | 84 | 77 | 81 | 83 | 86 | 2.8% |
| EBITDA | 1,107 | -1,741 | -1,637 | 8 | 9 | 13.0% |
| Net Income | -12 | -1,757 | -1,644 | 2 | 4 | 59.0% |
Balance Sheet
|
|---|
| Cash | 74 | 76 | 72 | 83 | 95 | 14.5% |
| Short Term Debt | 4 | 4 | 0 | 0 | 2 | |
| Long Term Debt | 4 | 0 | 0 | 0 | 2 | |
Cash flow
|
|---|
| Capex | 10 | 7 | 6 | 7 | | |
Ratios
|
|---|
| Revenue growth | -17.8% | -93.3% | -2.9% | 5.3% | 2.1% | |
| EBITDA growth | 105.6% | -257.2% | -6.0% | -100.5% | 13.0% | |
|
|---|
| Gross Margin | 34.3% | 51.8% | 55.6% | 58.5% | 56.6% | -2.0% |
| EBITDA Margin | 53.0% | -1,235.9% | -1,196.9% | 5.7% | 6.3% | 0.6% |
| SG&A, % of revenue | 4.0% | 54.8% | 59.3% | 57.8% | 58.2% | 0.4% |
| Net Income Margin | -0.6% | -1,247.1% | -1,202.2% | 1.7% | 2.6% | 0.9% |
| CAPEX, % of revenue | 0.5% | 5.1% | 4.6% | 4.6% | | |
|
|---|
| ROIC | 17.4% | -68.6% | -187.8% | 2.2% | 2.8% | 0.6% |
| ROE | -0.3% | -68.7% | -188.1% | 3.5% | 6.4% | 2.9% |
| Net Debt/EBITDA | -0.1x | | | -10.1x | -9.8x | 0.3x |
Peers in Software
Below you can find Kantone Holdings Ltd 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 |
|---|
| International Entertainment Corp ($1009) | - | -12.2% | 1.9% | 26.9% | -39.6% |
| |
|---|
| Median (1 company) | 21.5% | -3.1% | 8.1% | 26.9% | -39.6% |
|---|
| Kantone Holdings Ltd ($1059) | - | -93.3% | -2.9% | 5.3% | 2.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Entertainment Corp ($1009) | 46.6% | 74.5% | 76.0% | 71.8% | 65.4% |
| |
|---|
| Median (1 company) | 39.9% | 69.5% | 70.6% | 71.8% | 65.4% |
|---|
| Kantone Holdings Ltd ($1059) | 34.3% | 51.8% | 55.6% | 58.5% | 56.6% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Entertainment Corp ($1009) | 45.5% | -2.8% | -8.2% | 4.2% | -51.7% |
| |
|---|
| Median (1 company) | 2.8% | 18.8% | 17.2% | 4.2% | -51.7% |
|---|
| Kantone Holdings Ltd ($1059) | 53.0% | -1,235.9% | -1,196.9% | 5.7% | 6.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Entertainment Corp ($1009) | 3.3% | 6.8% | 3.4% | 30.2% | 15.2% |
| |
|---|
| Median (1 company) | 0.8% | 7.6% | 7.0% | 30.2% | 15.2% |
|---|
| Kantone Holdings Ltd ($1059) | 0.5% | 5.1% | 4.6% | 4.6% | - |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Entertainment Corp ($1009) | 0.5% | -1.8% | -2.1% | -2.5% | -8.8% |
| |
|---|
| Median (1 company) | 4.1% | 7.8% | 8.7% | -2.5% | -8.8% |
|---|
| Kantone Holdings Ltd ($1059) | 17.4% | -68.6% | -187.8% | 2.2% | 2.8% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| International Entertainment Corp ($1009) | -7.8x | - | - | 8.1x | - |
| |
|---|
| Median (1 company) | -1.0x | 2.2x | 1.6x | 8.1x | - |
|---|
| Kantone Holdings Ltd ($1059) | -0.1x | - | - | -10.1x | -9.8x |
