NWS Holdings Ltd reports 80.3% Net Income decline in 2020 and 3.4% Revenue decline
30/09/2020 • About NWS Holdings Ltd (
$659) • By InTwits
NWS 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: 3.9% in FY2020, 13.9% in FY2019, 17.6% in FY2018, 14.2% in FY2017, 17.1% in FY2016
- The company has unprofitable business model: ROIC is -0.5%
- It operates with high leverage: Net Debt/EBITDA is 19.3x while industry average is 6.0x
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 3.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 10.0 pp from 13.9% to 3.9% in FY2020.
Gross Margin decreased slightly on 1.6 pp from 11.3% to 9.7% in FY2020. SG&A as a % of Revenue increased on 4.5 pp from 5.3% to 9.8% in FY2020. SG&A as a % of Revenue followed a growing trend in the last 5 years.
Net Income margin dropped on 12.5 pp from 15.8% to 3.2% in FY2020. During the last 5 years Net Income margin topped in FY2017 at 17.9% and was declining since that time.
Return on investment
The company operates at negative ROIC (-0.5%) and low but positive ROE (0.4%). ROIC decreased on 3.7 pp from 3.3% to -0.46% in FY2020. ROE decreased on 7.1 pp from 7.6% to 0.44% in FY2020. During FY2016-FY2020 ROE topped in FY2018 at 12.3% and was declining since that time.
Leverage (Debt)
Debt level is 19.3x Net Debt / EBITDA and 32.2x Debt / EBITDA. Net Debt / EBITDA jumped on 19.3x from 0.0064x to 19.3x in FY2020. Debt jumped on 118% while cash dropped on 12.1%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2019 at 0.0064x.
NWS Holdings Ltd has no short term refinancing risk: cash is higher than short term debt (297.7%).
Valuation and dividends
The company's trades at EV/EBITDA 43.1x and P/E 29.1x.
Management team
NWS Holdings Ltd's CEO is Ma Siu-Cheung "Eric". Ma Siu-Cheung "Eric" has 1 year tenure with the company.
Financial and operational results
NWS Holdings Ltd ($659) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 29,498 | 31,385 | 35,115 | 26,834 | 25,921 | -3.4% |
| Gross Profit | 3,353 | 3,622 | 3,783 | 3,043 | 2,521 | -17.2% |
| SG&A | 1,104 | 1,294 | 1,466 | 1,418 | 2,549 | 79.8% |
| EBITDA | 5,047 | 4,452 | 6,171 | 3,736 | 1,022 | -72.7% |
| Net Income | 4,913 | 5,629 | 6,069 | 4,230 | 835 | -80.3% |
Balance Sheet
|
|---|
| Cash | 8,880 | 6,437 | 6,643 | 15,045 | 13,222 | -12.1% |
| Short Term Debt | 5,813 | 306 | 1,035 | 2,403 | 4,441 | 84.8% |
| Long Term Debt | 9,252 | 9,377 | 9,140 | 12,666 | 28,467 | 124.7% |
Cash flow
|
|---|
| Capex | 549 | 688 | 0 | 0 | | |
Ratios
|
|---|
| Revenue growth | 20.4% | 6.4% | 11.9% | -23.6% | -3.4% | |
| EBITDA growth | 12.0% | -11.8% | 38.6% | -39.5% | -72.7% | |
|
|---|
| Gross Margin | 11.4% | 11.5% | 10.8% | 11.3% | 9.7% | -1.6% |
| EBITDA Margin | 17.1% | 14.2% | 17.6% | 13.9% | 3.9% | -10.0% |
| SG&A, % of revenue | 3.7% | 4.1% | 4.2% | 5.3% | 9.8% | 4.5% |
| Net Income Margin | 16.7% | 17.9% | 17.3% | 15.8% | 3.2% | -12.5% |
| CAPEX, % of revenue | 1.9% | 2.2% | 0.0% | 0.0% | | |
|
|---|
| ROIC | 6.2% | 5.2% | 7.5% | 3.3% | -0.5% | -3.7% |
| ROE | 10.8% | 11.9% | 12.3% | 7.6% | 0.4% | -7.1% |
| Net Debt/EBITDA | 1.2x | 0.7x | 0.6x | 0.0x | 19.3x | 19.3x |
Peers in Holding Companies-Divers
Below we provide NWS Holdings Ltd benchmarking against other companies in Holding Companies-Divers 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.
