Vianet Group reports 21.2% Net Income decline and 5.0 pp EBITDA Margin decline from 27.1% to 22.1%
07 Jun 2016 • About Vianet Group (
$VNET) • By InTwits
Vianet Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Vianet Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 0.51 in 2016, 0.22 in 2015, 0.24 in 2014, 0.56 in 2013, 0.20 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Vianet Group ($VNET) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 22.975 | 21.085 | 18.335 | 14.358 | 14.290 | -0.5% |
| Gross Profit | 12.235 | 10.810 | 10.778 | 9.935 | 10.011 | 0.8% |
| SG&A | | | | 7.280 | 7.433 | 2.1% |
| EBITDA | 4.278 | 3.642 | 3.606 | 3.895 | 3.156 | -19.0% |
| Net Income | 2.259 | 1.930 | 3.133 | 1.290 | 1.017 | -21.2% |
Balance Sheet
|
|---|
| Cash | 0.105 | 1.196 | 0.183 | 0.548 | 3.605 | 557.8% |
| Short Term Debt | 1.985 | 0.899 | 1.183 | 1.043 | 0.489 | -53.1% |
| Long Term Debt | 1.526 | 2.146 | 1.245 | 1.594 | 1.103 | -30.8% |
Cash flow
|
|---|
| Capex | 0.495 | 0.597 | 0.455 | 0.363 | 0.383 | 5.5% |
Ratios
|
|---|
| Revenue growth | -5.4% | -8.2% | -13.0% | -21.7% | -0.5% | |
| EBITDA growth | -14.9% | -14.9% | -1.0% | 8.0% | -19.0% | |
| Gross Margin | 53.3% | 51.3% | 58.8% | 69.2% | 70.1% | 0.9% |
| EBITDA Margin | 18.6% | 17.3% | 19.7% | 27.1% | 22.1% | -5.0% |
| Net Income Margin | 9.8% | 9.2% | 17.1% | 9.0% | 7.1% | -1.9% |
| SG&A, % of revenue | | | | 50.7% | 52.0% | 1.3% |
| CAPEX, % of revenue | 2.2% | 2.8% | 2.5% | 2.5% | 2.7% | 0.2% |
| ROIC | 11.7% | 9.9% | 8.7% | 6.6% | 3.0% | -3.5% |
| ROE | 9.9% | 8.3% | 13.0% | 5.2% | 4.1% | -1.1% |
| Net Debt/EBITDA | 0.8x | 0.5x | 0.6x | 0.5x | -0.6x | -1.2x |
Revenue and profitability
Vianet Group's Revenue showed almost no change in FY2016. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 5.0 pp from 27.1% to 22.1% in FY2016.
Gross Margin increased slightly on 0.86 pp from 69.2% to 70.1% in FY2016. SG&A as a % of Revenue increased slightly on 1.3 pp from 50.7% to 52.0% in FY2016.
Net Income marign decreased slightly on 1.9 pp from 9.0% to 7.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Vianet Group had CAPEX/Revenue of 2.7%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 2.6%.
Return on investment
The company operates at low ROIC (3.04%) and ROE (4.13%). ROIC decreased on 3.5 pp from 6.6% to 3.0% in FY2016. ROE decreased slightly on 1.1 pp from 5.2% to 4.1% in FY2016.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and 0.5x Debt / EBITDA. Net Debt / EBITDA dropped on 1.2x from 0.5x to -0.6x in FY2016. Debt dropped on 39.6% in FY2016 while cash jumped on 558% in FY2016.
Appendix 1: Peers in Support Services
Below we provide Vianet Group benchmarking against other companies in Support Services 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 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Camco Clean Energy ($CCE) | | 88.0% | -54.7% | 99.4% | |
| Optimal Payments ($OPAY) | 39.9% | 41.5% | 44.0% | 68.1% | |
| Inspired Energy ($INSE) | 83.8% | 44.8% | 42.2% | 40.2% | |
| 21St Century Technology ($C21) | 0.1% | -22.8% | -16.6% | 35.5% | |
| Ibex Global Solutions ($IBEX) | 7.4% | 35.7% | 30.0% | 29.8% | |
| |
|---|
| Median (54 companies) | 5.9% | 8.0% | 5.0% | 6.7% | 1.7% |
|---|
| Vianet Group ($VNET) | | -8.2% | -13.0% | -21.7% | -0.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inspired Energy ($INSE) | 94.6% | 86.8% | 78.7% | 76.2% | |
| Ienergizer Ltd ($IBPO) | 56.2% | 78.4% | 76.8% | 72.7% | |
| Grafenia ($GRA) | 53.4% | 54.3% | 56.1% | 70.8% | |
| Prime People ($PRP) | 63.4% | 58.3% | 57.7% | 61.4% | |
| Murgitroyd Group ($MUR) | 58.4% | 61.4% | 57.6% | 55.4% | |
| |
|---|
| Median (48 companies) | 28.2% | 28.5% | 29.2% | 28.6% | 25.7% |
|---|
| Vianet Group ($VNET) | 53.3% | 51.3% | 58.8% | 69.2% | 70.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 21St Century Technology ($C21) | 13.4% | -0.2% | 36.0% | 44.8% | |
| Northgate ($67GX) | 41.2% | 40.4% | 40.6% | 39.4% | 38.3% |
| Inspired Energy ($INSE) | 46.2% | 48.5% | 1.5% | 35.4% | |
| Vp ($VP.) | 23.9% | 24.5% | 24.2% | 26.2% | 28.4% |
| Optimal Payments ($OPAY) | 10.3% | 18.5% | 21.3% | 22.6% | |
| |
|---|
| Median (54 companies) | 6.7% | 6.3% | 6.8% | 7.2% | 7.3% |
|---|
| Vianet Group ($VNET) | 18.6% | 17.3% | 19.7% | 27.1% | 22.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vp ($VP.) | 21.4% | 17.7% | 21.6% | 25.7% | 24.1% |
| Sagentia Group ($SAG) | 1.9% | 1.4% | 1.5% | 25.2% | |
| Nature Group ($NGR) | 14.3% | 7.2% | 5.6% | 22.9% | |
| Augean ($AUG) | 9.8% | 15.9% | 12.3% | 12.3% | |
| Falkland Islands Hldgs ($FKL) | 3.7% | 6.8% | 12.9% | 11.9% | |
| |
|---|
| Median (54 companies) | 1.0% | 1.1% | 1.0% | 1.1% | 1.2% |
|---|
| Vianet Group ($VNET) | 2.2% | 2.8% | 2.5% | 2.5% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 21St Century Technology ($C21) | 20.3% | -2.9% | 45.6% | 111.0% | |
| Inspired Energy ($INSE) | 63.9% | 65.5% | -7.5% | 28.0% | |
| Petards Group ($PEG) | 35.5% | -78.0% | 24.7% | 23.9% | |
| Servoca ($SVCA) | 1.0% | 7.8% | 14.9% | 22.3% | |
| Rtc Group ($RTC) | 14.6% | 17.6% | 19.9% | 22.2% | |
| |
|---|
| Median (54 companies) | 9.5% | 7.8% | 9.4% | 10.3% | 11.9% |
|---|
| Vianet Group ($VNET) | 11.7% | 9.9% | 8.7% | 6.6% | 3.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Redhall Group ($RHL) | 22.8x | 5.8x | 6.6x | 16.8x | |
| Mitsubishi Corp ($MBC) | 9.9x | 15.9x | 14.3x | 12.5x | 25.0x |
| Ienergizer Ltd ($IBPO) | 6.3x | 2.8x | 3.0x | 4.0x | |
| Ceps ($CEPS) | | 3.0x | 6.6x | 3.8x | |
| Kellan Group(The ($KLN) | | | 6.5x | 3.6x | |
| |
|---|
| Median (50 companies) | 0.8x | 0.7x | 0.6x | 0.4x | 1.3x |
|---|
| Vianet Group ($VNET) | 0.8x | 0.5x | 0.6x | 0.5x | -0.6x |
