Dewhurst reports 21.6% Net Income decline and 1.3 pp EBITDA Margin decline from 14.7% to 13.4%

06 Dec 2016 • About Dewhurst ($DWHA) • By InTwits

Dewhurst reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

• Dewhurst has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 2.1%.
• CAPEX is quite volatile: 0.90 in FY2016, 0.89 in FY2015, 0.41 in FY2014, 0.59 in FY2013, 1.4 in FY2012
• The company has highly profitable business model: ROIC is at 24.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Dewhurst ($DWHA) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	51.555	43.698	46.616	45.946	47.159	2.6%
EBITDA	6.635	5.492	6.373	6.753	6.317	-6.5%
Net Income	3.786	1.336	3.930	4.406	3.453	-21.6%
Balance Sheet
Cash	11.101	10.506	12.928	14.958	16.674	11.5%
Short Term Debt	0.000	0.000	0.000	0.000	0.000
Long Term Debt	0.000	0.000	0.000	0.000	0.000
Cash flow
Capex	1.374	0.587	0.408	0.893	0.901	0.9%
Ratios
Revenue growth	24.3%	-15.2%	6.7%	-1.4%	2.6%
EBITDA growth	17.7%	-17.2%	16.0%	6.0%	-6.5%
EBITDA Margin	12.9%	12.6%	13.7%	14.7%	13.4%	-1.3%
Net Income Margin	7.3%	3.1%	8.4%	9.6%	7.3%	-2.3%
CAPEX, % of revenue	2.7%	1.3%	0.9%	1.9%	1.9%	-0.0%
ROIC	29.2%	20.7%	24.5%	27.3%	24.6%	-2.7%
ROE	17.5%	6.2%	18.2%	19.3%	14.4%	-4.9%
Net Debt/EBITDA	-1.7x	-1.9x	-2.0x	-2.2x	-2.6x	-0.4x

Revenue and profitability

Dewhurst's Revenue increased on 2.6% in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 6.6 pp from 20.8% to 27.3% in FY2016.

Net Income marign decreased on 2.3 pp from 9.6% to 7.3% in FY2016.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 1.9% in FY2016. Dewhurst showed small growth in CAPEX/Revenue of 0.57 pp from 1.3% in FY2013 to 1.9% in FY2016. For the last three years the average CAPEX/Revenue was 1.6%.

Return on investment

The company operates at high and attractive ROIC (24.59%) while ROE is a bit lower (14.45%). ROIC decreased on 2.7 pp from 27.3% to 24.6% in FY2016. ROE decreased on 4.9 pp from 19.3% to 14.4% in FY2016.

Leverage (Debt)

The company has no debt. Cash surged on 11.5% in FY2016.

Appendix 1: Peers in Electronic & Electrical Equipment

Below we provide Dewhurst benchmarking against other companies in Electronic & Electrical Equipment 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
Stadium Group ($SDM)	-8.8%	3.0%	-1.1%	29.0%
Flowgroup ($FLOW)	-92.9%	125,263.6%	141.9%	21.1%
Solid State ($SSP)		21.7%	1.9%	13.9%	20.6%
Zytronic ($ZYT)	-0.3%	-15.4%	9.3%	12.6%
Apc Technology Group ($APC)	-5.4%	58.7%	-4.7%	10.4%
Median (13 companies)	-7.1%	-4.9%	-3.8%	-1.1%	-2.5%
Dewhurst ($DWHA)		-15.2%	6.7%	-1.4%	2.6%

Top companies by Gross margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	36.3%	30.8%	36.6%	41.9%
Elektron Technology ($EKT)	40.6%	37.5%	34.8%	35.6%	37.2%
Solid State ($SSP)	27.8%	26.1%	29.2%	30.5%	31.8%
Maruwa Co Ltd ($MAW)	31.6%	28.6%	32.8%	30.0%	35.9%
Lpa Group ($LPA)	28.3%	27.2%	29.6%	27.4%
Median (12 companies)	27.5%	26.7%	26.7%	24.1%	33.9%

Top companies by EBITDA margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	25.3%	18.8%	22.9%	27.8%
Maruwa Co Ltd ($MAW)	22.3%	17.7%	17.8%	14.7%	19.6%
Morgan Advanced Materials ($BA29)	13.7%	13.1%	9.8%	12.8%	14.6%
Stadium Group ($SDM)	6.1%	7.1%	9.9%	12.1%
Solid State ($SSP)	6.7%	6.3%	17.3%	9.7%	11.2%
Median (13 companies)	6.6%	5.3%	4.5%	4.4%	11.2%
Dewhurst ($DWHA)	12.9%	12.6%	13.7%	14.7%	13.4%

Top companies by CAPEX/Revenue, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Morgan Advanced Materials ($BA29)	2.9%	3.8%	3.7%	7.0%	4.0%
Maruwa Co Ltd ($MAW)	23.8%	15.3%	7.6%	6.5%	4.4%
Zytronic ($ZYT)	3.6%	2.8%	1.4%	4.7%
Stadium Group ($SDM)	1.0%	0.8%	0.5%	2.7%
Lpa Group ($LPA)	9.1%	2.0%	14.8%	1.8%
Median (13 companies)	3.0%	2.7%	1.4%	1.4%	2.0%
Dewhurst ($DWHA)	2.7%	1.3%	0.9%	1.9%	1.9%

Top companies by ROIC, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	23.0%	11.9%	17.0%	22.7%
Solid State ($SSP)	22.3%	19.7%	44.5%	20.0%	23.0%
Stadium Group ($SDM)	16.5%	17.6%	17.3%	19.3%
Morgan Advanced Materials ($BA29)	17.9%	16.3%	10.9%	18.4%	21.9%
Elektron Technology ($EKT)	24.1%	7.9%	3.3%	9.9%	7.0%
Median (13 companies)	13.8%	6.7%	4.7%	3.9%	9.0%
Dewhurst ($DWHA)	29.2%	20.7%	24.5%	27.3%	24.6%

Top companies by Net Debt / EBITDA

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Walsin Lihwa Corp ($WALS)	5.3x	8.7x	3.9x	4.6x
Lpa Group ($LPA)	1.9x	0.7x	1.5x	3.8x
Morgan Advanced Materials ($BA29)	1.4x	1.5x	2.3x	1.8x	1.7x
Elektron Technology ($EKT)	0.7x	1.7x	3.8x	0.8x	0.5x
Solid State ($SSP)	1.4x	1.2x	0.4x	0.7x	0.7x
Median (9 companies)	1.0x	0.9x	1.4x	0.7x	0.5x
Dewhurst ($DWHA)	-1.7x	-1.9x	-2.0x	-2.2x	-2.6x

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