Deswell Industries, Inc. Net Income surged on 350% and Revenue jumped on 36.3%
06/12/2018 • About Deswell Industries, Inc. (
$DSWL) • By InTwits
Deswell Industries, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Deswell Industries, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 0.0%. Average EBITDA Margin for the same period was -0.5%
- The company has potentially unprofitable business model: ROIC is 2.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 36.3%. Revenue decline was slowing down on average by 12.8 pp per annum in the last 5 years.
Gross Margin decreased slightly on 0.72 pp from 16.7% to 16.0% in FY2018. Gross Margin grew at 2.0 pp per annum in FY2014-FY2018. SG&A as a % of Revenue decreased on 5.4 pp from 19.9% to 14.5% in FY2018. SG&A as a % of Revenue stuck to a declining trend at -2.5 pp per annum in FY2014-FY2018.
Net Income margin increased on 7.1 pp from 3.1% to 10.2% in FY2018. Net Income margin stuck to a growing trend at 6.7 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.8% in FY2018. CAPEX/Revenue showed almost no change from FY2015 to FY2018.
Return on investment
The company operates at low ROIC (2.2%) and ROE (7.9%). ROIC increased on 4.9 pp from -2.7% to 2.2% in FY2018. ROE increased on 6.1 pp from 1.8% to 7.9% in FY2018. ROIC grew at 2.1 pp per annum in the last 5 years. ROE grew at 3.6 pp per annum in FY2014-FY2018.
Leverage (Debt)
The company has no debt. Cash jumped on 88.1%.
Valuation and dividends
The company's trades at EV/EBITDA 8.4x and P/E 7.8x.
Financial and operational results
FY ended 03/31/2018
Deswell Industries, Inc. ($DSWL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 40.932 | 38.076 | 44.568 | 44.522 | 60.667 | 36.3% |
| Gross Profit | 3.637 | 4.224 | 4.793 | 7.449 | 9.714 | 30.4% |
| SG&A | 10.257 | 9.123 | 9.119 | 8.856 | 8.806 | -0.6% |
| EBITDA | -3.213 | -1.982 | | | 3.940 | |
| Net Income | -7.490 | -2.808 | -4.934 | 1.376 | 6.190 | 349.9% |
Balance Sheet
|
|---|
| Cash | 23.278 | 14.325 | 11.996 | 8.078 | 15.192 | 88.1% |
| 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 | 0.853 | 0.890 | | | 1.707 | |
Ratios
|
|---|
| Revenue growth | -24.3% | -7.0% | 17.1% | -0.1% | 36.3% | |
| EBITDA growth | -742.6% | -38.3% | | | | |
|
|---|
| Gross Margin | 8.9% | 11.1% | 10.8% | 16.7% | 16.0% | -0.7% |
| EBITDA Margin | -7.8% | -5.2% | | | 6.5% |
| SG&A, % of revenue | 25.1% | 24.0% | 20.5% | 19.9% | 14.5% | -5.4% |
| Net Income Margin | -18.3% | -7.4% | -11.1% | 3.1% | 10.2% | 7.1% |
| CAPEX, % of revenue | 2.1% | 2.3% | | | 2.8% | |
|
|---|
| ROIC | -7.0% | -5.4% | -6.5% | -2.7% | 2.2% | 4.9% |
| ROE | -7.8% | -3.2% | -6.1% | 1.8% | 7.9% | 6.1% |
| Net Debt/EBITDA | | | | | -3.9x |
Peers in Electronic Manufacturing Servi
Below we provide Deswell Industries, Inc. benchmarking against other companies in Electronic Manufacturing Servi 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
| Alpine 4 Technologies Ltd ($ALPP) | | | 35,893.8% | 5.8% | 71.5% |
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| IEC Electronics Corp. ($IEC) | | 5.1% | 0.0% | -24.1% | 21.2% |
| |
|---|
| Median (27 companies) | | 2.8% | 1.2% | 3.0% | 7.1% |
|---|
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Neonode Inc. ($NEON) | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% |
| Andrea Electronics Corp ($ANDR) | 83.8% | 99.1% | 88.5% | 96.2% | 70.4% |
| Data I/O Corporation ($DAIO) | 53.9% | 52.4% | 55.0% | 58.9% | 59.4% |
| IPG Photonics Corporation ($IPGP) | 54.1% | 54.6% | 54.9% | 56.6% | 54.8% |
| CTS Corporation ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.7% | 19.4% | 22.2% | 13.8% | 12.1% |
|---|
| Deswell Industries, Inc. ($DSWL) | 8.9% | 11.1% | 10.8% | 16.7% | 16.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.5% | 42.4% | 41.8% | 44.7% | 40.9% |
| TE Connectivity Ltd. ($TEL) | 19.7% | 19.3% | 20.9% | 20.4% | 21.4% |
| CTS Corporation ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.8% | 5.8% | 5.2% | 4.8% | 4.7% |
|---|
| Deswell Industries, Inc. ($DSWL) | -7.8% | -5.2% | | | 6.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Maxwell Technologies, Inc. ($MXWL) | 3.7% | 2.5% | 4.9% | 6.6% | 11.3% |
| IPG Photonics Corporation ($IPGP) | 11.5% | 7.8% | 12.6% | 9.0% | 11.0% |
| eMagin Corporation ($EMAN) | 5.8% | 4.7% | 6.7% | 6.2% | 8.8% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 4.9% | 5.3% | 5.6% | 6.7% |
| CTS Corporation ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 3.1% | 2.4% |
|---|
| Deswell Industries, Inc. ($DSWL) | 2.1% | 2.3% | | | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
| IPG Photonics Corporation ($IPGP) | 27.0% | 27.8% | 25.1% | 29.9% | 22.9% |
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 5.0% | 5.3% | 6.7% | 5.7% | 6.7% |
|---|
| Deswell Industries, Inc. ($DSWL) | -7.0% | -5.4% | -6.5% | -2.7% | 2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
| IEC Electronics Corp. ($IEC) | 7.1x | 14.0x | 2.0x | 5.6x | 4.9x |
| Key Tronic Corporation ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (22 companies) | -0.2x | -0.6x | 0.2x | 0.2x | 0.5x |
|---|
| Deswell Industries, Inc. ($DSWL) | | | | | -3.9x |
