Hollysys Automation Technologies, Ltd. reports 85.6% EBITDA growth in 2018 and 7.8 pp EBITDA Margin growth from 16.1% to 23.9%
08/14/2018 • About Hollysys Automation Technologies, Ltd. (
$HOLI) • By InTwits
Hollysys Automation Technologies, Ltd. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Hollysys Automation Technologies, Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 0.6%.
- CAPEX is quite volatile: $2m in FY2018, $4m in FY2017, $8m in FY2016, $5m in FY2015, $8m in FY2014
- The company has highly profitable business model: ROIC is 13.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 25.2%. Revenue growth showed slowdown in FY18Q4 - it was 6.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 13.5 pp from 5.1% to 18.5% in 2018.
Gross Margin increased on 5.6 pp from 32.5% to 38.1% in FY2018. SG&A as a % of Revenue decreased on 2.3 pp from 15.9% to 13.6% in FY2018.
Net Income margin increased on 3.9 pp from 16.0% to 19.8% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Hollysys Automation Technologies, Ltd. had CAPEX/Revenue of 0.43%. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 0.91%.
Return on investment
The company operates at good ROIC (13.9%) and ROE (13.7%). ROIC increased on 6.2 pp from 7.6% to 13.9% in FY2018. ROE increased on 3.8 pp from 9.9% to 13.7% in FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.9x and Debt / EBITDA is 0.2x. Debt dropped on 17.8% while cash jumped on 34.4%.
Hollysys Automation Technologies, Ltd. has no short term refinancing risk: cash is higher than short term debt (8,263.6%).
Valuation and dividends
Hollysys Automation Technologies, Ltd.'s trades at EV/EBITDA 7.9x and P/E 11.8x.
Management team
Baiqing Shao is a Hollysys Automation Technologies, Ltd.'s CEO. Baiqing Shao is a founder and has spent 5 years with the company. Steven Wang is a Hollysys Automation Technologies, Ltd.'s CFO. Steven Wang has spent 1 year at the company.
Financial and operational results
FY ended 06/30/2018
Hollysys Automation Technologies, Ltd. ($HOLI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 521.3 | 531.4 | 544.3 | 431.9 | 540.8 | 25.2% |
| Gross Profit | 175.6 | 214.4 | 205.7 | 140.5 | 205.9 | 46.6% |
| SG&A | 68.0 | 77.0 | 71.5 | 68.7 | 73.5 | 6.9% |
| EBITDA | 110.9 | 143.1 | 127.7 | 69.6 | 129.3 | 85.6% |
| Net Income | 69.6 | 96.5 | 118.5 | 68.9 | 107.2 | 55.4% |
Balance Sheet
|
|---|
| Cash | 162.2 | 207.8 | 229.1 | 197.6 | 265.7 | 34.4% |
| Short Term Debt | 13.0 | 30.4 | 9.9 | 8.5 | 3.2 | -62.4% |
| Long Term Debt | 15.0 | 20.6 | 20.5 | 20.6 | 20.7 | 0.6% |
Cash flow
|
|---|
| Capex | 8.4 | 4.6 | 7.9 | 3.7 | 2.3 | -37.9% |
Ratios
|
|---|
| Revenue growth | 49.4% | 1.9% | 2.4% | -20.6% | 25.2% | |
| EBITDA growth | 66.0% | 29.0% | -10.8% | -45.4% | 85.6% | |
|
|---|
| Gross Margin | 33.7% | 40.3% | 37.8% | 32.5% | 38.1% | 5.6% |
| EBITDA Margin | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% | 7.8% |
| SG&A, % of revenue | 13.0% | 14.5% | 13.1% | 15.9% | 13.6% | -2.3% |
| Net Income Margin | 13.4% | 18.2% | 21.8% | 16.0% | 19.8% | 3.9% |
| CAPEX, % of revenue | 1.6% | 0.9% | 1.4% | 0.9% | 0.4% | -0.4% |
|
|---|
| ROIC | 18.9% | 21.0% | 16.7% | 7.6% | 13.9% | 6.2% |
| ROE | 15.4% | 18.1% | 18.9% | 9.9% | 13.7% | 3.8% |
| Net Debt/EBITDA | -1.2x | -1.1x | -1.6x | -2.4x | -1.9x | 0.5x |
Hollysys Automation Technologies, Ltd. ($HOLI) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 116 | 157 | 121 | 147 | | 11.6% | 58.8% | 32.1% | 6.7% |
| EBITDA | 25 | 43 | 27 | 36 | | 42.9% | 260.3% | 62.6% | 70.1% |
| Net Income | 21 | 36 | 22 | 28 | | -1.5% | 263.4% | 39.8% | 28.0% |
Balance Sheet
|
|---|
| Cash | 245 | 231 | 238 | 266 | | 15.3% | 10.0% | 30.4% | 34.4% |
| Short Term Debt | 9 | 8 | 8 | 3 | | 21.0% | -30.6% | 0.9% | -62.4% |
| Long Term Debt | 21 | 21 | 21 | 21 | | 0.7% | 2.1% | 2.6% | 0.6% |
Ratios
|
|---|
| Gross Margin | 36.4% | 39.3% | 36.4% | 39.4% | | 7.0% | 10.8% | 5.6% | 0.6% |
| EBITDA Margin | 22.0% | 27.0% | 22.1% | 24.2% | | 4.8% | 15.1% | 4.1% | 9.0% |
| Net Income Margin | 18.5% | 23.0% | 18.1% | 18.8% | | -2.4% | 13.0% | 1.0% | 3.1% |
Peers in Electronic Equipment & Instrum
Below you can find Hollysys Automation Technologies, Ltd. benchmarking vs. other companies in Electronic Equipment & Instrum 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 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (60 companies) | -37.7% | 4.5% | 0.3% | 4.6% | 9.8% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | | 1.9% | 2.4% | -20.6% | 25.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (59 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 42.6% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 33.7% | 40.3% | 37.8% | 32.5% | 38.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
| |
|---|
| Median (59 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.1% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (59 companies) | 1.9% | 2.0% | 2.1% | 1.7% | 2.3% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 1.6% | 0.9% | 1.4% | 0.9% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (71 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.8% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 18.9% | 21.0% | 16.7% | 7.6% | 13.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (34 companies) | -0.7x | -0.7x | -0.8x | -0.6x | -0.8x |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | -1.2x | -1.1x | -1.6x | -2.4x | -1.9x |
