Hollysys Automation Technologies, Ltd. reports 16.9% Net Income growth in 2019 and 0.79 pp EBITDA Margin decline from 23.9% to 23.1%
08/14/2019 • About Hollysys Automation Technologies, Ltd. (
$HOLI) • By InTwits
Hollysys Automation Technologies, Ltd. reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- Hollysys Automation Technologies, Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has highly profitable business model: ROIC is 12.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Hollysys Automation Technologies, Ltd.'s Revenue increased on 5.5%. Revenue growth showed acceleration in FY19Q4 - it increased 6.6% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.79 pp from 23.9% to 23.1% in FY2019.
Gross Margin decreased slightly on 1.0 pp from 38.1% to 37.0% in FY2019. SG&A as a % of Revenue decreased slightly on 1.4 pp from 13.6% to 12.2% in FY2019.
Net Income margin increased on 2.1 pp from 19.8% to 22.0% in FY2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.61% in FY2019. CAPEX/Revenue decreased slightly on 0.84 pp from 1.4% in FY2016 to 0.61% in FY2019. For the last three years the average CAPEX/Revenue was 0.63%.
Return on investment
The company operates at good ROIC (12.8%) and ROE (14.0%). ROIC decreased slightly on 1.1 pp from 13.9% to 12.8% in FY2019. ROE showed almost no change in FY2019.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.3x and Debt / EBITDA is 0.2x. Debt decreased on 3.0% while cash jumped on 25.2%.
Hollysys Automation Technologies, Ltd. has no short term refinancing risk: cash is higher than short term debt (1,496.5%).
Valuation and dividends
Hollysys Automation Technologies, Ltd.'s trades at EV/EBITDA 4.8x and P/E 7.5x.
Financial and operational results
FY ended 06/30/2019
Hollysys Automation Technologies, Ltd. ($HOLI) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 531.4 | 544.3 | 431.9 | 540.8 | 570.3 | 5.5% |
| Gross Profit | 214.4 | 205.7 | 140.5 | 205.9 | 211.2 | 2.6% |
| SG&A | 77.0 | 71.5 | 68.7 | 73.5 | 69.6 | -5.2% |
| EBITDA | 143.1 | 127.7 | 69.6 | 129.3 | 131.8 | 2.0% |
| Net Income | 96.5 | 118.5 | 68.9 | 107.2 | 125.3 | 16.9% |
Balance Sheet
|
|---|
| Cash | 207.8 | 229.1 | 197.6 | 265.7 | 332.5 | 25.2% |
| Short Term Debt | 30.4 | 9.9 | 8.5 | 3.2 | 22.2 | 591.1% |
| Long Term Debt | 20.6 | 20.5 | 20.6 | 20.7 | 1.0 | -95.3% |
Cash flow
|
|---|
| Capex | 4.6 | 7.9 | 3.7 | 2.3 | 3.5 | 51.4% |
Ratios
|
|---|
| Revenue growth | 1.9% | 2.4% | -20.6% | 25.2% | 5.5% | |
| EBITDA growth | 29.0% | -10.8% | -45.4% | 85.6% | 2.0% | |
|
|---|
| Gross Margin | 40.3% | 37.8% | 32.5% | 38.1% | 37.0% | -1.0% |
| EBITDA Margin | 26.9% | 23.5% | 16.1% | 23.9% | 23.1% | -0.8% |
| SG&A, % of revenue | 14.5% | 13.1% | 15.9% | 13.6% | 12.2% | -1.4% |
| Net Income Margin | 18.2% | 21.8% | 16.0% | 19.8% | 22.0% | 2.1% |
| CAPEX, % of revenue | 0.9% | 1.4% | 0.9% | 0.4% | 0.6% | 0.2% |
|
|---|
| ROIC | 21.0% | 16.7% | 7.6% | 13.9% | 12.8% | -1.1% |
| ROE | 18.1% | 18.9% | 9.9% | 13.7% | 14.0% | 0.3% |
| Net Debt/EBITDA | -1.1x | -1.6x | -2.4x | -1.9x | -2.3x | -0.5x |
Hollysys Automation Technologies, Ltd. ($HOLI) key quoterly financial indicators
| mln. $ | FY19Q1 | FY19Q2 | FY19Q3 | FY19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 139 | 149 | 125 | 157 | | 20.3% | -5.3% | 3.6% | 6.6% |
| EBITDA | 32 | 44 | 32 | 24 | | 25.9% | 3.4% | 20.3% | -32.6% |
| Net Income | 28 | 44 | 28 | 25 | | 31.1% | 21.5% | 28.2% | -9.8% |
Balance Sheet
|
|---|
| Cash | 277 | 271 | 253 | 333 | | 13.1% | 17.3% | 6.3% | 25.3% |
| Short Term Debt | 3 | 22 | 22 | 22 | | -67.8% | 166.3% | 164.5% | 584.3% |
| Long Term Debt | 21 | 1 | 1 | 1 | | 1.0% | -95.3% | -95.3% | -95.2% |
Ratios
|
|---|
| Gross Margin | 37.0% | 38.0% | 39.0% | 34.0% | | 0.6% | -1.3% | 2.6% | -5.4% |
| EBITDA Margin | 23.0% | 29.5% | 25.6% | 15.3% | | 1.0% | 2.5% | 3.5% | -8.9% |
| Net Income Margin | 20.1% | 29.5% | 22.4% | 15.9% | | 1.6% | 6.5% | 4.3% | -2.9% |
Peers in Electronic Equipment & Instruments
Below we provide Hollysys Automation Technologies, Ltd. benchmarking against other companies in Electronic Equipment & Instruments 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| SGOCO Group, Ltd ($SGOC) | -95.6% | 163.9% | -99.0% | 2,998.0% | |
| Hickok Inc ($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% | |
| Huami Corporation ($HMI) | | 73.6% | 31.6% | 77.9% | 59.4% |
| |
|---|
| Median (63 companies) | 3.0% | 0.3% | 5.0% | 10.4% | 8.0% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | | 2.4% | -20.6% | 25.2% | 5.5% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Intellicheck, Inc. ($IDN) | 57.1% | 80.0% | 85.5% | 91.3% | |
| Image Sensing Systems, Inc. ($ISNS) | 77.1% | 71.0% | 79.9% | 80.9% | |
| National Instruments Corporation ($NATI) | 74.1% | 74.5% | 74.5% | 75.4% | |
| Cognex Corporation ($CGNX) | 77.2% | 75.2% | 75.6% | 74.4% | |
| Applied DNA Sciences Inc ($APDN) | | 82.2% | 77.3% | 69.1% | |
| |
|---|
| Median (62 companies) | 42.3% | 40.7% | 41.7% | 40.9% | 36.2% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 40.3% | 37.8% | 32.5% | 38.1% | 37.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cognex Corporation ($CGNX) | 30.1% | 31.9% | 36.0% | 30.1% | |
| Coherent, Inc. ($COHR) | 16.7% | 18.9% | 24.9% | 26.6% | |
| Electro Scientific Industries, Inc. ($ESIO) | -19.1% | -2.0% | -17.8% | 23.1% | |
| FLIR Systems, Inc. ($FLIR) | 22.8% | 21.3% | 20.0% | 21.7% | |
| Badger Meter, Inc. ($BMI) | 16.7% | 18.6% | 20.1% | 18.7% | |
| |
|---|
| Median (62 companies) | 3.9% | 2.9% | 4.1% | 3.3% | 8.8% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 26.9% | 23.5% | 16.1% | 23.9% | 23.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| SGOCO Group, Ltd ($SGOC) | 0.0% | 0.0% | 0.0% | 154.6% | |
| Wrap Technologies Inc ($WRTC) | | | | 61.4% | |
| ClearSign Combustion Corporation ($CLIR) | 80.3% | 22.1% | 17.4% | 17.7% | |
| LightPath Technologies, Inc. ($LPTH) | | 6.5% | 7.8% | 7.7% | 5.7% |
| Giga-tronics Inc ($GIGA) | 0.1% | 1.3% | 0.3% | 7.0% | |
| |
|---|
| Median (62 companies) | 1.9% | 2.1% | 1.6% | 2.3% | 1.9% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 0.9% | 1.4% | 0.9% | 0.4% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | 83.3% | 39.6% | 55.3% | |
| Electro Scientific Industries, Inc. ($ESIO) | -19.7% | -7.1% | -22.9% | 31.5% | |
| Huami Corporation ($HMI) | | 4.5% | 38.6% | 30.1% | 27.7% |
| Coherent, Inc. ($COHR) | 13.1% | 15.6% | 24.0% | 21.5% | |
| Zebra Technologies Corporation ($ZBRA) | 0.9% | 2.2% | 10.2% | 20.8% | |
| |
|---|
| Median (74 companies) | 2.3% | 2.1% | 2.6% | 0.9% | 8.5% |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.0% | 16.7% | 7.6% | 13.9% | 12.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Itron, Inc. ($ITRI) | 1.9x | 1.0x | 2.0x | 12.3x | |
| Track Group Inc ($TRCK) | | | | 12.2x | |
| Mesa Laboratories, Inc. ($MLAB) | 1.1x | 1.7x | 2.0x | 3.5x | |
| Trimble Inc. ($TRMB) | 1.7x | 1.1x | 1.3x | 3.4x | |
| MTS Systems Corporation ($MTSC) | -0.4x | 5.8x | 3.9x | 3.2x | |
| |
|---|
| Median (36 companies) | -0.6x | -0.8x | -0.7x | -0.9x | -0.5x |
|---|
| Hollysys Automation Technologies, Ltd. ($HOLI) | -1.1x | -1.6x | -2.4x | -1.9x | -2.3x |
