ChinaCache International Holdings Ltd. :CCIH-US: Earnings Analysis: Q3, 2016 By the Numbers : December 2, 2016

ChinaCache International Holdings Ltd. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of ChinaCache International Holdings Ltd. – Akamai Technologies, Inc., Brightcove Inc., Internap Corporation, Limelight Networks, Inc., Interxion Holding N.V., China Eastern Airlines Corporation Limited Sponsored ADR Class H and China Telecom Corp. Ltd. Sponsored ADR Class H (AKAM-US, BCOV-US, INAP-US, LLNW-US, INXN-US, CEA-US and CHA-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 39.24 million, Net Earnings of USD -14.12 million.
  • Gross margins narrowed from 19.64% to 2.49% compared to the same period last year, operating (EBITDA) margins now -24.07% from -0.69%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 39.24 39.8 41 48.64 51.49
Revenue Growth (%YOY) -23.79 -30.15 -29.66 -11.66 -15.58
Earnings (mil) -14.12 -16.55 -21.2 -5.74 -6.24
Earnings Growth (%YOY) -126.37 -1297.25 -2442.6 -71.17 -6260.89
Net Margin (%) -35.99 -41.59 -51.71 -11.8 -12.12
EPS -0.55 -0.66 -0.86 -0.22 -0.23
Return on Equity (%) -79.85 -77.86 -83.28 -19.67 -19.05
Return on Assets (%) -17.25 -17.77 -21.13 -5.83 -6.68

Access our Ratings and Scores for ChinaCache International Holdings Ltd.

Market Share Versus Profits

Revenues History
Earnings History

CCIH-US‘s change in revenue this period compared to the same period last year of -23.79% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CCIH-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.41% and earnings by 14.69% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 19.64% to 2.49%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -0.69% to -24.07% in this time frame. For comparison, gross margins were -1.48% and EBITDA margins were -30.71% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -13.46% to -39.27% and (2) one-time items that contributed to a decrease in pretax margins from -11.30% to -36.19%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for ChinaCache International Holdings Ltd.

Company Profile

ChinaCache International Holdings Ltd. provides Internet content and application delivery services in China. It also provides a portfolio of services and solutions to businesses, government agencies, and other enterprises. ChinaCache International Holdings carrier-neutral service network is interconnected with networks operated by all telecommunications carriers, major non-carriers and local Internet service providers. It deploys servers and nodes across networks throughout China and uses private transmission backbone that connects nodes and data centers. The company was founded by Jean Xiaohong Kou and Song Wang in June 1998 and is headquartered in Beijing, China.

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