Kingtone Wirelessinfo Solution Holding Ltd. :KONE-US: Earnings Analysis: For the six months ended March 31, 2017 : August 21, 2017

Kingtone Wirelessinfo Solution Holding Ltd. reports financial results for the half-year ended March 31, 2017.

We analyze the earnings along side the following peers of Kingtone Wirelessinfo Solution Holding Ltd. – MobileIron, Inc., SAP SE Sponsored ADR and Accenture Plc Class A (MOBL-US, SAP-US and ACN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 0.21 million, Net Earnings of USD -0.24 million.
  • Gross margins narrowed from -11.29% to -158.60% compared to the same period last year, operating (EBITDA) margins now -271.16% from -190.93%.
  • Earnings growth due to contribution of one-time items.

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

2017-03-31 2016-09-30 2016-03-31 2015-09-30 2015-03-31
Relevant Numbers (Semi-Annual)
Revenues 0.21 0.69 0.49 0.34 8.47
Revenue Growth (YOY) -56.88 100.19 -94.24 -86.41 132.13
Earnings -0.24 0.51 -0.67 -1.6 2.63
Earnings Growth (YOY) 64.65 132.23 -125.46 -333.35 479.44
Net Margin -112.56 74.86 -137.3 -464.93 31.05
EPS -0.17 0.37 -0.47 -1.13 1.87
Return on Equity -1.25 2.6 -3.3 -7.28 12.09
Return on Assets -2.08 4.28 -5.35 -11.87 17.26

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Market Share Versus Profits

Revenues History
Earnings History

KONE-US‘s change in revenue this period compared to the same period last year of -56.88% 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 KONE-US is holding onto its market share. Also, for comparison purposes, revenues changed by -69.38% and earnings by -146.05% 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 earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from -158.60% to -11.29% for the same period last year, while operating margins (EBITDA margins) went from -271.16% to -190.93% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

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

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

KONE-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 12,396.11 days, compared to last year’s level of 1,481.51 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Margins

The company’s operating (EBIT) margins contracted from -244.56% to -399.07%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -137.30% to -112.56%.

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 Kingtone Wirelessinfo Solution Holding Ltd.

Company Profile

Kingtone Wirelessinfo Solution Holding Ltd. engages in the mobile enterprise software industry. It develops and provides mobile enterprise solutions in which the company gives support through information technology or information technology systems, including enterprise assets management, enterprise resource planning, supply chain management, and customer relationship management. Its software allows communicating among field personnel via wireless devices such as smart phones, cameras, barcode, scanners, table computers and others. The company was founded on October 27, 2009 and is headquartered in Xi’an, China.

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