Link REIT/The reports 724% CAPEX growth and 7.9% Revenue growth
10/06/2015 • About Link REIT/The (
$823) • By InTwits
Link REIT/The reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Link REIT/The has high CAPEX intensity: 5 year average CAPEX/Revenue was 38.4%. At the same time it's in pair with industry average of 51.0%.
- CAPEX is quite volatile: 8,278 in FY2015, 1,005 in FY2014, 871 in FY2013, 2,606 in FY2012, 725 in FY2011
- The company has highly profitable business model: ROIC is at 22.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Link REIT/The ($823) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,353 | 5,932 | 6,506 | 7,155 | 7,723 | 7.9% |
| SG&A | 270 | 364 | 332 | 333 | 545 | 63.7% |
| EBITDA | 16,304 | 10,621 | 22,125 | 18,445 | 27,954 | 51.6% |
| Net Income | 15,280 | 9,602 | 21,062 | 17,305 | 27,230 | 57.4% |
Balance Sheet
|
|---|
| Cash | 699 | 150 | 1,657 | 560 | 2,233 | 298.8% |
| Short Term Debt | 2,598 | 0 | 1,706 | 2,825 | 1,940 | -31.3% |
| Long Term Debt | 7,782 | 12,595 | 11,829 | 9,699 | 17,482 | 80.2% |
Cash flow
|
|---|
| Capex | 725 | 2,606 | 871 | 1,005 | 8,278 | 723.7% |
Ratios
|
|---|
| Revenue growth | 7.3% | 10.8% | 9.7% | 10.0% | 7.9% | |
| EBITDA growth | 25.1% | -34.9% | 108.3% | -16.6% | 51.6% | |
| EBITDA Margin | 304.6% | 179.0% | 340.1% | 257.8% | 362.0% | 104.2% |
| Net Income Margin | 285.4% | 161.9% | 323.7% | 241.9% | 352.6% | 110.7% |
| SG&A, % of revenue | 5.0% | 6.1% | 5.1% | 4.7% | 7.1% | 2.4% |
| CAPEX, % of revenue | 13.5% | 43.9% | 13.4% | 14.0% | 107.2% | 93.1% |
| ROIC | 27.2% | 14.8% | 25.5% | 17.7% | 22.3% | 4.6% |
| ROE | 31.8% | 16.3% | 29.2% | 19.4% | 25.4% | 5.9% |
| Net Debt/EBITDA | 0.6x | 1.2x | 0.5x | 0.6x | 0.6x | -0.0x |
Revenue and profitability
Link REIT/The's Revenue increased on 7.9% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 10.5 pp from 45.2% to 55.7% in 2015.
SG&A as a % of Revenue increased on 2.4 pp from 4.7% to 7.1% in FY2015.
Net Income marign jumped on 111 pp from 242% to 353% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 107% in FY2015. CAPEX/Revenue surged on 63.3 pp from 43.9% in FY2012 to 107% in FY2015. It's average level of CAPEX/Revenue for the last three years was 44.9%.
Return on investment
The company operates at high and attractive ROIC (22.29%) and ROE (25.39%). ROIC increased on 4.6 pp from 17.7% to 22.3% in FY2015. ROE increased on 5.9 pp from 19.4% to 25.4% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 0.7x. Net Debt / EBITDA decreased on 0.034x from 0.6x to 0.6x in FY2015. Debt surged on 55.1% in FY2015 while cash jumped on 299% in FY2015.
Management team
Hongchoy George is a Link REIT/The's CEO. Hongchoy George has spent 9 years at the company. The company's CFO is Cheung Lee Ming "Andy". Cheung Lee Ming "Andy" has 8 years tenure at the company.
Appendix 1: Peers in REITS
Below we provide Link REIT/The benchmarking against other companies in REITS 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Prosperity REIT ($808) | 3.1% | 10.8% | 10.8% | 18.0% | |
| Fortune Real Estate Investment Trust ($778) | 9.0% | 22.1% | 28.6% | 15.6% | |
| Spring Real Estate Investment Trust ($1426) | 25.2% | 13.8% | 33.1% | 15.4% | |
| Yuexiu Real Estate Investment Trust ($405) | 7.8% | 36.4% | 92.5% | 14.6% | |
| Regal Real Estate Investment Trust ($1881) | -18.3% | 13.6% | 7.0% | 13.8% | |
| |
|---|
| Median (8 companies) | 8.4% | 12.2% | 9.6% | 14.2% | |
|---|
| Link REIT/The ($823) | | 10.8% | 9.7% | 10.0% | 7.9% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sunlight Real Estate Investment Trust ($435) | 343.7% | 202.4% | 293.6% | 203.4% | |
| New Century Real Estate Investment Trust ($1275) | 30.9% | 31.3% | 33.2% | 82.5% | |
| Regal Real Estate Investment Trust ($1881) | 437.8% | 447.8% | 73.8% | 56.7% | |
| Yuexiu Real Estate Investment Trust ($405) | 59.2% | 56.0% | 50.4% | 50.7% | |
| |
|---|
| Median (4 companies) | 343.7% | 129.2% | 50.4% | 69.6% | |
|---|
| Link REIT/The ($823) | 304.6% | 179.0% | 340.1% | 257.8% | 362.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Regal Real Estate Investment Trust ($1881) | 11.5% | 8.3% | 19.8% | 322.0% | |
| Fortune Real Estate Investment Trust ($778) | 4.8% | 180.5% | 400.4% | 9.4% | |
| Prosperity REIT ($808) | 4.6% | 4.3% | 4.5% | 6.4% | |
| New Century Real Estate Investment Trust ($1275) | 0.0% | 0.0% | 3.5% | 5.7% | |
| Sunlight Real Estate Investment Trust ($435) | 1.2% | 1.4% | 0.7% | 5.1% | |
| |
|---|
| Median (8 companies) | 1.8% | 1.6% | 3.5% | 5.4% | |
|---|
| Link REIT/The ($823) | 13.5% | 43.9% | 13.4% | 14.0% | 107.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fortune Real Estate Investment Trust ($778) | 24.2% | 13.6% | 16.0% | 14.0% | |
| Sunlight Real Estate Investment Trust ($435) | 15.7% | 9.2% | 13.3% | 9.2% | |
| New Century Real Estate Investment Trust ($1275) | 7.9% | 6.5% | 3.0% | 4.4% | |
| Champion REIT ($2778) | 11.5% | 8.9% | 4.0% | 4.0% | |
| Spring Real Estate Investment Trust ($1426) | 3.6% | 3.4% | 3.7% | 3.8% | |
| |
|---|
| Median (9 companies) | 7.9% | 6.5% | 3.0% | 3.8% | |
|---|
| Link REIT/The ($823) | 27.2% | 14.8% | 25.5% | 17.7% | 22.3% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Regal Real Estate Investment Trust ($1881) | 1.5x | 1.3x | 10.2x | 13.9x | |
| Yuexiu Real Estate Investment Trust ($405) | 4.7x | 19.0x | 10.4x | 8.9x | |
| New Century Real Estate Investment Trust ($1275) | 5.4x | 4.3x | 6.5x | 6.1x | |
| Sunlight Real Estate Investment Trust ($435) | 2.2x | 3.3x | 2.1x | 2.7x | |
| |
|---|
| Median (4 companies) | 2.2x | 3.8x | 8.3x | 7.5x | |
|---|
| Link REIT/The ($823) | 0.6x | 1.2x | 0.5x | 0.6x | 0.6x |
