Wang On Group Ltd Debt jumped on 107% in 2015 while Revenue dropped on 11.1%
25/06/2015 • About Wang On Group Ltd (
$1222) • By InTwits
Wang On Group Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 26.9% in FY2015, 41.7% in FY2014, 28.2% in FY2013, 16.6% in FY2012, 15.3% in FY2011
- Wang On Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.7%. At the same time it's a lot of higher than industry average of 7.5%.
- CAPEX is quite volatile: 238 in FY2015, 445 in FY2014, 3.6 in FY2013, 33.2 in FY2012, 70.9 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Wang On Group Ltd ($1222) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 559 | 411 | 744 | 1,687 | 1,500 | -11.1% |
| Gross Profit | 178 | 164 | 365 | 943 | 697 | -26.1% |
| SG&A | | 99 | 136 | 192 | 217 | 12.8% |
| EBITDA | 86 | 68 | 210 | 703 | 403 | -42.6% |
| Net Income | 226 | 395 | 410 | 594 | 588 | -0.9% |
Balance Sheet
|
|---|
| Cash | 1,043 | 582 | 735 | 711 | 1,047 | 47.3% |
| Short Term Debt | 240 | 229 | 284 | 447 | 821 | 83.5% |
| Long Term Debt | 632 | 790 | 1,346 | 820 | 1,808 | 120.6% |
Cash flow
|
|---|
| Capex | 71 | 33 | 4 | 445 | 238 | -46.7% |
Ratios
|
|---|
| Revenue growth | -2.7% | -26.6% | 81.1% | 126.7% | -11.1% | |
| EBITDA growth | -34.8% | -20.4% | 207.9% | 234.8% | -42.6% | |
| Gross Margin | 31.9% | 39.9% | 49.0% | 55.9% | 46.5% | -9.4% |
| EBITDA Margin | 15.3% | 16.6% | 28.2% | 41.7% | 26.9% | -14.8% |
| Net Income Margin | 40.4% | 96.2% | 55.0% | 35.2% | 39.2% | 4.0% |
| SG&A, % of revenue | | 24.2% | 18.3% | 11.4% | 14.5% | 3.1% |
| CAPEX, % of revenue | 12.7% | 8.1% | 0.5% | 26.4% | 15.8% | -10.6% |
| ROIC | 2.3% | 1.5% | 4.4% | 13.2% | 6.5% | -6.7% |
| ROE | 9.9% | 14.1% | 12.5% | 15.9% | 14.5% | -1.4% |
| Net Debt/EBITDA | -2.0x | 6.4x | 4.3x | 0.8x | 3.9x | 3.1x |
Revenue and profitability
The company's Revenue dropped on 11.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 7.5% to 9.4% in 2015.
Gross Margin decreased on 9.4 pp from 55.9% to 46.5% in FY2015. SG&A as a % of Revenue increased on 3.1 pp from 11.4% to 14.5% in FY2015.
Net Income marign increased on 4.0 pp from 35.2% to 39.2% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Wang On Group Ltd's CAPEX/Revenue was 15.8% in FY2015. Wang On Group Ltd showed CAPEX/Revenue growth of 7.8 pp from 8.1% in FY2012 to 15.8% in FY2015. Average CAPEX/Revenue for the last three years was 14.2%.The company invested a big chunk of EBITDA (58.9%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (14.52%) while ROIC is low (6.47%). ROIC decreased on 6.7 pp from 13.2% to 6.5% in FY2015. ROE decreased slightly on 1.4 pp from 15.9% to 14.5% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.9x and Debt / EBITDA is 6.5x. Net Debt / EBITDA surged on 3.1x from 0.8x to 3.9x in FY2015. Debt surged on 107% in FY2015 while cash surged on 47.3% in FY2015.
Appendix 1: Peers in Real Estate
Below you can find Wang On Group Ltd benchmarking vs. other companies in Real Estate 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Common Splendor International Health Industry Group Ltd ($286) | -0.9% | -0.5% | 1.9% | 4,120.2% | |
| Landsea Green Properties Co Ltd ($106) | -91.1% | -35.1% | -51.2% | 3,097.3% | |
| LVGEM China Real Estate Invest ($95) | -0.1% | -27.5% | -21.9% | 3,008.3% | |
| Rivera Holdings Ltd ($281) | 222.2% | 197.1% | -89.9% | 2,067.2% | |
| Ceneric Holdings Ltd ($542) | -94.0% | -73.9% | -49.8% | 1,922.5% | |
| |
|---|
| Median (172 companies) | 15.0% | 15.6% | 12.4% | 5.0% | 3.9% |
|---|
| Wang On Group Ltd ($1222) | | -26.6% | 81.1% | 126.7% | -11.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tern Properties Co Ltd ($277) | 96.9% | 96.7% | 98.4% | 98.4% | 98.7% |
| GR Properties Ltd ($108) | 37.4% | 39.3% | | 98.2% | |
| Renhe Commercial Holdings Co Ltd ($1387) | 71.1% | 79.0% | 95.2% | 97.9% | |
| YT Realty Group Ltd ($75) | 91.5% | 94.4% | 96.6% | 96.7% | |
| ITC Properties Group Ltd ($199) | 29.8% | 22.8% | 92.9% | 95.2% | |
| |
|---|
| Median (154 companies) | 43.7% | 42.1% | 40.0% | 38.9% | 57.5% |
|---|
| Wang On Group Ltd ($1222) | 31.9% | 39.9% | 49.0% | 55.9% | 46.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ITC Properties Group Ltd ($199) | 24.0% | -125.5% | -2,995.7% | 1,685.3% | |
| Beijing Properties Holdings Ltd ($925) | 33.2% | -606.3% | 2,162.6% | 224.3% | |
| Chinese Estates Holdings Ltd ($127) | 340.9% | 356.2% | 91.6% | 195.5% | |
| Zall Development Group Ltd ($2098) | 73.6% | 105.3% | 133.1% | 143.2% | |
| Ceneric Holdings Ltd ($542) | -5.9% | -382.7% | -1,024.0% | 126.8% | |
| |
|---|
| Median (172 companies) | 35.4% | 28.9% | 27.9% | 26.4% | 25.8% |
|---|
| Wang On Group Ltd ($1222) | 15.3% | 16.6% | 28.2% | 41.7% | 26.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| LT Commercial Real Estate Ltd ($112) | 0.0% | 0.0% | 18.0% | 27,965.5% | |
| ITC Properties Group Ltd ($199) | 25.6% | 56.2% | 4,202.4% | 1,304.7% | |
| Wanda Hotel Development Co Ltd ($169) | | 5.9% | 24.1% | 1,091.1% | |
| Pacific Century Premium Developments Ltd ($432) | 6.5% | 2.9% | 323.1% | 351.2% | |
| Liu Chong Hing Investment Ltd ($194) | 9.4% | 18.5% | 6.1% | 269.7% | |
| |
|---|
| Median (173 companies) | 5.9% | 5.3% | 6.1% | 4.5% | 7.8% |
|---|
| Wang On Group Ltd ($1222) | 12.7% | 8.1% | 0.5% | 26.4% | 15.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Rykadan Capital Ltd ($2288) | 17.2% | -1.8% | -2.6% | 48.4% | -3.7% |
| LVGEM China Real Estate Invest ($95) | 0.2% | -0.2% | -1.1% | 22.1% | |
| Zall Development Group Ltd ($2098) | 39.0% | 19.2% | 17.6% | 18.7% | |
| China Overseas Land & Investment Ltd ($688) | 18.0% | 18.4% | 15.1% | 18.5% | |
| Hong Kong Ferry Holdings Co Ltd ($50) | 4.7% | 3.8% | 0.6% | 18.0% | |
| |
|---|
| Median (176 companies) | 4.6% | 4.0% | 3.8% | 3.8% | 1.9% |
|---|
| Wang On Group Ltd ($1222) | 2.3% | 1.5% | 4.4% | 13.2% | 6.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Properties Group Ltd ($1838) | 16.9x | 43.0x | 21.4x | 1,523.0x | |
| SRE Group Ltd ($1207) | 10.6x | 14.1x | 24.7x | 1,184.6x | |
| Cheuk Nang Holdings Ltd ($131) | 53.2x | | 177.3x | 901.7x | |
| Tian An China Investment Co Ltd ($28) | 2.4x | 13.2x | 15.1x | 486.6x | |
| Greenland Hong Kong Holdings Ltd ($337) | 3.7x | | 6.2x | 49.3x | |
| |
|---|
| Median (139 companies) | 2.1x | 2.3x | 2.7x | 3.0x | 0.3x |
|---|
| Wang On Group Ltd ($1222) | -2.0x | 6.4x | 4.3x | 0.8x | 3.9x |
