China South City Holdings Ltd reports 263% CAPEX growth while 27.6% Revenue decline
29/06/2015 • About China South City Holdings Ltd (
$1668) • By InTwits
China South City Holdings 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: 62.1% in FY2015, 47.1% in FY2014, 61.5% in FY2013, 91.4% in FY2012, 112.1% in FY2011
- China South City Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 67.2%. At the same time it's in pair with industry average of 19.0%.
- CAPEX is quite volatile: 12,107 in FY2015, 3,332 in FY2014, 3,083 in FY2013, 2,327 in FY2012, 1,849 in FY2011
- The company has business model with average profitability: ROIC is at 11.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China South City Holdings Ltd ($1668) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,234 | 3,671 | 7,488 | 13,468 | 9,758 | -27.6% |
| Gross Profit | 1,333 | 2,236 | 4,177 | 6,547 | 5,176 | -21.0% |
| SG&A | 320 | 538 | 826 | 1,444 | 1,796 | 24.4% |
| EBITDA | 2,505 | 3,356 | 4,603 | 6,337 | 6,062 | -4.3% |
| Net Income | 1,552 | 2,071 | 2,750 | 3,494 | 3,728 | 6.7% |
Balance Sheet
|
|---|
| Cash | 4,521 | 3,316 | 6,265 | 11,303 | 7,253 | -35.8% |
| Short Term Debt | 1,696 | 2,740 | 4,418 | 5,842 | 9,576 | 63.9% |
| Long Term Debt | 4,446 | 3,878 | 7,435 | 11,677 | 15,427 | 32.1% |
Cash flow
|
|---|
| Capex | 1,849 | 2,327 | 3,083 | 3,332 | 12,107 | 263.4% |
Ratios
|
|---|
| Revenue growth | 42.3% | 64.3% | 104.0% | 79.9% | -27.6% | |
| EBITDA growth | 15.3% | 34.0% | 37.1% | 37.7% | -4.3% | |
| Gross Margin | 59.7% | 60.9% | 55.8% | 48.6% | 53.0% | 4.4% |
| EBITDA Margin | 112.1% | 91.4% | 61.5% | 47.1% | 62.1% | 15.1% |
| Net Income Margin | 69.5% | 56.4% | 36.7% | 25.9% | 38.2% | 12.3% |
| SG&A, % of revenue | 14.3% | 14.7% | 11.0% | 10.7% | 18.4% | 7.7% |
| CAPEX, % of revenue | 82.8% | 63.4% | 41.2% | 24.7% | 124.1% | 99.3% |
| ROIC | 14.0% | 15.2% | 15.9% | 15.9% | 11.5% | -4.4% |
| ROE | 16.0% | 17.6% | 19.1% | 19.5% | 16.6% | -2.9% |
| Net Debt/EBITDA | 0.6x | 1.0x | 1.2x | 1.0x | 2.9x | 1.9x |
Revenue and profitability
The company's Revenue dropped on 27.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 15.1 pp from 47.1% to 62.1% in FY2015.
Gross Margin increased on 4.4 pp from 48.6% to 53.0% in FY2015. SG&A as a % of Revenue increased on 7.7 pp from 10.7% to 18.4% in FY2015.
Net Income marign surged on 12.3 pp from 25.9% to 38.2% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 124% in FY2015. The company showed fast CAPEX/Revenue growth of 60.7 pp from 63.4% in FY2012 to 124% in FY2015. For the last three years the average CAPEX/Revenue was 63.3%.The company has spent a lot to CAPEX (200% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (16.63%) while ROIC is low (11.51%). ROIC decreased on 4.4 pp from 15.9% to 11.5% in FY2015. ROE decreased on 2.9 pp from 19.5% to 16.6% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 4.1x. Net Debt / EBITDA jumped on 1.9x from 1.0x to 2.9x in FY2015. Debt jumped on 42.7% in FY2015 while cash dropped on 35.8% in FY2015.
Appendix 1: Peers in Real Estate
Below you can find China South City Holdings 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) | 13.8% | 15.2% | 12.4% | 5.0% | 2.9% |
|---|
| China South City Holdings Ltd ($1668) | | 64.3% | 104.0% | 79.9% | -27.6% |
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) | 43.4% | 41.9% | 40.0% | 38.9% | 48.3% |
|---|
| China South City Holdings Ltd ($1668) | 59.7% | 60.9% | 55.8% | 48.6% | 53.0% |
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) | 35.2% | 28.9% | 27.9% | 26.4% | 26.4% |
|---|
| China South City Holdings Ltd ($1668) | 112.1% | 91.4% | 61.5% | 47.1% | 62.1% |
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% | 1.2% |
|---|
| China South City Holdings Ltd ($1668) | 82.8% | 63.4% | 41.2% | 24.7% | 124.1% |
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% | 3.9% | 3.8% | 3.8% | 2.2% |
|---|
| China South City Holdings Ltd ($1668) | 14.0% | 15.2% | 15.9% | 15.9% | 11.5% |
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 | 2.4x | 2.8x | 3.0x | 1.1x |
|---|
| China South City Holdings Ltd ($1668) | 0.6x | 1.0x | 1.2x | 1.0x | 2.9x |
