Hopewell Holdings Ltd reports 109% Net Income growth while 10.9% Revenue decline
26/08/2015 • About Hopewell Holdings Ltd (
$54) • By InTwits
Hopewell Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hopewell Holdings Ltd doesn't have a profitable business model yet: FY2015 ROIC is 1.8%
- EBITDA Margin is quite volatile: 57.1% in FY2015, 41.4% in FY2014, 172.2% in FY2013, 43.1% in FY2012, 36.7% in FY2011
- Hopewell Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 66.3%. At the same time it's a lot of higher than industry average of 60.8%.
- CAPEX is quite volatile: 398 in FY2015, 686 in FY2014, 4,094 in FY2013, 318 in FY2012, 337 in FY2011
- The company has potentially unprofitable business model: ROIC is at 1.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hopewell Holdings Ltd ($54) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,543 | 1,758 | 1,725 | 2,093 | 1,865 | -10.9% |
| Gross Profit | 796 | 1,056 | 1,053 | 1,182 | 1,092 | -7.6% |
| SG&A | 386 | 422 | 430 | 416 | 433 | 3.9% |
| EBITDA | 566 | 757 | 2,971 | 866 | 1,065 | 23.0% |
| Net Income | 5,576 | 3,631 | 12,206 | 1,358 | 2,835 | 108.7% |
Balance Sheet
|
|---|
| Cash | 5,633 | 7,976 | 4,489 | 4,061 | 4,087 | 0.6% |
| Short Term Debt | 605 | 1,754 | 2,965 | 2,625 | 296 | -88.7% |
| Long Term Debt | 2,745 | 3,698 | 4,212 | 3,498 | 4,360 | 24.7% |
Cash flow
|
|---|
| Capex | 337 | 318 | 4,094 | 686 | 398 | -42.0% |
Ratios
|
|---|
| Revenue growth | 12.3% | 14.0% | -1.9% | 21.3% | -10.9% | |
| EBITDA growth | -78.5% | 33.8% | 292.3% | -70.8% | 23.0% | |
| Gross Margin | 51.6% | 60.1% | 61.0% | 56.5% | 58.5% | 2.1% |
| EBITDA Margin | 36.7% | 43.1% | 172.2% | 41.4% | 57.1% | 15.7% |
| Net Income Margin | 361.5% | 206.5% | 707.5% | 64.9% | 152.0% | 87.1% |
| SG&A, % of revenue | 25.0% | 24.0% | 24.9% | 19.9% | 23.2% | 3.3% |
| CAPEX, % of revenue | 21.8% | 18.1% | 237.3% | 32.8% | 21.3% | -11.5% |
| ROIC | 1.6% | 1.8% | 6.1% | 1.5% | 1.8% | 0.4% |
| ROE | 20.8% | 11.9% | 32.5% | 3.1% | 6.3% | 3.2% |
| Net Debt/EBITDA | -4.0x | -3.3x | 0.9x | 2.4x | 0.5x | -1.8x |
Revenue and profitability
Hopewell Holdings Ltd's Revenue dropped on 10.9% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 15.7 pp from 41.4% to 57.1% in FY2015.
Gross Margin increased on 2.1 pp from 56.5% to 58.5% in FY2015. SG&A as a % of Revenue increased on 3.3 pp from 19.9% to 23.2% in FY2015.
Net Income marign jumped on 87.1 pp from 64.9% to 152% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 21.3% in FY2015. Hopewell Holdings Ltd showed CAPEX/Revenue growth of 3.2 pp from 18.1% in FY2012 to 21.3% in FY2015. Average CAPEX/Revenue for the last three years was 97.1%.
Return on investment
The company operates at low ROIC (1.84%) and ROE (6.35%). ROIC showed almost no change in FY2015. ROE increased on 3.2 pp from 3.1% to 6.3% in FY2015.
Leverage (Debt)
Debt level is 0.5x Net Debt / EBITDA and 4.4x Debt / EBITDA. Net Debt / EBITDA dropped on 1.8x from 2.4x to 0.5x in FY2015. Debt dropped on 24.0% in FY2015 while cash increased slightly on 0.63% in FY2015.
Appendix 1: Peers in Real Estate
Below we provide Hopewell Holdings Ltd benchmarking against other companies in Real Estate 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 |
|---|
| 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) | 15.7% | 15.6% | 13.1% | 5.0% | 3.9% |
|---|
| Hopewell Holdings Ltd ($54) | | 14.0% | -1.9% | 21.3% | -10.9% |
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% | 62.7% |
| |
|---|
| Median (154 companies) | 43.4% | 41.9% | 40.0% | 38.9% | 48.3% |
|---|
| Hopewell Holdings Ltd ($54) | 51.6% | 60.1% | 61.0% | 56.5% | 58.5% |
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% | -525.1% |
| 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% |
|---|
| Hopewell Holdings Ltd ($54) | 36.7% | 43.1% | 172.2% | 41.4% | 57.1% |
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% | 189.7% |
| 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% | 1.5% |
|---|
| Hopewell Holdings Ltd ($54) | 21.8% | 18.1% | 237.3% | 32.8% | 21.3% |
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% | 2.2% |
|---|
| Hopewell Holdings Ltd ($54) | 1.6% | 1.8% | 6.1% | 1.5% | 1.8% |
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 | 0.5x |
|---|
| Hopewell Holdings Ltd ($54) | -4.0x | -3.3x | 0.9x | 2.4x | 0.5x |
