Sun Hung Kai Properties Ltd CAPEX dropped on 67.9% in 2015 and Revenue dropped on 11.1%
10/09/2015 • About Sun Hung Kai Properties Ltd (
$16) • By InTwits
Sun Hung Kai Properties Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sun Hung Kai Properties Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.3%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 4,491 in FY2015, 13,986 in FY2014, 9,673 in FY2013, 6,138 in FY2012, 8,758 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sun Hung Kai Properties Ltd ($16) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 62,553 | 68,400 | 53,793 | 75,100 | 66,783 | -11.1% |
| Gross Profit | 25,294 | 30,180 | 23,886 | 30,111 | 27,794 | -7.7% |
| SG&A | 4,502 | 5,724 | 5,571 | 6,138 | 5,610 | -8.6% |
| EBITDA | 47,627 | 45,797 | 40,024 | 38,797 | 35,562 | -8.3% |
| Net Income | 48,097 | 43,080 | 40,329 | 33,520 | 31,082 | -7.3% |
Balance Sheet
|
|---|
| Cash | 7,898 | 14,338 | 16,471 | 18,528 | 32,561 | 75.7% |
| Short Term Debt | 9,682 | 9,801 | 8,060 | 9,241 | 10,816 | 17.0% |
| Long Term Debt | 50,753 | 61,465 | 56,570 | 74,490 | 72,316 | -2.9% |
Cash flow
|
|---|
| Capex | 8,758 | 6,138 | 9,673 | 13,986 | 4,491 | -67.9% |
Ratios
|
|---|
| Revenue growth | 88.4% | 9.3% | -21.4% | 39.6% | -11.1% | |
| EBITDA growth | 51.8% | -3.8% | -12.6% | -3.1% | -8.3% | |
| Gross Margin | 40.4% | 44.1% | 44.4% | 40.1% | 41.6% | 1.5% |
| EBITDA Margin | 76.1% | 67.0% | 74.4% | 51.7% | 53.3% | 1.6% |
| Net Income Margin | 76.9% | 63.0% | 75.0% | 44.6% | 46.5% | 1.9% |
| SG&A, % of revenue | 7.2% | 8.4% | 10.4% | 8.2% | 8.4% | 0.2% |
| CAPEX, % of revenue | 14.0% | 9.0% | 18.0% | 18.6% | 6.7% | -11.9% |
| ROIC | 12.9% | 10.7% | 8.4% | 7.4% | 6.2% | -1.2% |
| ROE | 16.9% | 13.2% | 11.0% | 8.4% | 7.2% | -1.2% |
| Net Debt/EBITDA | 1.1x | 1.2x | 1.2x | 1.7x | 1.4x | -0.3x |
Revenue and profitability
The company's Revenue dropped on 11.1% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 51.7% to 53.3% in FY2015.
Gross Margin increased slightly on 1.5 pp from 40.1% to 41.6% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign increased slightly on 1.9 pp from 44.6% to 46.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 6.7%. CAPEX/Revenue decreased on 2.2 pp from 9.0% in FY2012 to 6.7% in FY2015. Average CAPEX/Revenue for the last three years was 14.4%.
Return on investment
The company operates at low ROIC (6.16%) and ROE (7.18%). ROIC decreased slightly on 1.2 pp from 7.4% to 6.2% in FY2015. ROE decreased slightly on 1.2 pp from 8.4% to 7.2% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is 2.3x. Net Debt / EBITDA dropped on 0.3x from 1.7x to 1.4x in FY2015. Debt decreased slightly on 0.72% in FY2015 while cash jumped on 75.7% in FY2015.
Management team
Kwok Ping-Luen "Raymond" is a the company's CEO. Kwok Ping-Luen "Raymond" has spent 6 years at the company.
Appendix 1: Peers in Real Estate
Below we provide Sun Hung Kai Properties 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) | 15.5% | 15.6% | 13.1% | 5.0% | 3.4% |
|---|
| Sun Hung Kai Properties Ltd ($16) | | 9.3% | -21.4% | 39.6% | -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% | 62.7% |
| |
|---|
| Median (154 companies) | 43.7% | 41.9% | 40.0% | 38.9% | 50.7% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 40.4% | 44.1% | 44.4% | 40.1% | 41.6% |
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% | 26.9% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 76.1% | 67.0% | 74.4% | 51.7% | 53.3% |
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% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 14.0% | 9.0% | 18.0% | 18.6% | 6.7% |
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% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 12.9% | 10.7% | 8.4% | 7.4% | 6.2% |
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 |
|---|
| Sun Hung Kai Properties Ltd ($16) | 1.1x | 1.2x | 1.2x | 1.7x | 1.4x |
