New World Development Co Ltd reports 96.5% Net Income growth while 2.2% Revenue decline
24/09/2015 • About New World Development Co Ltd (
$17) • By InTwits
New World Development Co Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- New World Development Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.3%. At the same time it's a lot of higher than industry average of 13.4%.
- CAPEX is quite volatile: 8,987 in FY2015, 6,352 in FY2014, 5,487 in FY2013, 2,755 in FY2012, 4,764 in FY2011
- The company has business model with low profitability: ROIC is at 8.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
New World Development Co Ltd ($17) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 32,882 | 35,620 | 46,780 | 56,501 | 55,245 | -2.2% |
| Gross Profit | 12,209 | 15,694 | 18,425 | 21,553 | 19,306 | -10.4% |
| SG&A | 5,674 | 6,483 | 7,797 | 8,716 | 9,809 | 12.5% |
| EBITDA | 12,320 | 17,361 | 20,225 | 19,193 | 30,159 | 57.1% |
| Net Income | 9,154 | 10,139 | 14,149 | 9,725 | 19,112 | 96.5% |
Balance Sheet
|
|---|
| Cash | 23,972 | 27,910 | 40,091 | 61,726 | 59,352 | -3.8% |
| Short Term Debt | 21,759 | 20,866 | 27,183 | 32,349 | 33,518 | 3.6% |
| Long Term Debt | 38,745 | 67,751 | 77,398 | 86,350 | 82,709 | -4.2% |
Cash flow
|
|---|
| Capex | 4,764 | 2,755 | 5,487 | 6,352 | 8,987 | 41.5% |
Ratios
|
|---|
| Revenue growth | 8.8% | 8.3% | 31.3% | 20.8% | -2.2% | |
| EBITDA growth | -14.7% | 40.9% | 16.5% | -5.1% | 57.1% | |
| Gross Margin | 37.1% | 44.1% | 39.4% | 38.1% | 34.9% | -3.2% |
| EBITDA Margin | 37.5% | 48.7% | 43.2% | 34.0% | 54.6% | 20.6% |
| Net Income Margin | 27.8% | 28.5% | 30.2% | 17.2% | 34.6% | 17.4% |
| SG&A, % of revenue | 17.3% | 18.2% | 16.7% | 15.4% | 17.8% | 2.3% |
| CAPEX, % of revenue | 14.5% | 7.7% | 11.7% | 11.2% | 16.3% | 5.0% |
| ROIC | 6.0% | 6.8% | 6.6% | 5.4% | 8.1% | 2.7% |
| ROE | 9.5% | 8.9% | 10.8% | 6.5% | 11.3% | 4.8% |
| Net Debt/EBITDA | 3.0x | 3.5x | 3.2x | 3.0x | 1.9x | -1.1x |
Revenue and profitability
The company's Revenue decreased on 2.2% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 20.6 pp from 34.0% to 54.6% in FY2015.
Gross Margin decreased on 3.2 pp from 38.1% to 34.9% in FY2015. SG&A as a % of Revenue increased on 2.3 pp from 15.4% to 17.8% in FY2015.
Net Income marign jumped on 17.4 pp from 17.2% to 34.6% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 16.3% in FY2015. CAPEX/Revenue increased on 8.5 pp from 7.7% in FY2012 to 16.3% in FY2015. Average CAPEX/Revenue for the last three years was 13.1%.
Return on investment
The company operates at low ROIC (8.11%) and ROE (11.28%). ROIC increased on 2.7 pp from 5.4% to 8.1% in FY2015. ROE increased on 4.8 pp from 6.5% to 11.3% in FY2015.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 3.9x Debt / EBITDA. Net Debt / EBITDA dropped on 1.1x from 3.0x to 1.9x in FY2015. Debt decreased on 2.1% in FY2015 while cash decreased on 3.8% in FY2015.
Appendix 1: Peers in Real Estate
Below we provide New World Development Co 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% | 12.4% | 5.0% | 2.9% |
|---|
| New World Development Co Ltd ($17) | | 8.3% | 31.3% | 20.8% | -2.2% |
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% | 41.1% | 39.2% | 50.7% |
|---|
| New World Development Co Ltd ($17) | 37.1% | 44.1% | 39.4% | 38.1% | 34.9% |
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% | 27.8% |
|---|
| New World Development Co Ltd ($17) | 37.5% | 48.7% | 43.2% | 34.0% | 54.6% |
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% |
|---|
| New World Development Co Ltd ($17) | 14.5% | 7.7% | 11.7% | 11.2% | 16.3% |
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% | 3.9% | 3.8% | 3.8% | 2.2% |
|---|
| New World Development Co Ltd ($17) | 6.0% | 6.8% | 6.6% | 5.4% | 8.1% |
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 | 0.6x |
|---|
| New World Development Co Ltd ($17) | 3.0x | 3.5x | 3.2x | 3.0x | 1.9x |
