Lai Fung Holdings Ltd reports 57.5% revenue growth in FY2015 and 6.9 pp EBITDA Margin decline from 49.9% to 42.9%
15/10/2015 • About Lai Fung Holdings Ltd (
$1125) • By InTwits
Lai Fung Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lai Fung Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 37.5%. At the same time it's a lot of higher than industry average of 11.4%.
- CAPEX is quite volatile: 447 in FY2015, 968 in FY2014, 238 in FY2013, 254 in FY2012, 343 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lai Fung Holdings Ltd ($1125) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 647 | 1,394 | 1,895 | 1,207 | 1,901 | 57.5% |
| Gross Profit | 382 | 813 | 998 | 746 | 1,037 | 39.0% |
| SG&A | | 307 | 376 | 340 | 344 | 1.1% |
| EBITDA | 267 | 625 | 765 | 602 | 817 | 35.7% |
| Net Income | 530 | 813 | 757 | 1,100 | 1,005 | -8.6% |
Balance Sheet
|
|---|
| Cash | 883 | 1,696 | 3,608 | 2,072 | 1,571 | -24.2% |
| Short Term Debt | 118 | 1,559 | 2,053 | 708 | 2,860 | 303.8% |
| Long Term Debt | 2,899 | 1,786 | 3,998 | 3,990 | 2,984 | -25.2% |
Cash flow
|
|---|
| Capex | 343 | 254 | 238 | 968 | 447 | -53.8% |
Ratios
|
|---|
| Revenue growth | -57.3% | 115.4% | 35.9% | -36.3% | 57.5% | |
| EBITDA growth | -60.7% | 133.9% | 22.4% | -21.3% | 35.7% | |
| Gross Margin | 59.1% | 58.3% | 52.6% | 61.8% | 54.5% | -7.3% |
| EBITDA Margin | 41.3% | 44.9% | 40.4% | 49.9% | 42.9% | -6.9% |
| Net Income Margin | 81.9% | 58.3% | 40.0% | 91.1% | 52.9% | -38.2% |
| SG&A, % of revenue | | 22.1% | 19.8% | 28.2% | 18.1% | -10.1% |
| CAPEX, % of revenue | 53.0% | 18.2% | 12.6% | 80.1% | 23.5% | -56.7% |
| ROIC | 1.7% | 3.8% | 3.8% | 2.6% | 3.5% | 0.9% |
| ROE | 6.6% | 8.6% | 6.9% | 9.1% | 7.7% | -1.4% |
| Net Debt/EBITDA | 8.0x | 2.6x | 3.2x | 4.4x | 5.2x | 0.9x |
Revenue and profitability
Lai Fung Holdings Ltd's Revenue jumped on 57.5% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.8 pp from 26.4% to 21.6% in 2015.
Gross Margin decreased on 7.3 pp from 61.8% to 54.5% in FY2015. SG&A as a % of Revenue dropped on 10.1 pp from 28.2% to 18.1% in FY2015.
Net Income marign dropped on 38.2 pp from 91.1% to 52.9% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Lai Fung Holdings Ltd's CAPEX/Revenue was 23.5% in FY2015. CAPEX/Revenue increased on 5.3 pp from 18.2% in FY2012 to 23.5% in FY2015. For the last three years the average CAPEX/Revenue was 38.7%.Lai Fung Holdings Ltd invested a big chunk of EBITDA (54.7%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (3.53%) and ROE (7.69%). ROIC increased slightly on 0.92 pp from 2.6% to 3.5% in FY2015. ROE decreased slightly on 1.4 pp from 9.1% to 7.7% in FY2015.
Leverage (Debt)
Debt level is 5.2x Net Debt / EBITDA and 7.2x Debt / EBITDA. Net Debt / EBITDA jumped on 0.9x from 4.4x to 5.2x in FY2015. Debt surged on 24.4% in FY2015 while cash dropped on 24.2% in FY2015.
Appendix 1: Peers in Real Estate
Below we provide Lai Fung 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) | 15.5% | 15.2% | 12.4% | 5.1% | 0.3% |
|---|
| Lai Fung Holdings Ltd ($1125) | | 115.4% | 35.9% | -36.3% | 57.5% |
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% | 53.0% |
|---|
| Lai Fung Holdings Ltd ($1125) | 59.1% | 58.3% | 52.6% | 61.8% | 54.5% |
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% | 34.5% |
|---|
| Lai Fung Holdings Ltd ($1125) | 41.3% | 44.9% | 40.4% | 49.9% | 42.9% |
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% | 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% | 4.8% |
|---|
| Lai Fung Holdings Ltd ($1125) | 53.0% | 18.2% | 12.6% | 80.1% | 23.5% |
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% | 2.1% |
|---|
| Lai Fung Holdings Ltd ($1125) | 1.7% | 3.8% | 3.8% | 2.6% | 3.5% |
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 | 1.4x |
|---|
| Lai Fung Holdings Ltd ($1125) | 8.0x | 2.6x | 3.2x | 4.4x | 5.2x |
