Lai Sun Development Co Ltd reports 232% CAPEX growth while 26.9% Revenue decline
15/10/2015 • About Lai Sun Development Co Ltd (
$488) • By InTwits
Lai Sun Development Co Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lai Sun Development Co Ltd doesn't have a profitable business model yet: FY2015 ROIC is 1.7%
- EBITDA Margin is quite volatile: 34.5% in FY2015, 24.6% in FY2014, -2.8% in FY2013, 46.5% in FY2012, 20.5% in FY2011
- Lai Sun Development Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 58.7%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 2,996 in FY2015, 903 in FY2014, 283 in FY2013, 52.6 in FY2012, 249 in FY2011
- The company has potentially unprofitable business model: ROIC is at 1.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lai Sun Development Co Ltd ($488) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,193 | 875 | 964 | 2,110 | 1,542 | -26.9% |
| Gross Profit | 612 | 544 | 589 | 1,058 | 896 | -15.3% |
| SG&A | 334 | 325 | 316 | 365 | 264 | -27.7% |
| EBITDA | 245 | 407 | -27 | 518 | 532 | 2.6% |
| Net Income | 2,449 | 2,283 | 2,564 | 1,479 | 2,018 | 36.5% |
Balance Sheet
|
|---|
| Cash | 903 | 1,565 | 3,124 | 1,671 | 1,068 | -36.1% |
| Short Term Debt | 217 | 1,105 | 417 | 417 | 1,013 | 142.9% |
| Long Term Debt | 2,199 | 1,707 | 5,357 | 4,973 | 5,974 | 20.1% |
Cash flow
|
|---|
| Capex | 249 | 53 | 283 | 903 | 2,996 | 231.9% |
Ratios
|
|---|
| Revenue growth | 63.6% | -26.6% | 10.1% | 118.9% | -26.9% | |
| EBITDA growth | 23.6% | 66.2% | -106.7% | -1,998.3% | 2.6% | |
| Gross Margin | 51.3% | 62.2% | 61.1% | 50.1% | 58.1% | 7.9% |
| EBITDA Margin | 20.5% | 46.5% | -2.8% | 24.6% | 34.5% | 9.9% |
| Net Income Margin | 205.3% | 260.8% | 266.1% | 70.1% | 130.9% | 60.8% |
| SG&A, % of revenue | 28.0% | 37.1% | 32.8% | 17.3% | 17.1% | -0.2% |
| CAPEX, % of revenue | 20.9% | 6.0% | 29.4% | 42.8% | 194.3% | 151.5% |
| ROIC | 1.5% | 2.1% | -0.3% | 1.8% | 1.7% | -0.2% |
| ROE | 21.4% | 15.3% | 14.5% | 7.4% | 9.3% | 1.9% |
| Net Debt/EBITDA | 6.2x | 3.1x | | 7.2x | 11.1x | 4.0x |
Revenue and profitability
The company's Revenue dropped on 26.9% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 9.9 pp from 24.6% to 34.5% in FY2015.
Gross Margin increased on 7.9 pp from 50.1% to 58.1% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign jumped on 60.8 pp from 70.1% to 131% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 194% in FY2015. CAPEX/Revenue jumped on 188 pp from 6.0% in FY2012 to 194% in FY2015. For the last three years the average CAPEX/Revenue was 88.8%.Lai Sun Development Co Ltd has spent a lot to CAPEX (563% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (1.69%) and ROE (9.29%). ROIC showed almost no change in FY2015. ROE increased slightly on 1.9 pp from 7.4% to 9.3% in FY2015.
Leverage (Debt)
Debt level is 11.1x Net Debt / EBITDA and 13.1x Debt / EBITDA. Net Debt / EBITDA surged on 4.0x from 7.2x to 11.1x in FY2015. Debt surged on 29.6% in FY2015 while cash dropped on 36.1% in FY2015.
Appendix 1: Peers in Real Estate
Below we provide Lai Sun 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) | 15.5% | 15.6% | 13.1% | 5.0% | 2.3% |
|---|
| Lai Sun Development Co Ltd ($488) | | -26.6% | 10.1% | 118.9% | -26.9% |
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% | 53.0% |
|---|
| Lai Sun Development Co Ltd ($488) | 51.3% | 62.2% | 61.1% | 50.1% | 58.1% |
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) | 35.4% | 28.9% | 28.1% | 26.9% | 34.7% |
|---|
| Lai Sun Development Co Ltd ($488) | 20.5% | 46.5% | -2.8% | 24.6% | 34.5% |
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 Sun Development Co Ltd ($488) | 20.9% | 6.0% | 29.4% | 42.8% | 194.3% |
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% | 3.9% | 3.8% | 2.2% |
|---|
| Lai Sun Development Co Ltd ($488) | 1.5% | 2.1% | -0.3% | 1.8% | 1.7% |
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 | 2.8x | 3.0x | 1.4x |
|---|
| Lai Sun Development Co Ltd ($488) | 6.2x | 3.1x | | 7.2x | 11.1x |
