Hang Lung Group Ltd reports 53.0% Net Income decline and 8.8 pp EBITDA Margin decline from 82.2% to 73.3%
28/01/2016 • About Hang Lung Group Ltd (
$10) • By InTwits
Hang Lung Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hang Lung Group Ltd is a company in decline: 2015 revenue growth was -45.9%, 5 years revenue CAGR was -5.4%
- EBITDA Margin is declining: 73.3% in 2015 vs. 82.2% in 2014 vs. 133.3% in 2011
- Hang Lung Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 74.9%. At the same time it's in pair with industry average of 4.7%.
- CAPEX is quite volatile: 885 in 2015, 325 in 2014, 476 in 2013, 419 in 2012, 252 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hang Lung Group Ltd ($10) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,714 | 7,986 | 9,734 | 17,606 | 9,528 | -45.9% |
| Gross Profit | | 6,160 | 7,252 | 13,406 | 6,955 | -48.1% |
| SG&A | 490 | 695 | 698 | 705 | 728 | 3.3% |
| EBITDA | 7,619 | 10,791 | 9,255 | 14,470 | 6,988 | -51.7% |
| Net Income | 3,529 | 5,262 | 4,557 | 6,825 | 3,211 | -53.0% |
Balance Sheet
|
|---|
| Cash | 20,796 | 32,072 | 39,109 | 40,219 | 27,019 | -32.8% |
| Short Term Debt | 7,500 | 1,113 | 1,657 | 7,937 | 6,640 | -16.3% |
| Long Term Debt | 13,436 | 36,532 | 43,367 | 32,158 | 30,690 | -4.6% |
Cash flow
|
|---|
| Capex | 6,324 | 5,360 | 9,896 | 5,305 | 6,188 | 16.6% |
Ratios
|
|---|
| Revenue growth | -54.6% | 39.8% | 21.9% | 80.9% | -45.9% | |
| EBITDA growth | -75.0% | 41.6% | -14.2% | 56.3% | -51.7% | |
| Gross Margin | | 77.1% | 74.5% | 76.1% | 73.0% | -3.1% |
| EBITDA Margin | 133.3% | 135.1% | 95.1% | 82.2% | 73.3% | -8.8% |
| Net Income Margin | 61.8% | 65.9% | 46.8% | 38.8% | 33.7% | -5.1% |
| SG&A, % of revenue | 8.6% | 8.7% | 7.2% | 4.0% | 7.6% | 3.6% |
| CAPEX, % of revenue | 110.7% | 67.1% | 101.7% | 30.1% | 64.9% | 34.8% |
| ROIC | 5.5% | 6.5% | 5.0% | 7.4% | 3.6% | -3.8% |
| ROE | 6.3% | 8.5% | 6.7% | 9.3% | 4.2% | -5.1% |
| Net Debt/EBITDA | 0.0x | 0.5x | 0.6x | -0.0x | 1.5x | 1.5x |
Revenue and profitability
The company's Revenue dropped on 45.9% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 8.8 pp from 82.2% to 73.3% in 2015.
Gross Margin decreased on 3.1 pp from 76.1% to 73.0% in 2015. SG&A as a % of Revenue increased on 3.6 pp from 4.0% to 7.6% in 2015.
Net Income marign decreased on 5.1 pp from 38.8% to 33.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 64.9%. The company showed decline in CAPEX/Revenue of 2.2 pp from 67.1% in 2012 to 64.9% in 2015. It's average CAPEX/Revenue for the last three years was 65.6%.Battling declining revenue Hang Lung Group Ltd invested a large share of EBITDA (88.6%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.60%) and ROE (4.24%). ROIC decreased on 3.8 pp from 7.4% to 3.6% in 2015. ROE decreased on 5.1 pp from 9.3% to 4.2% in 2015.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 5.3x Debt / EBITDA. Net Debt / EBITDA surged on 1.5x from -0.0086x to 1.5x in 2015. Debt decreased on 6.9% in 2015 while cash dropped on 32.8% in 2015.
Appendix 1: Peers in Real Estate
Below we provide Hang Lung Group 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) | 15.9% | 15.2% | 12.4% | 5.0% | 1.7% |
|---|
| Hang Lung Group Ltd ($10) | | 39.8% | 21.9% | 80.9% | -45.9% |
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) | 43.6% | 41.9% | 40.0% | 38.9% | 53.0% |
|---|
| Hang Lung Group Ltd ($10) | | 77.1% | 74.5% | 76.1% | 73.0% |
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% | 35.2% |
|---|
| Hang Lung Group Ltd ($10) | 133.3% | 135.1% | 95.1% | 82.2% | 73.3% |
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% | 6.7% |
|---|
| Hang Lung Group Ltd ($10) | 110.7% | 67.1% | 101.7% | 30.1% | 64.9% |
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% |
|---|
| Hang Lung Group Ltd ($10) | 5.5% | 6.5% | 5.0% | 7.4% | 3.6% |
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 | 1.1x |
|---|
| Hang Lung Group Ltd ($10) | 0.0x | 0.5x | 0.6x | -0.0x | 1.5x |
