Hang Lung Properties Ltd Net Income dropped on 56.5% in 2015 and Revenue dropped on 47.5%
28/01/2016 • About Hang Lung Properties Ltd (
$101) • By InTwits
Hang Lung Properties Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hang Lung Properties Ltd is a company in decline: 2015 revenue growth was -47.5%, 5 years revenue CAGR was -5.8%
- EBITDA Margin is declining: 73.1% in 2015 vs. 82.9% in 2014 vs. 136.7% in 2011
- Hang Lung Properties Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 80.6%. At the same time it's a lot of higher than industry average of 4.0%.
- CAPEX is quite volatile: 203 in 2015, 123 in 2014, 251 in 2013, 435 in 2012, 501 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 Properties Ltd ($101) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,164 | 7,372 | 9,138 | 17,030 | 8,948 | -47.5% |
| Gross Profit | | | 6,837 | 13,008 | 6,548 | -49.7% |
| SG&A | 512 | 626 | 642 | 644 | 655 | 1.7% |
| EBITDA | 7,057 | 9,821 | 8,722 | 14,121 | 6,543 | -53.7% |
| Net Income | 5,792 | 8,395 | 7,212 | 11,704 | 5,092 | -56.5% |
Balance Sheet
|
|---|
| Cash | 19,798 | 27,989 | 33,761 | 39,887 | 26,870 | -32.6% |
| Short Term Debt | 4,500 | 1,113 | 1,657 | 5,657 | 4,693 | -17.0% |
| Long Term Debt | 12,271 | 28,623 | 33,322 | 29,441 | 28,078 | -4.6% |
Cash flow
|
|---|
| Capex | 6,316 | 5,328 | 9,886 | 5,301 | 6,180 | 16.6% |
Ratios
|
|---|
| Revenue growth | -57.2% | 42.8% | 24.0% | 86.4% | -47.5% | |
| EBITDA growth | -76.3% | 39.2% | -11.2% | 61.9% | -53.7% | |
| Gross Margin | | | 74.8% | 76.4% | 73.2% | -3.2% |
| EBITDA Margin | 136.7% | 133.2% | 95.4% | 82.9% | 73.1% | -9.8% |
| Net Income Margin | 112.2% | 113.9% | 78.9% | 68.7% | 56.9% | -11.8% |
| SG&A, % of revenue | 9.9% | 8.5% | 7.0% | 3.8% | 7.3% | 3.5% |
| CAPEX, % of revenue | 122.3% | 72.3% | 108.2% | 31.1% | 69.1% | 37.9% |
| ROIC | 5.5% | 6.4% | 5.1% | 7.8% | 3.6% | -4.2% |
| ROE | 5.7% | 7.4% | 5.9% | 9.1% | 3.9% | -5.2% |
| Net Debt/EBITDA | -0.4x | 0.2x | 0.1x | -0.3x | 0.9x | 1.2x |
Revenue and profitability
The company's Revenue dropped on 47.5% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.7 pp from 8.6% to 10.2% in FY2015.
Gross Margin decreased on 3.2 pp from 76.4% to 73.2% in 2015. SG&A as a % of Revenue increased on 3.5 pp from 3.8% to 7.3% in 2015.
Net Income marign dropped on 11.8 pp from 68.7% to 56.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Hang Lung Properties Ltd had CAPEX/Revenue of 69.1%. CAPEX/Revenue decreased on 3.2 pp from 72.3% in 2012 to 69.1% in 2015. It's average CAPEX/Revenue for the last three years was 69.5%.The company invested a big chunk of EBITDA (94.5%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (3.58%) and ROE (3.90%). ROIC decreased on 4.2 pp from 7.8% to 3.6% in 2015. ROE decreased on 5.2 pp from 9.1% to 3.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 5.0x. Net Debt / EBITDA jumped on 1.2x from -0.3x to 0.9x in 2015. Debt decreased on 6.6% in 2015 while cash dropped on 32.6% in 2015.
Appendix 1: Peers in Real Estate
Below we provide Hang Lung 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) | 15.9% | 15.2% | 12.4% | 5.0% | 1.7% |
|---|
| Hang Lung Properties Ltd ($101) | | 42.8% | 24.0% | 86.4% | -47.5% |
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) | 43.6% | 41.9% | 40.0% | 38.9% | 53.0% |
|---|
| Hang Lung Properties Ltd ($101) | | | 74.8% | 76.4% | 73.2% |
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 Properties Ltd ($101) | 136.7% | 133.2% | 95.4% | 82.9% | 73.1% |
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 Properties Ltd ($101) | 122.3% | 72.3% | 108.2% | 31.1% | 69.1% |
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 Properties Ltd ($101) | 5.5% | 6.4% | 5.1% | 7.8% | 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 | 1.3x |
|---|
| Hang Lung Properties Ltd ($101) | -0.4x | 0.2x | 0.1x | -0.3x | 0.9x |
