MGM China Holdings Ltd CAPEX jumped on 63.6% in 2015 while Revenue dropped on 32.5%
18/02/2016 • About MGM China Holdings Ltd (
$2282) • By InTwits
MGM China Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MGM China Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.2%. At the same time it's a lot of higher than industry average of 7.0%.
- CAPEX is quite volatile: 4,504 in 2015, 2,754 in 2014, 1,936 in 2013, 1,039 in 2012, 303 in 2011
- The company has highly profitable business model: ROIC is at 24.0%
- It operates with high leverage: Net Debt/EBITDA is 1.5x while industry average is -29.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
MGM China Holdings Ltd ($2282) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 20,294 | 21,774 | 25,728 | 25,454 | 17,170 | -32.5% |
| EBITDA | 4,714 | 5,225 | 6,311 | 6,568 | 4,086 | -37.8% |
| Net Income | 3,279 | 4,531 | 5,334 | 5,707 | 3,113 | -45.5% |
Balance Sheet
|
|---|
| Cash | 5,590 | 7,381 | 7,885 | 4,232 | 5,421 | 28.1% |
| Short Term Debt | 207 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 3,929 | 3,983 | 4,049 | 4,118 | 11,732 | 184.9% |
Cash flow
|
|---|
| Capex | 303 | 1,039 | 1,936 | 2,754 | 4,504 | 63.6% |
Ratios
|
|---|
| Revenue growth | 63.2% | 7.3% | 18.2% | -1.1% | -32.5% | |
| EBITDA growth | 68.5% | 10.8% | 20.8% | 4.1% | -37.8% | |
| EBITDA Margin | 23.2% | 24.0% | 24.5% | 25.8% | 23.8% | -2.0% |
| Net Income Margin | 16.2% | 20.8% | 20.7% | 22.4% | 18.1% | -4.3% |
| CAPEX, % of revenue | 1.5% | 4.8% | 7.5% | 10.8% | 26.2% | 15.4% |
| ROIC | 47.3% | 46.2% | 53.8% | 54.5% | 24.0% | -30.4% |
| ROE | 111.3% | 87.8% | 85.9% | 88.9% | 55.3% | -33.6% |
| Net Debt/EBITDA | -0.3x | -0.7x | -0.6x | -0.0x | 1.5x | 1.6x |
Revenue and profitability
The company's Revenue dropped on 32.5% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.3 pp from 42.3% to 53.6% in 2015.
Net Income marign decreased on 4.3 pp from 22.4% to 18.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
MGM China Holdings Ltd's CAPEX/Revenue was 26.2% in 2015. CAPEX/Revenue surged on 21.5 pp from 4.8% in 2012 to 26.2% in 2015. For the last three years the average CAPEX/Revenue was 14.9%.MGM China Holdings Ltd has spent a lot to CAPEX (110% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at high and attractive ROIC (24.02%) and ROE (55.30%). ROIC dropped on 30.4 pp from 54.5% to 24.0% in 2015. ROE dropped on 33.6 pp from 88.9% to 55.3% in 2015.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA jumped on 1.6x from -0.017x to 1.5x in 2015. Debt jumped on 185% in 2015 while cash surged on 28.1% in 2015.
Management team
MGM China Holdings Ltd's CEO is Grant R Bowie. Grant R Bowie has 8 years tenure at the company. MGM China Holdings Ltd's CFO is Wang Zhi Qi "Hubert". Wang Zhi Qi "Hubert" has 7 years tenure at the company.
Appendix 1: Peers in Lodging
Below you can find MGM China Holdings Ltd benchmarking vs. other companies in Lodging industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zhuhai Holdings Investment Group Ltd ($908) | 13.4% | 229.8% | 14.5% | 57.0% | |
| Carrianna Group Holdings Co Ltd ($126) | | 69.3% | -36.2% | 35.4% | -33.8% |
| NagaCorp Ltd ($3918) | | 24.6% | 23.7% | 17.2% | 24.6% |
| Emperor Entertainment Hotel Ltd ($296) | | 35.9% | 13.8% | 11.7% | -10.2% |
| Far East Consortium International Ltd/HK ($35) | | 6.4% | 111.9% | 9.0% | 25.7% |
| |
|---|
| Median (21 companies) | 28.9% | 18.2% | 10.2% | 0.8% | -3.5% |
|---|
| MGM China Holdings Ltd ($2282) | | 7.3% | 18.2% | -1.1% | -32.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| SJM Holdings Ltd ($880) | 99.7% | 99.7% | 99.7% | 99.7% | |
| Wynn Macau Ltd ($1128) | 97.6% | 97.9% | 98.3% | 98.5% | |
| Emperor Entertainment Hotel Ltd ($296) | 70.9% | 77.1% | 75.6% | 76.8% | 70.9% |
| Asia Standard Hotel Group Ltd ($292) | 52.5% | 60.7% | 73.4% | 72.1% | 67.6% |
| Sino Hotels Holdings Ltd ($1221) | 69.7% | 71.3% | 70.4% | 68.9% | 65.8% |
| |
|---|
| Median (16 companies) | 49.1% | 53.1% | 51.1% | 49.6% | 65.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Standard Hotel Group Ltd ($292) | 69.1% | -23.9% | 65.2% | 49.9% | 40.4% |
| Emperor Entertainment Hotel Ltd ($296) | 38.7% | 44.9% | 46.4% | 46.9% | 43.1% |
| Sino Hotels Holdings Ltd ($1221) | 42.8% | 46.5% | 45.9% | 43.1% | 39.6% |
| Far East Consortium International Ltd/HK ($35) | 50.1% | 57.2% | 34.5% | 43.0% | 36.4% |
| NagaCorp Ltd ($3918) | 49.2% | 49.8% | 50.1% | 42.8% | 45.3% |
| |
|---|
| Median (21 companies) | 24.2% | 26.8% | 26.4% | 26.2% | 39.6% |
|---|
| MGM China Holdings Ltd ($2282) | 23.2% | 24.0% | 24.5% | 25.8% | 23.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Macau Legend Development Ltd ($1680) | 1.3% | 5.0% | 24.2% | 73.0% | |
| Regal Hotels International Holdings Ltd ($78) | 4.9% | 7.4% | 7.2% | 60.4% | |
| Shangri-La Asia Ltd ($69) | 26.5% | 48.5% | 33.1% | 41.2% | |
| Wynn Macau Ltd ($1128) | 3.2% | 5.2% | 11.0% | 28.2% | |
| NagaCorp Ltd ($3918) | 20.3% | 25.9% | 17.2% | 24.0% | 27.8% |
| |
|---|
| Median (21 companies) | 6.5% | 7.4% | 11.0% | 13.2% | 7.9% |
|---|
| MGM China Holdings Ltd ($2282) | 1.5% | 4.8% | 7.5% | 10.8% | 26.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wynn Macau Ltd ($1128) | 66.1% | 53.9% | 42.3% | 29.9% | |
| Galaxy Entertainment Group Ltd ($27) | 14.7% | 25.2% | 30.0% | 27.5% | |
| Sands China Ltd ($1928) | 14.5% | 14.2% | 24.4% | 26.7% | |
| SJM Holdings Ltd ($880) | 26.2% | 29.7% | 31.0% | 24.8% | |
| NagaCorp Ltd ($3918) | 27.6% | 30.6% | 28.9% | 22.6% | 28.6% |
| |
|---|
| Median (21 companies) | 5.2% | 7.6% | 5.7% | 3.9% | 3.9% |
|---|
| MGM China Holdings Ltd ($2282) | 47.3% | 46.2% | 53.8% | 54.5% | 24.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Regal Hotels International Holdings Ltd ($78) | | 5.0x | 8.7x | 11.8x | |
| Century City International Holdings Ltd ($355) | -58.1x | 6.5x | 9.3x | 11.2x | |
| Shangri-La Asia Ltd ($69) | 4.0x | 6.0x | 6.8x | 6.9x | |
| Zhuhai Holdings Investment Group Ltd ($908) | -3.7x | -4.1x | 11.1x | 6.7x | |
| Asia Standard Hotel Group Ltd ($292) | 3.5x | | 3.7x | 5.2x | 5.5x |
| |
|---|
| Median (20 companies) | 0.6x | 0.5x | 0.6x | 0.7x | 3.4x |
|---|
| MGM China Holdings Ltd ($2282) | -0.3x | -0.7x | -0.6x | -0.0x | 1.5x |
