KWG Property Holding Ltd revenue dropped on 20.3% in 2015 while EBITDA Margin increased on 3.5 pp from 30.7% to 34.2%
19/02/2016 • About KWG Property Holding Ltd (
$1813) • By InTwits
KWG Property Holding Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- KWG Property Holding Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's in pair with industry average of 5.8%.
- CAPEX is quite volatile: 245 in 2015, 554 in 2014, 575 in 2013, 1,017 in 2012, 531 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
KWG Property Holding Ltd ($1813) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 10,123 | 9,676 | 9,468 | 10,466 | 8,340 | -20.3% |
| Gross Profit | 4,472 | 3,536 | 3,432 | 3,718 | 3,009 | -19.0% |
| SG&A | 764 | 894 | 1,014 | 1,093 | 1,051 | -3.8% |
| EBITDA | 4,080 | 3,391 | 3,059 | 3,214 | 2,851 | -11.3% |
| Net Income | 2,103 | 2,406 | 2,750 | 3,272 | 3,416 | 4.4% |
Balance Sheet
|
|---|
| Cash | 4,025 | 4,927 | 9,414 | 10,094 | 10,946 | 8.4% |
| Short Term Debt | 3,410 | 3,100 | 3,065 | 3,465 | 3,983 | 14.9% |
| Long Term Debt | 10,425 | 13,090 | 17,840 | 21,048 | 24,015 | 14.1% |
Cash flow
|
|---|
| Capex | 531 | 1,017 | 575 | 554 | 245 | -55.8% |
Ratios
|
|---|
| Revenue growth | 35.6% | -4.4% | -2.2% | 10.5% | -20.3% | |
| EBITDA growth | 62.8% | -16.9% | -9.8% | 5.1% | -11.3% | |
| Gross Margin | 44.2% | 36.5% | 36.2% | 35.5% | 36.1% | 0.6% |
| EBITDA Margin | 40.3% | 35.0% | 32.3% | 30.7% | 34.2% | 3.5% |
| Net Income Margin | 20.8% | 24.9% | 29.0% | 31.3% | 41.0% | 9.7% |
| SG&A, % of revenue | 7.6% | 9.2% | 10.7% | 10.4% | 12.6% | 2.2% |
| CAPEX, % of revenue | 5.2% | 10.5% | 6.1% | 5.3% | 2.9% | -2.4% |
| ROIC | 14.2% | 10.1% | 7.7% | 6.7% | 5.2% | -1.5% |
| ROE | 16.8% | 16.7% | 16.6% | 17.1% | 16.0% | -1.1% |
| Net Debt/EBITDA | 2.4x | 3.3x | 3.8x | 4.5x | 6.0x | 1.5x |
Revenue and profitability
KWG Property Holding Ltd's Revenue dropped on 20.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.5 pp from 30.7% to 34.2% in 2015.
Gross Margin increased slightly on 0.56 pp from 35.5% to 36.1% in 2015. SG&A as a % of Revenue increased on 2.2 pp from 10.4% to 12.6% in 2015.
Net Income marign increased on 9.7 pp from 31.3% to 41.0% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 KWG Property Holding Ltd had CAPEX/Revenue of 2.9%. CAPEX/Revenue decreased on 7.6 pp from 10.5% in 2012 to 2.9% in 2015. Average CAPEX/Revenue for the last three years was 4.8%.
Return on investment
The company operates at good ROE (15.98%) while ROIC is low (5.19%). ROIC decreased slightly on 1.5 pp from 6.7% to 5.2% in 2015. ROE decreased slightly on 1.1 pp from 17.1% to 16.0% in 2015.
Leverage (Debt)
Debt level is 6.0x Net Debt / EBITDA and 9.8x Debt / EBITDA. Net Debt / EBITDA surged on 1.5x from 4.5x to 6.0x in 2015. Debt surged on 14.2% in 2015 while cash increased on 8.4% in 2015.
Management team
The company's CEO is Kong Jian Tao. Kong Jian Tao has 23 years tenure at the company. KWG Property Holding Ltd's CFO Tsui Kam Tim has spent 11 years at the company.
Appendix 1: Peers in Real Estate
Below we provide KWG Property Holding 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% |
|---|
| KWG Property Holding Ltd ($1813) | | -4.4% | -2.2% | 10.5% | -20.3% |
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% | 42.1% | 41.1% | 39.2% | 53.0% |
|---|
| KWG Property Holding Ltd ($1813) | 44.2% | 36.5% | 36.2% | 35.5% | 36.1% |
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) | 35.2% | 28.9% | 27.9% | 26.4% | 35.7% |
|---|
| KWG Property Holding Ltd ($1813) | 40.3% | 35.0% | 32.3% | 30.7% | 34.2% |
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) | 6.0% | 5.3% | 6.1% | 4.5% | 7.7% |
|---|
| KWG Property Holding Ltd ($1813) | 5.2% | 10.5% | 6.1% | 5.3% | 2.9% |
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% |
|---|
| KWG Property Holding Ltd ($1813) | 14.2% | 10.1% | 7.7% | 6.7% | 5.2% |
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 |
|---|
| KWG Property Holding Ltd ($1813) | 2.4x | 3.3x | 3.8x | 4.5x | 6.0x |
