Sands China Ltd reports 54.0% CAPEX growth while 28.2% Revenue decline
19/02/2016 • About Sands China Ltd (
$1928) • By InTwits
Sands China Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sands China Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.4%. At the same time it's a lot of higher than industry average of 19.7%.
- CAPEX is quite volatile: 418 in FY2015, 262 in FY2014, 113 in FY2013, 162 in FY2012, 175 in FY2011
- The company has highly profitable business model: ROIC is at 15.8%
- It operates with high leverage: Net Debt/EBITDA is 1.0x 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.
Sands China Ltd ($1928) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,881 | 6,511 | 8,908 | 9,505 | 6,820 | -28.2% |
| SG&A | 248 | 391 | 581 | 624 | 559 | -10.4% |
| EBITDA | 1,474 | 1,629 | 2,796 | 3,150 | 2,053 | -34.8% |
| Net Income | 1,133 | 1,236 | 2,215 | 2,548 | 1,459 | -42.7% |
Balance Sheet
|
|---|
| Cash | 2,491 | 1,948 | 2,943 | 2,535 | 1,283 | -49.4% |
| Short Term Debt | 80 | 49 | 207 | 6 | 6 | 4.5% |
| Long Term Debt | 3,329 | 3,212 | 3,023 | 3,194 | 3,379 | 5.8% |
Cash flow
|
|---|
| Capex | 781 | 989 | 601 | 720 | 1,109 | 54.0% |
Ratios
|
|---|
| Revenue growth | 17.8% | 33.4% | 36.8% | 6.7% | -28.2% | |
| EBITDA growth | 33.2% | 10.5% | 71.6% | 12.7% | -34.8% | |
| EBITDA Margin | 30.2% | 25.0% | 31.4% | 33.1% | 30.1% | -3.0% |
| Net Income Margin | 23.2% | 19.0% | 24.9% | 26.8% | 21.4% | -5.4% |
| SG&A, % of revenue | 5.1% | 6.0% | 6.5% | 6.6% | 8.2% | 1.6% |
| CAPEX, % of revenue | 16.0% | 15.2% | 6.7% | 7.6% | 16.3% | 8.7% |
| ROIC | 14.5% | 14.2% | 24.4% | 26.7% | 15.8% | -10.9% |
| ROE | 22.9% | 22.3% | 36.8% | 39.6% | 23.8% | -15.8% |
| Net Debt/EBITDA | 0.6x | 0.8x | 0.1x | 0.2x | 1.0x | 0.8x |
Revenue and profitability
The company's Revenue dropped on 28.2% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.96 pp from 21.9% to 22.8% in 2015.
SG&A as a % of Revenue increased slightly on 1.6 pp from 6.6% to 8.2% in 2015.
Net Income marign decreased on 5.4 pp from 26.8% to 21.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 16.3%. The company's CAPEX/Revenue increased slightly on 1.1 pp from 15.2% in 2012 to 16.3% in 2015. It's average level of CAPEX/Revenue for the last three years was 10.2%.The company invested a big chunk of EBITDA (54.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at high and attractive ROE (23.79%) while ROIC is a bit lower (15.78%). ROIC dropped on 10.9 pp from 26.7% to 15.8% in 2015. ROE dropped on 15.8 pp from 39.6% to 23.8% in 2015.
Leverage (Debt)
Debt level is 1.0x Net Debt / EBITDA and 1.6x Debt / EBITDA. Net Debt / EBITDA jumped on 0.8x from 0.2x to 1.0x in 2015. Debt increased on 5.8% in 2015 while cash dropped on 49.4% in 2015.
Management team
Sands China Ltd's CEO is Sheldon Gary Adelson. Sheldon Gary Adelson has 3 years tenure at the company.
Appendix 1: Peers in Lodging
Below we provide Sands China Ltd benchmarking against other companies in Lodging 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 |
|---|
| 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) | 31.5% | 14.4% | 10.2% | 0.7% | -6.8% |
|---|
| Sands China Ltd ($1928) | | 33.4% | 36.8% | 6.7% | -28.2% |
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) | 23.7% | 26.8% | 24.5% | 25.8% | 38.0% |
|---|
| Sands China Ltd ($1928) | 30.2% | 25.0% | 31.4% | 33.1% | 30.1% |
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) | 6.3% | 6.3% | 11.0% | 13.2% | 10.1% |
|---|
| Sands China Ltd ($1928) | 16.0% | 15.2% | 6.7% | 7.6% | 16.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| MGM China Holdings Ltd ($2282) | 47.3% | 46.2% | 53.8% | 54.5% | 24.0% |
| 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% | |
| 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% | 5.8% |
|---|
| Sands China Ltd ($1928) | 14.5% | 14.2% | 24.4% | 26.7% | 15.8% |
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) | 0.1x | 0.2x | 0.6x | 0.7x | 2.5x |
|---|
| Sands China Ltd ($1928) | 0.6x | 0.8x | 0.1x | 0.2x | 1.0x |
