SJM Holdings Ltd Net Income dropped on 63.4% in 2015 and EBITDA Margin decreased on 2.8 pp from 9.5% to 6.7%
23/02/2016 • About SJM Holdings Ltd (
$880) • By InTwits
SJM Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SJM Holdings Ltd is a company in decline: 2015 revenue growth was -38.5%, 5 years revenue CAGR was -3.1%
- SJM Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's a lot of higher than industry average of 7.0%.
- CAPEX is quite volatile: 3,352 in 2015, 3,650 in 2014, 1,150 in 2013, 389 in 2012, 432 in 2011
- The company has business model with low profitability: ROIC is at 8.6%
- It operates with high leverage: Net Debt/EBITDA is -2.7x while industry average is -29.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
SJM Holdings Ltd ($880) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 76,092 | 79,519 | 87,651 | 79,934 | 49,171 | -38.5% |
| Gross Profit | 75,846 | 79,242 | 87,358 | 79,668 | 48,922 | -38.6% |
| SG&A | 41,480 | 42,361 | 46,637 | 42,569 | 27,651 | -35.0% |
| EBITDA | 6,433 | 7,712 | 8,678 | 7,632 | 3,313 | -56.6% |
| Net Income | 5,308 | 6,745 | 7,706 | 6,731 | 2,465 | -63.4% |
Balance Sheet
|
|---|
| Cash | 14,560 | 11,932 | 11,145 | 9,547 | 10,372 | 8.6% |
| Short Term Debt | 3,421 | 287 | 351 | 281 | 163 | -41.8% |
| Long Term Debt | 960 | 2,423 | 1,961 | 1,383 | 1,184 | -14.4% |
Cash flow
|
|---|
| Capex | 432 | 389 | 1,150 | 3,650 | 3,352 | -8.2% |
Ratios
|
|---|
| Revenue growth | 32.0% | 4.5% | 10.2% | -8.8% | -38.5% | |
| EBITDA growth | 32.9% | 19.9% | 12.5% | -12.1% | -56.6% | |
| Gross Margin | 99.7% | 99.7% | 99.7% | 99.7% | 99.5% | -0.2% |
| EBITDA Margin | 8.5% | 9.7% | 9.9% | 9.5% | 6.7% | -2.8% |
| Net Income Margin | 7.0% | 8.5% | 8.8% | 8.4% | 5.0% | -3.4% |
| SG&A, % of revenue | 54.5% | 53.3% | 53.2% | 53.3% | 56.2% | 3.0% |
| CAPEX, % of revenue | 0.6% | 0.5% | 1.3% | 4.6% | 6.8% | 2.3% |
| ROIC | 26.2% | 29.7% | 31.0% | 24.8% | 8.6% | -16.3% |
| ROE | 35.0% | 36.4% | 35.6% | 27.9% | 10.3% | -17.7% |
| Net Debt/EBITDA | -1.6x | -1.2x | -1.0x | -1.0x | -2.7x | -1.7x |
Revenue and profitability
SJM Holdings Ltd's Revenue dropped on 38.5% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 20.6 pp from 34.0% to 54.6% in FY2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased on 3.0 pp from 53.3% to 56.2% in 2015.
Net Income marign decreased on 3.4 pp from 8.4% to 5.0% in 2015.
Capital expenditures (CAPEX) and working capital investments
SJM Holdings Ltd's CAPEX/Revenue was 6.8% in 2015. The company's CAPEX/Revenue increased on 6.3 pp from 0.49% in 2012 to 6.8% in 2015. For the last three years the average CAPEX/Revenue was 4.2%.Battling declining revenue the company made large investments to CAPEX (101% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (8.56%) and ROE (10.25%). ROIC dropped on 16.3 pp from 24.8% to 8.6% in 2015. ROE dropped on 17.7 pp from 27.9% to 10.3% in 2015.
Leverage (Debt)
Debt level is -2.7x Net Debt / EBITDA and 0.4x Debt / EBITDA. Net Debt / EBITDA dropped on 1.7x from -1.0x to -2.7x in 2015. Debt dropped on 19.0% in 2015 while cash increased on 8.6% in 2015.
Management team
SJM Holdings Ltd's CEO So Shu Fai "Ambrose" has spent 12 years at the company.
Appendix 1: Peers in Lodging
Below you can find SJM 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% | 13.8% | 0.8% | -10.2% |
|---|
| SJM Holdings Ltd ($880) | | 4.5% | 10.2% | -8.8% | -38.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 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% |
| NagaCorp Ltd ($3918) | 73.2% | 72.9% | 72.1% | 67.4% | 65.1% |
| |
|---|
| Median (15 companies) | 45.7% | 50.4% | 46.3% | 48.0% | 65.1% |
|---|
| SJM Holdings Ltd ($880) | 99.7% | 99.7% | 99.7% | 99.7% | 99.5% |
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% | 36.4% |
|---|
| SJM Holdings Ltd ($880) | 8.5% | 9.7% | 9.9% | 9.5% | 6.7% |
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% | 12.3% |
|---|
| SJM Holdings Ltd ($880) | 0.6% | 0.5% | 1.3% | 4.6% | 6.8% |
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% | |
| Sands China Ltd ($1928) | 14.5% | 14.2% | 24.4% | 26.7% | 15.8% |
| NagaCorp Ltd ($3918) | 27.6% | 30.6% | 28.9% | 22.6% | 28.6% |
| |
|---|
| Median (21 companies) | 5.2% | 7.6% | 5.7% | 3.9% | 7.7% |
|---|
| SJM Holdings Ltd ($880) | 26.2% | 29.7% | 31.0% | 24.8% | 8.6% |
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 | 1.5x |
|---|
| SJM Holdings Ltd ($880) | -1.6x | -1.2x | -1.0x | -1.0x | -2.7x |
