Galaxy Entertainment Group Ltd reports 59.8% Net Income decline and 2.5 pp EBITDA Margin decline from 16.9% to 14.4%
25/02/2016 • About Galaxy Entertainment Group Ltd (
$27) • By InTwits
Galaxy Entertainment Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Galaxy Entertainment Group Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.7%. At the same time it's in pair with industry average of 3.3%.
- CAPEX is quite volatile: 6,541 in 2015, 9,475 in 2014, 5,123 in 2013, 2,227 in 2012, 4,522 in 2011
- The company has business model with average profitability: ROIC is at 10.2%
- It operates with high leverage: Net Debt/EBITDA is -0.9x 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.
Galaxy Entertainment Group Ltd ($27) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 41,186 | 56,746 | 66,033 | 71,752 | 50,991 | -28.9% |
| EBITDA | 4,616 | 9,456 | 12,118 | 12,099 | 7,347 | -39.3% |
| Net Income | 3,004 | 7,378 | 10,052 | 10,340 | 4,161 | -59.8% |
Balance Sheet
|
|---|
| Cash | 7,251 | 8,907 | 9,028 | 8,331 | 7,979 | -4.2% |
| Short Term Debt | 1,142 | 4,966 | 406 | 412 | 719 | 74.7% |
| Long Term Debt | 10,531 | 6,291 | 237 | 576 | 671 | 16.5% |
Cash flow
|
|---|
| Capex | 4,522 | 2,227 | 5,123 | 9,475 | 6,541 | -31.0% |
Ratios
|
|---|
| Revenue growth | 113.8% | 37.8% | 16.4% | 8.7% | -28.9% | |
| EBITDA growth | 176.3% | 104.9% | 28.2% | -0.2% | -39.3% | |
| EBITDA Margin | 11.2% | 16.7% | 18.4% | 16.9% | 14.4% | -2.5% |
| Net Income Margin | 7.3% | 13.0% | 15.2% | 14.4% | 8.2% | -6.2% |
| CAPEX, % of revenue | 11.0% | 3.9% | 7.8% | 13.2% | 12.8% | -0.4% |
| ROIC | 14.7% | 25.2% | 30.0% | 27.5% | 10.2% | -17.3% |
| ROE | 25.7% | 40.9% | 37.0% | 29.2% | 10.5% | -18.7% |
| Net Debt/EBITDA | 1.0x | 0.2x | -0.7x | -0.6x | -0.9x | -0.3x |
Revenue and profitability
Galaxy Entertainment Group Ltd's Revenue dropped on 28.9% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.5 pp from 16.9% to 14.4% in 2015.
Net Income marign decreased on 6.2 pp from 14.4% to 8.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Galaxy Entertainment Group Ltd had CAPEX/Revenue of 12.8%. The company's CAPEX/Revenue increased on 8.9 pp from 3.9% in 2012 to 12.8% in 2015. It's average CAPEX/Revenue for the last three years was 11.3%.Battling declining revenue Galaxy Entertainment Group Ltd invested a large share of EBITDA (89.0%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (10.19%) and ROE (10.47%). ROIC dropped on 17.3 pp from 27.5% to 10.2% in 2015. ROE dropped on 18.7 pp from 29.2% to 10.5% in 2015.
Leverage (Debt)
Debt level is -0.9x Net Debt / EBITDA and 0.2x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from -0.6x to -0.9x in 2015. Debt surged on 40.7% in 2015 while cash decreased on 4.2% in 2015.
Appendix 1: Peers in Lodging
Below we provide Galaxy Entertainment Group 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) | 26.4% | 14.4% | 10.2% | 0.7% | -13.7% |
|---|
| Galaxy Entertainment Group Ltd ($27) | | 37.8% | 16.4% | 8.7% | -28.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| SJM Holdings Ltd ($880) | 99.7% | 99.7% | 99.7% | 99.7% | 99.5% |
| 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% | 65.4% |
|---|
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% | 33.3% |
|---|
| Galaxy Entertainment Group Ltd ($27) | 11.2% | 16.7% | 18.4% | 16.9% | 14.4% |
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% | 7.4% | 11.0% | 10.8% | 10.1% |
|---|
| Galaxy Entertainment Group Ltd ($27) | 11.0% | 3.9% | 7.8% | 13.2% | 12.8% |
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% | |
| Sands China Ltd ($1928) | 14.5% | 14.2% | 24.4% | 26.7% | 15.8% |
| SJM Holdings Ltd ($880) | 26.2% | 29.7% | 31.0% | 24.8% | 8.6% |
| NagaCorp Ltd ($3918) | 27.6% | 30.6% | 28.9% | 22.6% | 28.6% |
| |
|---|
| Median (21 companies) | 5.2% | 7.6% | 5.7% | 3.9% | 8.1% |
|---|
| Galaxy Entertainment Group Ltd ($27) | 14.7% | 25.2% | 30.0% | 27.5% | 10.2% |
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 | 0.5x | 0.6x | 0.7x | 1.3x |
|---|
| Galaxy Entertainment Group Ltd ($27) | 1.0x | 0.2x | -0.7x | -0.6x | -0.9x |
