Longfor Properties Co Ltd reports 46.8% CAPEX decline and 7.0% Revenue decline
29/03/2016 • About Longfor Properties Co Ltd (
$960) • By InTwits
Longfor Properties Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Longfor Properties Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 35.7%. 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 average profitability: ROIC is at 12.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Longfor Properties Co Ltd ($960) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 24,093 | 27,893 | 41,510 | 50,991 | 47,423 | -7.0% |
| Gross Profit | 9,769 | 11,183 | 11,538 | 13,516 | 13,015 | -3.7% |
| SG&A | 1,352 | 1,561 | 1,972 | 2,363 | 2,453 | 3.8% |
| EBITDA | 11,102 | 11,012 | 12,563 | 13,477 | 14,300 | 6.1% |
| Net Income | 6,328 | 6,301 | 8,037 | 8,354 | 8,988 | 7.6% |
Balance Sheet
|
|---|
| Cash | 14,121 | 18,384 | 14,399 | 18,794 | 17,920 | -4.7% |
| Short Term Debt | 3,580 | 5,109 | 9,067 | 7,973 | 6,178 | -22.5% |
| Long Term Debt | 20,386 | 27,728 | 28,636 | 39,769 | 46,088 | 15.9% |
Cash flow
|
|---|
| Capex | 8,892 | 14,260 | 15,072 | 17,630 | 9,374 | -46.8% |
Ratios
|
|---|
| Revenue growth | 59.6% | 15.8% | 48.8% | 22.8% | -7.0% | |
| EBITDA growth | 61.3% | -0.8% | 14.1% | 7.3% | 6.1% | |
| Gross Margin | 40.5% | 40.1% | 27.8% | 26.5% | 27.4% | 0.9% |
| EBITDA Margin | 46.1% | 39.5% | 30.3% | 26.4% | 30.2% | 3.7% |
| Net Income Margin | 26.3% | 22.6% | 19.4% | 16.4% | 19.0% | 2.6% |
| SG&A, % of revenue | 5.6% | 5.6% | 4.7% | 4.6% | 5.2% | 0.5% |
| CAPEX, % of revenue | 36.9% | 51.1% | 36.3% | 34.6% | 19.8% | -14.8% |
| ROIC | 23.9% | 17.0% | 15.4% | 13.6% | 12.0% | -1.6% |
| ROE | 33.4% | 24.3% | 24.0% | 19.7% | 17.5% | -2.2% |
| Net Debt/EBITDA | 0.9x | 1.3x | 1.9x | 2.1x | 2.4x | 0.3x |
Revenue and profitability
The company's Revenue decreased on 7.0% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.7 pp from 26.4% to 30.2% in 2015.
Gross Margin increased slightly on 0.94 pp from 26.5% to 27.4% in 2015. SG&A as a % of Revenue increased slightly on 0.54 pp from 4.6% to 5.2% in 2015.
Net Income marign increased on 2.6 pp from 16.4% to 19.0% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Longfor Properties Co Ltd had CAPEX/Revenue of 19.8%. The company's CAPEX/Revenue dropped on 31.4 pp from 51.1% in 2012 to 19.8% in 2015. It's average level of CAPEX/Revenue for the last three years was 30.2%.Longfor Properties Co Ltd invested a big chunk of EBITDA (65.6%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (17.47%) while ROIC is low (11.99%). ROIC decreased slightly on 1.6 pp from 13.6% to 12.0% in 2015. ROE decreased on 2.2 pp from 19.7% to 17.5% in 2015.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 3.7x Debt / EBITDA. Net Debt / EBITDA jumped on 0.3x from 2.1x to 2.4x in 2015. Debt increased on 9.5% in 2015 while cash decreased on 4.7% in 2015.
Appendix 1: Peers in Real Estate
Below you can find Longfor Properties Co Ltd benchmarking vs. other companies in Real Estate 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 |
|---|
| Guangdong Land Holdings Ltd ($124) | | | | | 24,971.2% |
| Wanda Hotel Development Co Ltd ($169) | | | -51.4% | -86.2% | 1,071.2% |
| Henderson Investment Ltd ($97) | | -78.9% | | | 737.1% |
| ITC Properties Group Ltd ($199) | | -70.5% | -95.2% | 75.7% | 678.6% |
| LT Commercial Real Estate Ltd ($112) | | 30.5% | -53.9% | -83.4% | 662.4% |
| |
|---|
| Median (150 companies) | 12.6% | 16.4% | 13.1% | 5.2% | 3.9% |
|---|
| Longfor Properties Co Ltd ($960) | | 15.8% | 48.8% | 22.8% | -7.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Renhe Commercial Holdings Co Ltd ($1387) | 71.1% | 79.0% | 95.2% | 97.9% | 99.9% |
| Tern Properties Co Ltd ($277) | 96.9% | 96.7% | 98.4% | 98.4% | 98.7% |
| YT Realty Group Ltd ($75) | 91.5% | 94.4% | 96.6% | 96.7% | 97.6% |
| Wah Ha Realty Co Ltd ($278) | 88.7% | 96.3% | 96.0% | 93.2% | 95.9% |
| Soundwill Holdings Ltd ($878) | 35.6% | 53.1% | 74.5% | 46.9% | 95.7% |
| |
|---|
| Median (132 companies) | 44.2% | 41.9% | 41.9% | 39.3% | 42.2% |
|---|
| Longfor Properties Co Ltd ($960) | 40.5% | 40.1% | 27.8% | 26.5% | 27.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chinese Estates Holdings Ltd ($127) | 340.9% | 356.2% | 91.6% | 195.5% | 397.4% |
| SOHO China Ltd ($410) | 113.8% | 113.6% | 80.8% | 104.0% | 201.9% |
| Beijing Properties Holdings Ltd ($925) | 33.2% | -606.3% | 2,162.6% | 224.3% | 186.5% |
| Swire Properties Ltd ($1972) | 283.7% | 154.5% | 114.6% | 73.2% | 100.3% |
| Tern Properties Co Ltd ($277) | 82.9% | 103.0% | 112.8% | 78.4% | 86.9% |
| |
|---|
| Median (150 companies) | 35.4% | 29.1% | 28.3% | 27.8% | 26.0% |
|---|
| Longfor Properties Co Ltd ($960) | 46.1% | 39.5% | 30.3% | 26.4% | 30.2% |
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% | 4,834.8% |
| China Oceanwide Holdings Ltd ($715) | 0.4% | 0.8% | 0.3% | 2.0% | 880.6% |
| Pacific Century Premium Developments Ltd ($432) | 6.5% | 2.9% | 323.1% | 351.2% | 340.6% |
| Hon Kwok Land Investment Co Ltd ($160) | 90.6% | 20.6% | 157.3% | 144.5% | 296.3% |
| Silver Grant International Industries Ltd ($171) | 100.8% | 134.5% | 193.1% | 204.1% | 280.7% |
| |
|---|
| Median (151 companies) | 5.8% | 5.5% | 6.1% | 4.7% | 3.9% |
|---|
| Longfor Properties Co Ltd ($960) | 36.9% | 51.1% | 36.3% | 34.6% | 19.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Gemdale Properties & Investment Corp Ltd ($535) | 8.9% | 15.3% | 19.6% | 10.8% | 15.9% |
| China Overseas Land & Investment Ltd ($688) | 18.0% | 18.4% | 15.1% | 18.5% | 15.4% |
| Colour Life Services Group Co Ltd ($1778) | | 44.2% | 47.9% | 29.3% | 14.5% |
| Dalian Wanda Commercial Properties Co Ltd ($3699) | | 26.8% | 19.6% | 12.3% | 14.4% |
| China Vanke Co Ltd ($2202) | 16.8% | 17.8% | 13.5% | 14.6% | 14.1% |
| |
|---|
| Median (152 companies) | 4.6% | 4.1% | 4.0% | 4.1% | 2.8% |
|---|
| Longfor Properties Co Ltd ($960) | 23.9% | 17.0% | 15.4% | 13.6% | 12.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Shui On Land Ltd ($272) | 7.9x | 22.1x | 13.2x | 17.1x | 54.2x |
| Beijing Capital Land Ltd ($2868) | 2.9x | 7.1x | 4.6x | 11.7x | 49.1x |
| Sunshine 100 China Holdings Ltd ($2608) | 19.8x | 9.9x | 12.4x | 12.9x | 42.3x |
| Greenland Hong Kong Holdings Ltd ($337) | 3.7x | | 6.2x | 49.3x | 38.4x |
| LVGEM China Real Estate Invest ($95) | 21.5x | 24.4x | | 2.9x | 16.7x |
| |
|---|
| Median (117 companies) | 2.2x | 2.4x | 2.8x | 3.0x | 3.8x |
|---|
| Longfor Properties Co Ltd ($960) | 0.9x | 1.3x | 1.9x | 2.1x | 2.4x |
