Link REIT/The EBITDA Margin dropped on 163 pp from 362% to 199% in 2016 while Revenue surged on 13.2%
08/06/2016 • About Link REIT/The (
$823) • By InTwits
Link REIT/The reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Link REIT/The is a growth stock: FY2016 revenue growth was 13.2%, 5 year revenue CAGR was 10.3% at FY2016 ROIC 11.6%
- Link REIT/The has high CAPEX intensity: 5 year average CAPEX/Revenue was 61.5%. At the same time it's a lot of higher than industry average of 28.0%.
- CAPEX is quite volatile: 11,276 in FY2016, 8,278 in FY2015, 1,005 in FY2014, 871 in FY2013, 2,606 in FY2012
- The company has business model with average profitability: ROIC is at 11.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Link REIT/The ($823) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,932 | 6,506 | 7,155 | 7,723 | 8,740 | 13.2% |
| SG&A | 364 | 332 | 333 | 545 | 488 | -10.5% |
| EBITDA | 10,621 | 22,125 | 18,445 | 27,954 | 17,430 | -37.6% |
| Net Income | 9,602 | 21,062 | 17,305 | 27,230 | 16,295 | -40.2% |
Balance Sheet
|
|---|
| Cash | 150 | 1,657 | 560 | 2,233 | 336 | -85.0% |
| Short Term Debt | 0 | 1,706 | 2,825 | 1,940 | 959 | -50.6% |
| Long Term Debt | 12,595 | 11,829 | 9,699 | 17,482 | 28,404 | 62.5% |
Cash flow
|
|---|
| Capex | 2,606 | 871 | 1,005 | 8,278 | 11,276 | 36.2% |
Ratios
|
|---|
| Revenue growth | 10.8% | 9.7% | 10.0% | 7.9% | 13.2% | |
| EBITDA growth | -34.9% | 108.3% | -16.6% | 51.6% | -37.6% | |
| EBITDA Margin | 179.0% | 340.1% | 257.8% | 362.0% | 199.4% | -162.5% |
| Net Income Margin | 161.9% | 323.7% | 241.9% | 352.6% | 186.4% | -166.1% |
| SG&A, % of revenue | 6.1% | 5.1% | 4.7% | 7.1% | 5.6% | -1.5% |
| CAPEX, % of revenue | 43.9% | 13.4% | 14.0% | 107.2% | 129.0% | 21.8% |
| ROIC | 14.8% | 25.5% | 17.7% | 22.3% | 11.6% | -10.6% |
| ROE | 16.3% | 29.2% | 19.4% | 25.4% | 13.3% | -12.1% |
| Net Debt/EBITDA | 1.2x | 0.5x | 0.6x | 0.6x | 1.7x | 1.1x |
Revenue and profitability
Link REIT/The's Revenue surged on 13.2%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 163 pp from 362% to 199% in FY2016.
SG&A as a % of Revenue decreased slightly on 1.5 pp from 7.1% to 5.6% in FY2016.
Net Income marign dropped on 166 pp from 353% to 186% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Link REIT/The's CAPEX/Revenue was 129% in FY2016. The company's CAPEX/Revenue surged on 116 pp from 13.4% in FY2013 to 129% in FY2016. For the last three years the average CAPEX/Revenue was 83.4%.To deliver this fast growth Link REIT/The invested a large share of EBITDA (64.7%) to CAPEX.
Return on investment
The company operates at good ROE (13.28%) while ROIC is low (11.64%). ROIC dropped on 10.6 pp from 22.3% to 11.6% in FY2016. ROE dropped on 12.1 pp from 25.4% to 13.3% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.7x and Debt / EBITDA is 1.7x. Net Debt / EBITDA surged on 1.1x from 0.6x to 1.7x in FY2016. Debt jumped on 51.2% while cash dropped on 85.0%.
Management team
The company's CEO is Hongchoy George. Hongchoy George has 9 years tenure at the company. The company's CFO is Cheung Lee Ming "Andy". Cheung Lee Ming "Andy" has 8 years tenure at the company.
Appendix 1: Peers in REITS
Below you can find Link REIT/The benchmarking vs. other companies in REITS 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| New Century Real Estate Investment Trust ($1275) | 1.2% | -41.7% | -41.7% | 16.5% | |
| Fortune Real Estate Investment Trust ($778) | 22.1% | 28.6% | 15.6% | 13.7% | |
| Sunlight Real Estate Investment Trust ($435) | 9.2% | 8.3% | 9.3% | 9.5% | |
| Yuexiu Real Estate Investment Trust ($405) | 36.4% | 92.5% | 14.6% | 8.8% | |
| Prosperity REIT ($808) | 10.8% | 10.8% | 18.0% | 8.8% | |
| |
|---|
| Median (8 companies) | 12.2% | 9.6% | 14.2% | 8.8% | |
|---|
| Link REIT/The ($823) | | 9.7% | 10.0% | 7.9% | 13.2% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sunlight Real Estate Investment Trust ($435) | 202.4% | 293.6% | 203.4% | 275.0% | |
| New Century Real Estate Investment Trust ($1275) | 31.3% | 33.2% | 82.5% | 77.8% | |
| Yuexiu Real Estate Investment Trust ($405) | 56.0% | 50.4% | 50.7% | 46.9% | |
| Regal Real Estate Investment Trust ($1881) | 447.8% | 73.8% | 56.7% | -118.2% | |
| |
|---|
| Median (4 companies) | 129.2% | 50.4% | 69.6% | 62.4% | |
|---|
| Link REIT/The ($823) | 179.0% | 340.1% | 257.8% | 362.0% | 199.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Real Estate Investment Trust ($778) | 180.5% | 400.4% | 9.4% | 99.9% | |
| Regal Real Estate Investment Trust ($1881) | 8.3% | 19.8% | 322.0% | 10.1% | |
| Sunlight Real Estate Investment Trust ($435) | 1.4% | 0.7% | 5.1% | 3.1% | |
| Prosperity REIT ($808) | 4.3% | 4.5% | 6.4% | 3.0% | |
| Yuexiu Real Estate Investment Trust ($405) | 1.8% | 0.6% | 1.4% | 2.9% | |
| |
|---|
| Median (8 companies) | 1.6% | 3.5% | 5.4% | 3.0% | |
|---|
| Link REIT/The ($823) | 43.9% | 13.4% | 14.0% | 107.2% | 129.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sunlight Real Estate Investment Trust ($435) | 9.2% | 13.3% | 9.2% | 12.6% | |
| Fortune Real Estate Investment Trust ($778) | 13.6% | 16.0% | 14.0% | 8.6% | |
| Champion REIT ($2778) | 8.9% | 4.0% | 4.0% | 6.2% | |
| New Century Real Estate Investment Trust ($1275) | 6.5% | 3.0% | 4.4% | 4.8% | |
| Spring Real Estate Investment Trust ($1426) | 3.4% | 3.7% | 3.8% | 3.9% | |
| |
|---|
| Median (9 companies) | 6.5% | 3.0% | 3.8% | 3.9% | |
|---|
| Link REIT/The ($823) | 14.8% | 25.5% | 17.7% | 22.3% | 11.6% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Yuexiu Real Estate Investment Trust ($405) | 19.0x | 10.4x | 8.9x | 12.8x | |
| New Century Real Estate Investment Trust ($1275) | 4.3x | 6.5x | 6.1x | 8.0x | |
| Sunlight Real Estate Investment Trust ($435) | 3.3x | 2.1x | 2.7x | 1.9x | |
| |
|---|
| Median (3 companies) | 3.8x | 8.3x | 7.5x | 8.0x | |
|---|
| Link REIT/The ($823) | 1.2x | 0.5x | 0.6x | 0.6x | 1.7x |
