Wang On Group Ltd EBITDA dropped on 72.5% and Revenue dropped on 38.9%
08/06/2016 • About Wang On Group Ltd (
$1222) • By InTwits
Wang On Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Wang On Group Ltd doesn't have a profitable business model yet: FY2016 ROIC is 1.5%
- EBITDA Margin is quite volatile: 12.1% in FY2016, 26.9% in FY2015, 41.7% in FY2014, 28.2% in FY2013, 16.6% in FY2012
- Wang On Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.9%. At the same time it's a lot of higher than industry average of 29.0%.
- CAPEX is quite volatile: 34.6 in FY2016, 238 in FY2015, 445 in FY2014, 3.6 in FY2013, 33.2 in FY2012
- The company has potentially unprofitable business model: ROIC is at 1.5%
- It operates with high leverage: Net Debt/EBITDA is 8.3x while industry average is 3.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Wang On Group Ltd ($1222) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 411 | 744 | 1,687 | 1,500 | 917 | -38.9% |
| Gross Profit | 164 | 365 | 943 | 697 | 348 | -50.1% |
| SG&A | 99 | 136 | 192 | 217 | 241 | 11.1% |
| EBITDA | 68 | 210 | 703 | 403 | 111 | -72.5% |
| Net Income | 395 | 410 | 594 | 588 | 449 | -23.7% |
Balance Sheet
|
|---|
| Cash | 582 | 735 | 711 | 1,047 | 1,287 | 23.0% |
| Short Term Debt | 229 | 284 | 447 | 821 | 600 | -26.9% |
| Long Term Debt | 790 | 1,346 | 820 | 1,808 | 1,609 | -11.0% |
Cash flow
|
|---|
| Capex | 33 | 4 | 445 | 238 | 35 | -85.4% |
Ratios
|
|---|
| Revenue growth | -26.6% | 81.1% | 126.7% | -11.1% | -38.9% | |
| EBITDA growth | -20.4% | 207.9% | 234.8% | -42.6% | -72.5% | |
| Gross Margin | 39.9% | 49.0% | 55.9% | 46.5% | 37.9% | -8.5% |
| EBITDA Margin | 16.6% | 28.2% | 41.7% | 26.9% | 12.1% | -14.8% |
| Net Income Margin | 96.2% | 55.0% | 35.2% | 39.2% | 49.0% | 9.8% |
| SG&A, % of revenue | 24.2% | 18.3% | 11.4% | 14.5% | 26.3% | 11.8% |
| CAPEX, % of revenue | 8.1% | 0.5% | 26.4% | 15.8% | 3.8% | -12.1% |
| ROIC | 1.5% | 4.4% | 13.2% | 6.5% | 1.5% | -5.0% |
| ROE | 14.1% | 12.5% | 15.9% | 14.5% | 10.3% | -4.3% |
| Net Debt/EBITDA | 6.4x | 4.3x | 0.8x | 3.9x | 8.3x | 4.4x |
Revenue and profitability
The company's Revenue dropped on 38.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 7.2% to 9.2% in FY2016.
Gross Margin decreased on 8.5 pp from 46.5% to 37.9% in FY2016. SG&A as a % of Revenue surged on 11.8 pp from 14.5% to 26.3% in FY2016.
Net Income marign increased on 9.8 pp from 39.2% to 49.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Wang On Group Ltd had CAPEX/Revenue of 3.8%. Wang On Group Ltd's CAPEX/Revenue increased on 3.3 pp from 0.48% in FY2013 to 3.8% in FY2016. Average CAPEX/Revenue for the last three years was 15.3%.
Return on investment
The company operates at low ROIC (1.50%) and ROE (10.27%). ROIC decreased on 5.0 pp from 6.5% to 1.5% in FY2016. ROE decreased on 4.3 pp from 14.5% to 10.3% in FY2016.
Leverage (Debt)
Debt level is 8.3x Net Debt / EBITDA and 19.9x Debt / EBITDA. Net Debt / EBITDA jumped on 4.4x from 3.9x to 8.3x in FY2016. Debt dropped on 16.0% while cash jumped on 23.0%.
Appendix 1: Peers in Real Estate
Below we provide Wang On Group Ltd benchmarking against other companies in Real Estate 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Guangdong Land Holdings Ltd ($124) | | | | 24,971.2% | |
| GR Properties Ltd ($108) | 21.6% | -82.9% | 14.6% | 1,203.6% | |
| 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% | |
| |
|---|
| Median (179 companies) | 15.8% | 13.1% | 5.2% | 4.5% | 16.2% |
|---|
| Wang On Group Ltd ($1222) | | 81.1% | 126.7% | -11.1% | -38.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Renhe Commercial Holdings Co Ltd ($1387) | 79.0% | 95.2% | 97.9% | 99.9% | |
| Tern Properties Co Ltd ($277) | 96.7% | 98.4% | 98.4% | 98.7% | |
| YT Realty Group Ltd ($75) | 94.4% | 96.6% | 96.7% | 97.6% | |
| Wah Ha Realty Co Ltd ($278) | 96.3% | 96.0% | 93.2% | 95.9% | |
| Soundwill Holdings Ltd ($878) | 53.1% | 74.5% | 46.9% | 95.7% | |
| |
|---|
| Median (160 companies) | 42.1% | 41.8% | 39.1% | 38.2% | 21.1% |
|---|
| Wang On Group Ltd ($1222) | 39.9% | 49.0% | 55.9% | 46.5% | 37.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Chinese Estates Holdings Ltd ($127) | 356.2% | 91.6% | 195.5% | 397.4% | |
| Zall Development Group Ltd ($2098) | 105.3% | 133.1% | 143.2% | 213.9% | |
| SOHO China Ltd ($410) | 113.6% | 80.8% | 104.0% | 201.9% | |
| Beijing Properties Holdings Ltd ($925) | -606.3% | 2,162.6% | 224.3% | 186.5% | |
| Swire Properties Ltd ($1972) | 154.5% | 114.6% | 73.2% | 100.3% | |
| |
|---|
| Median (179 companies) | 29.3% | 28.5% | 26.9% | 23.4% | 21.8% |
|---|
| Wang On Group Ltd ($1222) | 16.6% | 28.2% | 41.7% | 26.9% | 12.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| LT Commercial Real Estate Ltd ($112) | 0.0% | 18.0% | 27,965.5% | 4,834.8% | |
| China Oceanwide Holdings Ltd ($715) | 0.8% | 0.3% | 2.0% | 880.6% | |
| Madex International Holdings Ltd ($231) | 174.5% | 519.7% | 205.3% | 350.6% | |
| Pacific Century Premium Developments Ltd ($432) | 2.9% | 323.1% | 351.2% | 340.6% | |
| Hon Kwok Land Investment Co Ltd ($160) | 20.6% | 157.3% | 144.5% | 296.3% | |
| |
|---|
| Median (179 companies) | 5.6% | 6.2% | 4.7% | 3.2% | 1.3% |
|---|
| Wang On Group Ltd ($1222) | 8.1% | 0.5% | 26.4% | 15.8% | 3.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hydoo International Holding Ltd ($1396) | 44.3% | 62.0% | 12.9% | 16.6% | |
| Gemdale Properties & Investment Corp Ltd ($535) | 15.3% | 19.6% | 10.8% | 15.9% | |
| China Overseas Land & Investment Ltd ($688) | | 15.1% | 18.5% | 15.4% | 13.0% |
| 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% | |
| |
|---|
| Median (181 companies) | 4.2% | 4.0% | 4.1% | 2.4% | 7.3% |
|---|
| Wang On Group Ltd ($1222) | 1.5% | 4.4% | 13.2% | 6.5% | 1.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shui On Land Ltd ($272) | 22.1x | 13.2x | 17.1x | 54.2x | |
| Beijing Capital Land Ltd ($2868) | 7.1x | 4.6x | 11.7x | 49.1x | |
| Talent Property Group Ltd ($760) | | | | 43.0x | |
| Mingfa Group International Co Ltd ($846) | 2.5x | 3.0x | 6.3x | 42.9x | |
| Sunshine 100 China Holdings Ltd ($2608) | 9.9x | 12.4x | 12.9x | 42.3x | |
| |
|---|
| Median (136 companies) | 2.3x | 2.7x | 3.0x | 3.2x | 7.8x |
|---|
| Wang On Group Ltd ($1222) | 6.4x | 4.3x | 0.8x | 3.9x | 8.3x |
