HKR International Ltd reports 78.0% CAPEX growth while 22.3% Revenue decline
17/06/2016 • About HKR International Ltd (
$480) • By InTwits
HKR International Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- HKR International Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.4%. At the same time it's a lot of higher than industry average of 4.2%.
- CAPEX is quite volatile: 563 in FY2016, 317 in FY2015, 439 in FY2014, 961 in FY2013, 364 in FY2012
- The company has potentially unprofitable business model: ROIC is at 4.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.0x while industry average is 2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HKR International Ltd ($480) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,664 | 5,119 | 4,125 | 3,408 | 2,648 | -22.3% |
| Gross Profit | 469 | 1,333 | 920 | 1,258 | 860 | -31.6% |
| SG&A | 440 | 544 | 543 | 411 | 407 | -0.9% |
| EBITDA | 939 | 1,518 | 1,745 | 1,547 | 1,197 | -22.6% |
| Net Income | 747 | 998 | 835 | 910 | 784 | -13.9% |
Balance Sheet
|
|---|
| Cash | 2,629 | 3,082 | 5,312 | 5,520 | 4,718 | -14.5% |
| Short Term Debt | 3,705 | 1,801 | 2,321 | 2,434 | 351 | -85.6% |
| Long Term Debt | 1,160 | 4,009 | 4,168 | 3,553 | 6,810 | 91.6% |
Cash flow
|
|---|
| Capex | 364 | 961 | 439 | 317 | 563 | 78.0% |
Ratios
|
|---|
| Revenue growth | -7.6% | 207.6% | -19.4% | -17.4% | -22.3% | |
| EBITDA growth | -47.2% | 61.7% | 15.0% | -11.4% | -22.6% | |
| Gross Margin | 28.2% | 26.0% | 22.3% | 36.9% | 32.5% | -4.4% |
| EBITDA Margin | 56.4% | 29.6% | 42.3% | 45.4% | 45.2% | -0.2% |
| Net Income Margin | 44.9% | 19.5% | 20.2% | 26.7% | 29.6% | 2.9% |
| SG&A, % of revenue | 26.4% | 10.6% | 13.2% | 12.1% | 15.4% | 3.3% |
| CAPEX, % of revenue | 21.9% | 18.8% | 10.6% | 9.3% | 21.3% | 12.0% |
| ROIC | 3.9% | 6.1% | 6.4% | 5.4% | 4.0% | -1.3% |
| ROE | 5.3% | 6.7% | 5.3% | 5.5% | 4.8% | -0.7% |
| Net Debt/EBITDA | 2.4x | 1.8x | 0.7x | 0.3x | 2.0x | 1.7x |
Revenue and profitability
The company's Revenue dropped on 22.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 88.4 pp from -34.6% to 53.8% in FY2016.
Gross Margin decreased on 4.4 pp from 36.9% to 32.5% in FY2016. SG&A as a % of Revenue increased on 3.3 pp from 12.1% to 15.4% in FY2016.
Net Income marign increased on 2.9 pp from 26.7% to 29.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 HKR International Ltd had CAPEX/Revenue of 21.3%. HKR International Ltd's CAPEX/Revenue increased on 2.5 pp from 18.8% in FY2013 to 21.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 13.7%.
Return on investment
The company operates at low ROIC (4.03%) and ROE (4.78%). ROIC decreased slightly on 1.3 pp from 5.4% to 4.0% in FY2016. ROE decreased slightly on 0.75 pp from 5.5% to 4.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 6.0x. Net Debt / EBITDA jumped on 1.7x from 0.3x to 2.0x in FY2016. Debt surged on 19.6% while cash dropped on 14.5%.
Appendix 1: Peers in Real Estate
Below we provide HKR International 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) | 16.6% | 13.1% | 5.3% | 4.5% | 13.3% |
|---|
| HKR International Ltd ($480) | | 207.6% | -19.4% | -17.4% | -22.3% |
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% | 98.8% |
| 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% | 41.9% | 39.3% | 38.4% | 28.8% |
|---|
| HKR International Ltd ($480) | 28.2% | 26.0% | 22.3% | 36.9% | 32.5% |
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) | 28.9% | 28.3% | 26.9% | 23.4% | 7.6% |
|---|
| HKR International Ltd ($480) | 56.4% | 29.6% | 42.3% | 45.4% | 45.2% |
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% | 6.1% | 4.7% | 3.2% | 1.4% |
|---|
| HKR International Ltd ($480) | 21.9% | 18.8% | 10.6% | 9.3% | 21.3% |
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% | 1.5% |
|---|
| HKR International Ltd ($480) | 3.9% | 6.1% | 6.4% | 5.4% | 4.0% |
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 | 2.8x | 3.0x | 3.3x | 0.3x |
|---|
| HKR International Ltd ($480) | 2.4x | 1.8x | 0.7x | 0.3x | 2.0x |
