Emperor Entertainment Hotel Ltd reports 49.2% Net Income decline in 2016 and 15.4% Revenue decline
22/06/2016 • About Emperor Entertainment Hotel Ltd (
$296) • By InTwits
Emperor Entertainment Hotel Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Emperor Entertainment Hotel Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.0%. At the same time it's in pair with industry average of 6.7%.
- CAPEX is quite volatile: 58.0 in FY2016, 103 in FY2015, 373 in FY2014, 180 in FY2013, 112 in FY2012
- The company has business model with low profitability: ROIC is at 7.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Emperor Entertainment Hotel Ltd ($296) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,783 | 2,028 | 2,265 | 2,035 | 1,721 | -15.4% |
| Gross Profit | 1,375 | 1,534 | 1,739 | 1,442 | 1,127 | -21.9% |
| SG&A | | 711 | 844 | 764 | 625 | -18.2% |
| EBITDA | 800 | 941 | 1,063 | 877 | 623 | -28.9% |
| Net Income | 465 | 549 | 600 | 504 | 256 | -49.2% |
Balance Sheet
|
|---|
| Cash | 899 | 2,006 | 410 | 674 | 2,851 | 323.0% |
| Short Term Debt | 230 | 226 | 907 | 38 | 38 | -1.2% |
| Long Term Debt | 0 | 0 | 0 | 508 | 470 | -7.4% |
Cash flow
|
|---|
| Capex | 112 | 180 | 373 | 103 | 58 | -43.5% |
Ratios
|
|---|
| Revenue growth | 35.9% | 13.8% | 11.7% | -10.2% | -15.4% | |
| EBITDA growth | 57.7% | 17.6% | 13.0% | -17.5% | -28.9% | |
| Gross Margin | 77.1% | 75.6% | 76.8% | 70.9% | 65.5% | -5.4% |
| EBITDA Margin | 44.9% | 46.4% | 46.9% | 43.1% | 36.2% | -6.9% |
| Net Income Margin | 26.1% | 27.0% | 26.5% | 24.8% | 14.9% | -9.9% |
| SG&A, % of revenue | | 35.1% | 37.2% | 37.6% | 36.3% | -1.2% |
| CAPEX, % of revenue | 6.3% | 8.9% | 16.5% | 5.0% | 3.4% | -1.7% |
| ROIC | 22.2% | 21.1% | 18.4% | 12.0% | 7.5% | -4.6% |
| ROE | 24.1% | 23.8% | 21.9% | 16.1% | 7.6% | -8.5% |
| Net Debt/EBITDA | -0.8x | -1.9x | 0.5x | -0.1x | -3.8x | -3.6x |
Revenue and profitability
The company's Revenue dropped on 15.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from 33.3% to 38.2% in FY2016.
Gross Margin decreased on 5.4 pp from 70.9% to 65.5% in FY2016. SG&A as a % of Revenue decreased slightly on 1.2 pp from 37.6% to 36.3% in FY2016.
Net Income marign decreased on 9.9 pp from 24.8% to 14.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 3.4% in FY2016. The company showed decline in CAPEX/Revenue of 5.5 pp from 8.9% in FY2013 to 3.4% in FY2016. For the last three years the average CAPEX/Revenue was 8.3%.
Return on investment
The company operates at low ROIC (7.45%) and ROE (7.60%). ROIC decreased on 4.6 pp from 12.0% to 7.5% in FY2016. ROE decreased on 8.5 pp from 16.1% to 7.6% in FY2016.
Leverage (Debt)
Debt level is -3.8x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 3.6x from -0.1x to -3.8x in FY2016. Debt decreased on 7.0% while cash jumped on 323%.
Appendix 1: Peers in Lodging
Below you can find Emperor Entertainment Hotel Ltd benchmarking vs. other companies in Lodging 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 |
|---|
| China New City Commercial Development Ltd ($1321) | -16.9% | 433.0% | -76.2% | 141.3% | |
| Zhuhai Holdings Investment Group Ltd ($908) | 229.8% | 14.5% | 57.0% | 76.3% | |
| Shanghai Jin Jiang International Hotels Group Co Ltd ($2006) | -28.8% | 3.2% | 0.8% | 29.9% | |
| Century City International Holdings Ltd ($355) | 283.6% | 108.7% | -35.8% | 25.9% | |
| Far East Consortium International Ltd/HK ($35) | 6.4% | 111.9% | 9.0% | 25.7% | |
| |
|---|
| Median (23 companies) | 11.5% | 10.2% | 0.7% | -3.5% | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | | 13.8% | 11.7% | -10.2% | -15.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| SJM Holdings Ltd ($880) | 99.7% | 99.7% | 99.7% | 99.5% | |
| Wynn Macau Ltd ($1128) | 97.9% | 98.3% | 98.5% | 98.4% | |
| Asia Standard Hotel Group Ltd ($292) | 60.7% | 73.4% | 72.1% | 67.6% | |
| Sino Hotels Holdings Ltd ($1221) | 71.3% | 70.4% | 68.9% | 65.8% | |
| NagaCorp Ltd ($3918) | 72.9% | 72.1% | 67.4% | 65.1% | |
| |
|---|
| Median (17 companies) | 55.7% | 46.3% | 51.3% | 45.4% | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | 77.1% | 75.6% | 76.8% | 70.9% | 65.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NagaCorp Ltd ($3918) | 49.8% | 50.1% | 42.8% | 45.3% | |
| Jinmao Investments and Jinmao China Investments Holdings Ltd ($6139) | 41.2% | 40.5% | 25.8% | 41.5% | |
| Asia Standard Hotel Group Ltd ($292) | -23.9% | 65.2% | 49.9% | 40.4% | |
| Sino Hotels Holdings Ltd ($1221) | 46.5% | 45.9% | 43.1% | 39.6% | |
| Far East Consortium International Ltd/HK ($35) | 57.2% | 34.5% | 43.0% | 36.4% | |
| |
|---|
| Median (23 companies) | 26.7% | 26.4% | 25.8% | 22.6% | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | 44.9% | 46.4% | 46.9% | 43.1% | 36.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Macau Legend Development Ltd ($1680) | 5.0% | 24.2% | 73.0% | 68.5% | |
| Wynn Macau Ltd ($1128) | 5.2% | 11.0% | 28.2% | 66.6% | |
| Legend Strategy International Holdings Group Co Ltd ($1355) | 17.0% | 38.0% | 1.2% | 62.6% | |
| Century City International Holdings Ltd ($355) | 21.2% | 32.9% | 13.4% | 35.8% | |
| Shangri-La Asia Ltd ($69) | 48.5% | 33.1% | 41.2% | 34.3% | |
| |
|---|
| Median (23 companies) | 7.4% | 11.0% | 10.8% | 14.5% | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | 6.3% | 8.9% | 16.5% | 5.0% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NagaCorp Ltd ($3918) | 30.6% | 28.9% | 22.6% | 28.6% | |
| MGM China Holdings Ltd ($2282) | 46.2% | 53.8% | 54.5% | 24.0% | |
| Sands China Ltd ($1928) | 14.2% | 24.4% | 26.7% | 15.8% | |
| Galaxy Entertainment Group Ltd ($27) | 25.2% | 30.0% | 27.5% | 10.2% | |
| Wynn Macau Ltd ($1128) | 53.9% | 42.3% | 29.9% | 9.9% | |
| |
|---|
| Median (23 companies) | 5.7% | 5.6% | 3.6% | 2.7% | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | 22.2% | 21.1% | 18.4% | 12.0% | 7.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China New City Commercial Development Ltd ($1321) | 26.0x | 7.9x | | 100.1x | |
| Century City International Holdings Ltd ($355) | 6.5x | 9.3x | 11.2x | 12.3x | |
| Regal Hotels International Holdings Ltd ($78) | 5.0x | 8.7x | 11.8x | 11.1x | |
| Shangri-La Asia Ltd ($69) | 6.0x | 6.8x | 6.9x | 9.8x | |
| Macau Legend Development Ltd ($1680) | 2.2x | 0.6x | 0.2x | 7.1x | |
| |
|---|
| Median (21 companies) | 1.2x | 0.8x | 1.0x | 4.0x | |
|---|
| Emperor Entertainment Hotel Ltd ($296) | -0.8x | -1.9x | 0.5x | -0.1x | -3.8x |
