Far East Consortium International Ltd/HK reports 41.3% CAPEX growth while 21.8% Revenue decline
23/06/2016 • About Far East Consortium International Ltd/HK (
$35) • By InTwits
Far East Consortium International Ltd/HK reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Far East Consortium International Ltd/HK has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.1%. At the same time it's in pair with industry average of 21.3%.
- CAPEX is quite volatile: 569 in FY2016, 402 in FY2015, 955 in FY2014, 1,043 in FY2013, 824 in FY2012
- The company has potentially unprofitable business model: ROIC is at 5.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Far East Consortium International Ltd/HK ($35) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,761 | 3,732 | 4,066 | 5,110 | 3,995 | -21.8% |
| Gross Profit | 848 | 1,027 | 1,553 | 1,946 | 1,706 | -12.3% |
| SG&A | 467 | 553 | 592 | 719 | 686 | -4.6% |
| EBITDA | 1,006 | 1,288 | 1,750 | 1,861 | 1,492 | -19.8% |
| Net Income | 448 | 903 | 914 | 957 | 734 | -23.2% |
Balance Sheet
|
|---|
| Cash | 1,375 | 2,721 | 1,908 | 2,285 | 2,370 | 3.7% |
| Short Term Debt | 1,765 | 4,714 | 4,289 | 4,341 | 2,936 | -32.4% |
| Long Term Debt | 4,651 | 3,186 | 5,528 | 5,478 | 8,736 | 59.5% |
Cash flow
|
|---|
| Capex | 824 | 1,043 | 955 | 402 | 569 | 41.3% |
Ratios
|
|---|
| Revenue growth | 6.4% | 111.9% | 9.0% | 25.7% | -21.8% | |
| EBITDA growth | 21.5% | 28.0% | 35.9% | 6.3% | -19.8% | |
| Gross Margin | 48.1% | 27.5% | 38.2% | 38.1% | 42.7% | 4.6% |
| EBITDA Margin | 57.2% | 34.5% | 43.0% | 36.4% | 37.3% | 0.9% |
| Net Income Margin | 25.4% | 24.2% | 22.5% | 18.7% | 18.4% | -0.3% |
| SG&A, % of revenue | 26.5% | 14.8% | 14.6% | 14.1% | 17.2% | 3.1% |
| CAPEX, % of revenue | 46.8% | 27.9% | 23.5% | 7.9% | 14.2% | 6.4% |
| ROIC | 5.7% | 6.7% | 8.1% | 7.7% | 5.5% | -2.2% |
| ROE | 6.2% | 11.7% | 10.9% | 10.7% | 7.6% | -3.1% |
| Net Debt/EBITDA | 5.0x | 4.0x | 4.5x | 4.0x | 6.2x | 2.2x |
Revenue and profitability
The company's Revenue dropped on 21.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.93 pp from 36.4% to 37.3% in FY2016.
Gross Margin increased on 4.6 pp from 38.1% to 42.7% in FY2016. SG&A as a % of Revenue increased on 3.1 pp from 14.1% to 17.2% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 14.2% in FY2016. Far East Consortium International Ltd/HK's CAPEX/Revenue dropped on 13.7 pp from 27.9% in FY2013 to 14.2% in FY2016. It's average level of CAPEX/Revenue for the last three years was 15.2%.
Return on investment
The company operates at low ROIC (5.45%) and ROE (7.62%). ROIC decreased on 2.2 pp from 7.7% to 5.5% in FY2016. ROE decreased on 3.1 pp from 10.7% to 7.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.2x and Debt / EBITDA is 7.8x. Net Debt / EBITDA jumped on 2.2x from 4.0x to 6.2x in FY2016. Debt jumped on 18.9% while cash increased on 3.7%.
Appendix 1: Peers in Lodging
Below we provide Far East Consortium International Ltd/HK benchmarking against other companies in Lodging 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 |
|---|
| 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% | |
| NagaCorp Ltd ($3918) | 24.6% | 23.7% | 17.2% | 24.6% | |
| |
|---|
| Median (23 companies) | 13.0% | 10.2% | 0.7% | -10.2% | -15.4% |
|---|
| Far East Consortium International Ltd/HK ($35) | | 111.9% | 9.0% | 25.7% | -21.8% |
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% | |
| Emperor Entertainment Hotel Ltd ($296) | 77.1% | 75.6% | 76.8% | 70.9% | 65.5% |
| 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% | |
| |
|---|
| Median (17 companies) | 57.2% | 55.9% | 52.0% | 51.8% | 65.5% |
|---|
| Far East Consortium International Ltd/HK ($35) | 48.1% | 27.5% | 38.2% | 38.1% | 42.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NagaCorp Ltd ($3918) | 49.8% | 50.1% | 42.8% | 45.3% | |
| Emperor Entertainment Hotel Ltd ($296) | 44.9% | 46.4% | 46.9% | 43.1% | 36.2% |
| 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% | |
| |
|---|
| Median (23 companies) | 26.7% | 26.4% | 25.8% | 22.6% | 36.2% |
|---|
| Far East Consortium International Ltd/HK ($35) | 57.2% | 34.5% | 43.0% | 36.4% | 37.3% |
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) | 6.3% | 8.9% | 10.8% | 14.5% | 3.4% |
|---|
| Far East Consortium International Ltd/HK ($35) | 46.8% | 27.9% | 23.5% | 7.9% | 14.2% |
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% | |
| Emperor Entertainment Hotel Ltd ($296) | 22.2% | 21.1% | 18.4% | 12.0% | 7.5% |
| Galaxy Entertainment Group Ltd ($27) | 25.2% | 30.0% | 27.5% | 10.2% | |
| |
|---|
| Median (23 companies) | 7.6% | 5.6% | 3.6% | 2.7% | 7.5% |
|---|
| Far East Consortium International Ltd/HK ($35) | 5.7% | 6.7% | 8.1% | 7.7% | 5.5% |
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) | 0.5x | 0.6x | 0.5x | 4.0x | -3.8x |
|---|
| Far East Consortium International Ltd/HK ($35) | 5.0x | 4.0x | 4.5x | 4.0x | 6.2x |
