Van Shung Chong Holdings Ltd reports 270% CAPEX growth while 12.6% Revenue decline
23/06/2016 • About Van Shung Chong Holdings Ltd (
$1001) • By InTwits
Van Shung Chong Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Van Shung Chong Holdings Ltd is a company in decline: FY2016 revenue growth was -12.6%, 5 years revenue CAGR was -4.3%
- EBITDA Margin is quite volatile: 2.7% in FY2016, 3.7% in FY2015, 2.5% in FY2014, 3.5% in FY2013, -0.4% in FY2012
- Van Shung Chong Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 10.4%.
- CAPEX is quite volatile: 178 in FY2016, 48.1 in FY2015, 4.8 in FY2014, 24.1 in FY2013, 6.1 in FY2012
- The company has potentially unprofitable business model: ROIC is at 2.3%
- It operates with high leverage: Net Debt/EBITDA is 15.8x while industry average is 10.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Van Shung Chong Holdings Ltd ($1001) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,432 | 3,761 | 3,849 | 3,868 | 3,380 | -12.6% |
| Gross Profit | 171 | 355 | 370 | 390 | 416 | 6.6% |
| SG&A | | 207 | 288 | 193 | 303 | 56.9% |
| EBITDA | -19 | 133 | 97 | 142 | 92 | -35.3% |
| Net Income | 6 | 72 | 104 | 216 | 70 | -67.5% |
Balance Sheet
|
|---|
| Cash | 267 | 460 | 371 | 355 | 546 | 53.9% |
| Short Term Debt | 654 | 581 | 1,010 | 883 | 852 | -3.5% |
| Long Term Debt | 0 | 0 | 562 | 566 | 1,140 | 101.7% |
Cash flow
|
|---|
| Capex | 6 | 24 | 5 | 48 | 178 | 269.9% |
Ratios
|
|---|
| Revenue growth | 5.3% | -15.2% | 2.4% | 0.5% | -12.6% | |
| EBITDA growth | -154.9% | -817.1% | -27.0% | 45.6% | -35.3% | |
| Gross Margin | 3.9% | 9.4% | 9.6% | 10.1% | 12.3% | 2.2% |
| EBITDA Margin | -0.4% | 3.5% | 2.5% | 3.7% | 2.7% | -1.0% |
| Net Income Margin | 0.1% | 1.9% | 2.7% | 5.6% | 2.1% | -3.5% |
| SG&A, % of revenue | | 5.5% | 7.5% | 5.0% | 9.0% | 4.0% |
| CAPEX, % of revenue | 0.1% | 0.6% | 0.1% | 1.2% | 5.3% | 4.0% |
| ROIC | -2.0% | 9.6% | 4.8% | 5.1% | 2.3% | -2.7% |
| ROE | 1.0% | 10.4% | 13.9% | 23.3% | 6.6% | -16.7% |
| Net Debt/EBITDA | | 0.9x | 12.3x | 7.7x | 15.8x | 8.1x |
Revenue and profitability
Van Shung Chong Holdings Ltd's Revenue dropped on 12.6%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 0.95 pp from 3.7% to 2.7% in FY2016.
Gross Margin increased on 2.2 pp from 10.1% to 12.3% in FY2016. SG&A as a % of Revenue increased on 4.0 pp from 5.0% to 9.0% in FY2016.
Net Income marign decreased on 3.5 pp from 5.6% to 2.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.3% in FY2016. Van Shung Chong Holdings Ltd's CAPEX/Revenue increased on 4.6 pp from 0.64% in FY2013 to 5.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 2.2%.Battling declining revenue Van Shung Chong Holdings Ltd made large investments to CAPEX (194% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.35%) and ROE (6.58%). ROIC decreased on 2.7 pp from 5.1% to 2.3% in FY2016. ROE dropped on 16.7 pp from 23.3% to 6.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 15.8x and Debt / EBITDA is 21.7x. Net Debt / EBITDA surged on 8.1x from 7.7x to 15.8x in FY2016. Debt surged on 37.5% while cash surged on 53.9%.
Appendix 1: Peers in Holding Companies-Divers
Below we provide Van Shung Chong Holdings Ltd benchmarking against other companies in Holding Companies-Divers 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 |
|---|
| Beijing Development HK Ltd ($154) | 12.5% | | | 1,048.9% | |
| CIAM Group Ltd ($378) | -62.2% | 47.9% | -40.0% | 211.5% | |
| Melco International Development Ltd ($200) | 16.5% | 21.7% | 3.0% | 134.9% | |
| New Century Group Hong Kong Ltd ($234) | -68.9% | 326.7% | -70.3% | 118.2% | |
| Greater China Holdings Ltd ($431) | -35.8% | -72.1% | 67.3% | 110.3% | |
| |
|---|
| Median (43 companies) | 11.4% | 5.0% | 15.5% | 6.1% | -3.3% |
|---|
| Van Shung Chong Holdings Ltd ($1001) | | -15.2% | 2.4% | 0.5% | -12.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| New Century Group Hong Kong Ltd ($234) | 27.3% | 85.2% | 82.8% | 91.5% | |
| Melco International Development Ltd ($200) | 63.1% | 52.9% | 54.5% | 79.4% | |
| CIAM Group Ltd ($378) | | | | 75.8% | |
| Emperor International Holdings Ltd ($163) | 71.3% | 64.9% | 79.2% | 75.3% | 55.3% |
| Heng Fai Enterprises Ltd ($185) | 89.0% | 89.5% | 58.3% | 74.7% | |
| |
|---|
| Median (38 companies) | 33.4% | 36.0% | 34.4% | 37.6% | 38.7% |
|---|
| Van Shung Chong Holdings Ltd ($1001) | 3.9% | 9.4% | 9.6% | 10.1% | 12.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| New Century Group Hong Kong Ltd ($234) | -5.5% | 78.8% | 58.3% | 85.0% | |
| Emperor International Holdings Ltd ($163) | 180.7% | 131.8% | 100.6% | 73.9% | -20.1% |
| Pioneer Global Group Ltd ($224) | -0.5% | -9.9% | -11.6% | 64.3% | |
| C C Land Holdings Ltd ($1224) | 27.0% | 23.6% | 24.6% | 55.7% | |
| China Merchants Holdings International Co Ltd ($144) | 56.4% | 50.8% | 45.2% | 55.7% | |
| |
|---|
| Median (43 companies) | 3.0% | 2.0% | 8.9% | 6.8% | 11.7% |
|---|
| Van Shung Chong Holdings Ltd ($1001) | -0.4% | 3.5% | 2.5% | 3.7% | 2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Heng Fai Enterprises Ltd ($185) | 4.8% | 77.1% | 310.0% | 458.1% | |
| Chinney Investments Ltd ($216) | 17.5% | 103.4% | 111.3% | 230.9% | |
| China Investments Holdings Ltd ($132) | 4.8% | 81.9% | 382.2% | 222.5% | |
| Goldin Properties Holdings Ltd ($283) | 2,178.4% | 1,190.0% | 50.1% | 202.4% | |
| Carnival Group International Holdings Ltd ($996) | | 137.9% | 61.0% | 133.3% | |
| |
|---|
| Median (43 companies) | 2.6% | 3.7% | 6.6% | 9.2% | 7.0% |
|---|
| Van Shung Chong Holdings Ltd ($1001) | 0.1% | 0.6% | 0.1% | 1.2% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| C C Land Holdings Ltd ($1224) | 7.4% | 5.3% | 7.9% | 15.0% | |
| Chinney Alliance Group Ltd ($385) | 6.4% | 8.1% | 13.6% | 15.0% | |
| Niraku GC Holdings Inc ($1245) | | 19.0% | 18.8% | 13.1% | 2.7% |
| Top Spring International Holdings Ltd ($3688) | 15.6% | 6.9% | 7.3% | 8.0% | |
| New Century Group Hong Kong Ltd ($234) | -1.7% | 11.7% | 1.7% | 7.3% | |
| |
|---|
| Median (43 companies) | 0.1% | 0.0% | 0.7% | 0.2% | 2.7% |
|---|
| Van Shung Chong Holdings Ltd ($1001) | -2.0% | 9.6% | 4.8% | 5.1% | 2.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Chinney Investments Ltd ($216) | 10.3x | 63.7x | 48.6x | 93.7x | |
| Carnival Group International Holdings Ltd ($996) | | | 23.7x | 92.3x | |
| Multifield International Holdings Ltd ($898) | 3.2x | 7.3x | 3.0x | 55.9x | |
| CIAM Group Ltd ($378) | | | | 32.6x | |
| Chuang's Consortium International Ltd ($367) | 0.7x | 5.0x | | 23.9x | |
| |
|---|
| Median (24 companies) | 2.4x | 3.1x | 2.8x | 2.4x | 3.2x |
|---|
| Van Shung Chong Holdings Ltd ($1001) | | 0.9x | 12.3x | 7.7x | 15.8x |
