China South City Holdings Ltd reports 54.2% CAPEX decline and 37.1% Revenue decline
27/06/2016 • About China South City Holdings Ltd (
$1668) • By InTwits
China South City Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China South City Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 68.7%. At the same time it's in pair with industry average of 58.8%.
- CAPEX is quite volatile: 5,545 in FY2016, 12,107 in FY2015, 3,332 in FY2014, 3,083 in FY2013, 2,327 in FY2012
- The company has business model with low profitability: ROIC is at 8.0%
- It operates with high leverage: Net Debt/EBITDA is 4.7x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China South City Holdings Ltd ($1668) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,671 | 7,488 | 13,468 | 9,758 | 6,136 | -37.1% |
| Gross Profit | 2,236 | 4,177 | 6,547 | 5,176 | 2,959 | -42.8% |
| SG&A | 538 | 826 | 1,444 | 1,796 | 2,042 | 13.7% |
| EBITDA | 3,356 | 4,603 | 6,337 | 6,062 | 5,224 | -13.8% |
| Net Income | 2,071 | 2,750 | 3,494 | 3,728 | 3,537 | -5.1% |
Balance Sheet
|
|---|
| Cash | 3,316 | 6,265 | 11,303 | 7,253 | 9,328 | 28.6% |
| Short Term Debt | 2,740 | 4,418 | 5,842 | 9,576 | 10,182 | 6.3% |
| Long Term Debt | 3,878 | 7,435 | 11,677 | 15,427 | 23,626 | 53.1% |
Cash flow
|
|---|
| Capex | 2,327 | 3,083 | 3,332 | 12,107 | 5,545 | -54.2% |
Ratios
|
|---|
| Revenue growth | 64.3% | 104.0% | 79.9% | -27.6% | -37.1% | |
| EBITDA growth | 34.0% | 37.1% | 37.7% | -4.3% | -13.8% | |
| Gross Margin | 60.9% | 55.8% | 48.6% | 53.0% | 48.2% | -4.8% |
| EBITDA Margin | 91.4% | 61.5% | 47.1% | 62.1% | 85.1% | 23.0% |
| Net Income Margin | 56.4% | 36.7% | 25.9% | 38.2% | 57.6% | 19.4% |
| SG&A, % of revenue | 14.7% | 11.0% | 10.7% | 18.4% | 33.3% | 14.9% |
| CAPEX, % of revenue | 63.4% | 41.2% | 24.7% | 124.1% | 90.4% | -33.7% |
| ROIC | 15.2% | 15.9% | 15.9% | 11.5% | 8.0% | -3.5% |
| ROE | 17.6% | 19.1% | 19.5% | 16.6% | 13.9% | -2.8% |
| Net Debt/EBITDA | 1.0x | 1.2x | 1.0x | 2.9x | 4.7x | 1.8x |
Revenue and profitability
China South City Holdings Ltd's Revenue dropped on 37.1%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 23.0 pp from 62.1% to 85.1% in FY2016.
Gross Margin decreased on 4.8 pp from 53.0% to 48.2% in FY2016. SG&A as a % of Revenue surged on 14.9 pp from 18.4% to 33.3% in FY2016.
Net Income marign jumped on 19.4 pp from 38.2% to 57.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 90.4%. The company showed fast CAPEX/Revenue growth of 49.2 pp from 41.2% in FY2013 to 90.4% in FY2016. Average CAPEX/Revenue for the last three years was 79.7%.China South City Holdings Ltd has spent a lot to CAPEX (106% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (13.86%) while ROIC is low (7.98%). ROIC decreased on 3.5 pp from 11.5% to 8.0% in FY2016. ROE decreased on 2.8 pp from 16.6% to 13.9% in FY2016.
Leverage (Debt)
Debt level is 4.7x Net Debt / EBITDA and 6.5x Debt / EBITDA. Net Debt / EBITDA jumped on 1.8x from 2.9x to 4.7x in FY2016. Debt jumped on 35.2% while cash surged on 28.6%.
Management team
China South City Holdings Ltd's CEO Fung Sing Hong "Stephen" has spent 2 years at the company. Tsoi Yiu Tingk is a China South City Holdings Ltd's CFO. Tsoi Yiu Tingk has spent 2 years at the company.
Appendix 1: Peers in Real Estate
Below you can find China South City Holdings Ltd benchmarking vs. other companies in Real Estate 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 |
|---|
| 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) | | -95.2% | 75.7% | 678.6% | 206.4% |
| |
|---|
| Median (179 companies) | 15.9% | 13.1% | 5.2% | 4.5% | 5.4% |
|---|
| China South City Holdings Ltd ($1668) | | 104.0% | 79.9% | -27.6% | -37.1% |
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) | 41.9% | 41.8% | 39.1% | 38.2% | 55.1% |
|---|
| China South City Holdings Ltd ($1668) | 60.9% | 55.8% | 48.6% | 53.0% | 48.2% |
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% | 13.3% |
|---|
| China South City Holdings Ltd ($1668) | 91.4% | 61.5% | 47.1% | 62.1% | 85.1% |
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% | 6.1% | 4.7% | 3.2% | 1.4% |
|---|
| China South City Holdings Ltd ($1668) | 63.4% | 41.2% | 24.7% | 124.1% | 90.4% |
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) | 4.0% | 4.0% | 4.1% | 2.4% | 1.5% |
|---|
| China South City Holdings Ltd ($1668) | 15.2% | 15.9% | 15.9% | 11.5% | 8.0% |
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) | 2.4x | 2.8x | 3.0x | 3.3x | 0.7x |
|---|
| China South City Holdings Ltd ($1668) | 1.0x | 1.2x | 1.0x | 2.9x | 4.7x |
