Hon Kwok Land Investment Co Ltd EBITDA Margin surged on 702 pp from -677% to 25.5% in 2016 and Revenue surged on 335%
28/06/2016 • About Hon Kwok Land Investment Co Ltd (
$160) • By InTwits
Hon Kwok Land Investment Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hon Kwok Land Investment Co Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -50.3% for the sames years0
- Hon Kwok Land Investment Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 129.3%. At the same time it's a lot of higher than industry average of 57.3%.
- CAPEX is quite volatile: 440 in FY2016, 1,069 in FY2015, 552 in FY2014, 375 in FY2013, 185 in FY2012
- The company has potentially unprofitable business model: ROIC is at 2.6%
- It operates with high leverage: Net Debt/EBITDA is 10.4x 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.
Hon Kwok Land Investment Co Ltd ($160) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 899 | 238 | 382 | 361 | 1,570 | 335.1% |
| Gross Profit | 312 | 142 | 208 | 192 | 536 | 179.9% |
| SG&A | | | | 84 | 94 | 12.2% |
| EBITDA | 245 | 71 | -12 | -2,440 | 400 | |
| Net Income | 217 | 402 | 437 | 1,898 | 460 | -75.8% |
Balance Sheet
|
|---|
| Cash | 489 | 172 | 320 | 541 | 1,646 | 204.2% |
| Short Term Debt | 817 | 1,304 | 1,602 | 2,699 | 2,895 | 7.3% |
| Long Term Debt | 1,981 | 2,264 | 2,433 | 2,676 | 2,925 | 9.3% |
Cash flow
|
|---|
| Capex | 185 | 375 | 552 | 1,069 | 440 | -58.8% |
Ratios
|
|---|
| Revenue growth | 518.0% | -73.5% | 60.4% | -5.6% | 335.1% | |
| EBITDA growth | 7,913.1% | -71.1% | -117.6% | 19,433.5% | -116.4% | |
| Gross Margin | 34.7% | 59.6% | 54.4% | 53.1% | 34.2% | -18.9% |
| EBITDA Margin | 27.3% | 29.8% | -3.3% | -676.6% | 25.5% | 702.1% |
| Net Income Margin | 24.1% | 168.6% | 114.3% | 526.3% | 29.3% | -496.9% |
| SG&A, % of revenue | | | | 23.2% | 6.0% | -17.2% |
| CAPEX, % of revenue | 20.6% | 157.3% | 144.5% | 296.3% | 28.1% | -268.3% |
| ROIC | 3.2% | 0.7% | -0.2% | -19.4% | 2.6% | 22.0% |
| ROE | 5.1% | 8.6% | 8.1% | 27.8% | 5.9% | -21.9% |
| Net Debt/EBITDA | 9.4x | 47.9x | | | 10.4x | 10.4x |
Revenue and profitability
Hon Kwok Land Investment Co Ltd's Revenue surged on 335%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.2 pp from 1.8% to -14.4% in FY2016.
Gross Margin dropped on 18.9 pp from 53.1% to 34.2% in FY2016. SG&A as a % of Revenue dropped on 17.2 pp from 23.2% to 6.0% in FY2016.
Net Income marign dropped on 497 pp from 526% to 29.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 28.1% in FY2016. Hon Kwok Land Investment Co Ltd showed big decline in CAPEX/Revenue of 129 pp from 157% in FY2013 to 28.1% in FY2016. Average CAPEX/Revenue for the last three years was 156%.To secure this fast growth the company made large investments to CAPEX (110% of EBITDA).
Return on investment
The company operates at low ROIC (2.63%) and ROE (5.92%). ROIC jumped on 22.0 pp from -19.4% to 2.6% in FY2016. ROE dropped on 21.9 pp from 27.8% to 5.9% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 10.4x and Debt / EBITDA is 14.5x. Net Debt / EBITDA surged10.4x from to 10.4x in FY2016. Debt increased on 8.3% while cash jumped on 204%.
Appendix 1: Peers in Real Estate
Below we provide Hon Kwok Land Investment Co 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) | | -95.2% | 75.7% | 678.6% | 206.4% |
| |
|---|
| Median (179 companies) | 15.8% | 13.5% | 5.2% | 4.5% | 4.8% |
|---|
| Hon Kwok Land Investment Co Ltd ($160) | | -73.5% | 60.4% | -5.6% | 335.1% |
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) | 42.1% | 41.8% | 39.1% | 38.2% | 48.2% |
|---|
| Hon Kwok Land Investment Co Ltd ($160) | 34.7% | 59.6% | 54.4% | 53.1% | 34.2% |
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) | 29.3% | 28.3% | 27.8% | 23.5% | 13.3% |
|---|
| Hon Kwok Land Investment Co Ltd ($160) | 27.3% | 29.8% | -3.3% | -676.6% | 25.5% |
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% | |
| Silver Grant International Industries Ltd ($171) | 134.5% | 193.1% | 204.1% | 280.7% | |
| |
|---|
| Median (179 companies) | 5.6% | 6.1% | 4.7% | 3.2% | 1.6% |
|---|
| Hon Kwok Land Investment Co Ltd ($160) | 20.6% | 157.3% | 144.5% | 296.3% | 28.1% |
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% | 4.1% | 4.2% | 2.5% | 1.5% |
|---|
| Hon Kwok Land Investment Co Ltd ($160) | 3.2% | 0.7% | -0.2% | -19.4% | 2.6% |
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 (137 companies) | 2.3x | 2.7x | 3.0x | 3.2x | 1.4x |
|---|
