Sun Hung Kai Properties Ltd CAPEX surged on 47.7% in 2016 and Revenue jumped on 36.5%
08/09/2016 • About Sun Hung Kai Properties Ltd (
$16) • By InTwits
Sun Hung Kai Properties Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sun Hung Kai Properties Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.9%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 6,634 in FY2016, 4,491 in FY2015, 13,986 in FY2014, 9,673 in FY2013, 6,138 in FY2012
- The company has potentially unprofitable business model: ROIC is at 6.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sun Hung Kai Properties Ltd ($16) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 68,400 | 53,793 | 75,100 | 66,783 | 91,184 | 36.5% |
| Gross Profit | 30,180 | 23,886 | 30,111 | 27,794 | 34,739 | 25.0% |
| SG&A | 5,724 | 5,571 | 6,138 | 5,610 | 6,646 | 18.5% |
| EBITDA | 45,797 | 40,024 | 38,797 | 35,562 | 39,353 | 10.7% |
| Net Income | 43,080 | 40,329 | 33,520 | 31,082 | 32,666 | 5.1% |
Balance Sheet
|
|---|
| Cash | 14,338 | 16,471 | 18,528 | 32,561 | 30,048 | -7.7% |
| Short Term Debt | 9,801 | 8,060 | 9,241 | 10,816 | 17,486 | 61.7% |
| Long Term Debt | 61,465 | 56,570 | 74,490 | 72,316 | 63,275 | -12.5% |
Cash flow
|
|---|
| Capex | 6,138 | 9,673 | 13,986 | 4,491 | 6,634 | 47.7% |
Ratios
|
|---|
| Revenue growth | 9.3% | -21.4% | 39.6% | -11.1% | 36.5% | |
| EBITDA growth | -3.8% | -12.6% | -3.1% | -8.3% | 10.7% | |
| Gross Margin | 44.1% | 44.4% | 40.1% | 41.6% | 38.1% | -3.5% |
| EBITDA Margin | 67.0% | 74.4% | 51.7% | 53.3% | 43.2% | -10.1% |
| Net Income Margin | 63.0% | 75.0% | 44.6% | 46.5% | 35.8% | -10.7% |
| SG&A, % of revenue | 8.4% | 10.4% | 8.2% | 8.4% | 7.3% | -1.1% |
| CAPEX, % of revenue | 9.0% | 18.0% | 18.6% | 6.7% | 7.3% | 0.6% |
| ROIC | 10.7% | 8.4% | 7.4% | 6.2% | 6.5% | 0.4% |
| ROE | 13.2% | 11.0% | 8.4% | 7.2% | 7.1% | -0.1% |
| Net Debt/EBITDA | 1.2x | 1.2x | 1.7x | 1.4x | 1.3x | -0.1x |
Revenue and profitability
Sun Hung Kai Properties Ltd's Revenue jumped on 36.5%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 10.1 pp from 53.3% to 43.2% in FY2016.
Gross Margin decreased on 3.5 pp from 41.6% to 38.1% in FY2016. SG&A as a % of Revenue decreased slightly on 1.1 pp from 8.4% to 7.3% in FY2016.
Net Income marign dropped on 10.7 pp from 46.5% to 35.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Sun Hung Kai Properties Ltd had CAPEX/Revenue of 7.3%. The company's CAPEX/Revenue dropped on 10.7 pp from 18.0% in FY2013 to 7.3% in FY2016. Average CAPEX/Revenue for the last three years was 10.9%.
Return on investment
The company operates at low ROIC (6.54%) and ROE (7.10%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 2.1x. Net Debt / EBITDA dropped on 0.1x from 1.4x to 1.3x in FY2016. Debt decreased on 2.9% while cash decreased on 7.7%.
Management team
Kwok Ping-Luen "Raymond" is a the company's CEO. Kwok Ping-Luen "Raymond" has spent 7 years at the company.
Appendix 1: Peers in Real Estate
Below you can find Sun Hung Kai Properties 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) | 15.8% | 13.5% | 5.2% | 4.5% | 4.8% |
|---|
| Sun Hung Kai Properties Ltd ($16) | | -21.4% | 39.6% | -11.1% | 36.5% |
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% | 92.9% |
| Soundwill Holdings Ltd ($878) | 53.1% | 74.5% | 46.9% | 95.7% | |
| |
|---|
| Median (160 companies) | 41.9% | 41.8% | 39.1% | 38.2% | 43.8% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 44.1% | 44.4% | 40.1% | 41.6% | 38.1% |
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% | 24.2% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 67.0% | 74.4% | 51.7% | 53.3% | 43.2% |
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% | 28.1% |
| |
|---|
| Median (179 companies) | 5.6% | 6.1% | 4.7% | 3.2% | 1.6% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 9.0% | 18.0% | 18.6% | 6.7% | 7.3% |
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% | 2.0% |
|---|
| Sun Hung Kai Properties Ltd ($16) | 10.7% | 8.4% | 7.4% | 6.2% | 6.5% |
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 | 2.2x |
|---|
| Sun Hung Kai Properties Ltd ($16) | 1.2x | 1.2x | 1.7x | 1.4x | 1.3x |
