Hong Kong Resources Holdings Co Ltd revenue dropped on 15.7% while EBITDA Margin increased on 4.3 pp from -9.5% to -5.2%
15/09/2016 • About Hong Kong Resources Holdings Co Ltd (
$2882) • By InTwits
Hong Kong Resources Holdings Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hong Kong Resources Holdings Co Ltd is a company in decline: FY2016 revenue growth was -15.7%, 5 years revenue CAGR was -14.0%
- The company operates at negative EBITDA Margin: -5.2%
- Hong Kong Resources Holdings Co Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -2.1%0
- Hong Kong Resources Holdings Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 12.6%.
- CAPEX is quite volatile: 171 in 2016, 100 in 2015, 49.9 in 2014, 65.5 in 2013, 52.1 in 2012
- The company has unprofitable business model: ROIC is at -5.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hong Kong Resources Holdings Co Ltd ($2882) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,841 | 2,887 | 1,562 | 1,371 | 1,156 | -15.7% |
| Gross Profit | 718 | 608 | 378 | 402 | 327 | -18.5% |
| SG&A | | 136 | 147 | 139 | 109 | -21.5% |
| EBITDA | 66 | 35 | -136 | -130 | -60 | |
| Net Income | -29 | -116 | -184 | -94 | -63 | |
Balance Sheet
|
|---|
| Cash | 162 | 123 | 358 | 262 | 94 | -64.1% |
| Short Term Debt | 600 | 939 | 1,005 | 933 | 833 | -10.8% |
| Long Term Debt | 236 | 19 | 77 | 85 | 197 | 133.4% |
Cash flow
|
|---|
| Capex | 21 | 19 | 21 | 28 | 28 | -0.9% |
Ratios
|
|---|
| Revenue growth | 56.7% | -24.8% | -45.9% | -12.2% | -15.7% | |
| EBITDA growth | -32.0% | -47.0% | -489.0% | -4.7% | -53.7% | |
| Gross Margin | 18.7% | 21.1% | 24.2% | 29.3% | 28.3% | -1.0% |
| EBITDA Margin | 1.7% | 1.2% | -8.7% | -9.5% | -5.2% | 4.3% |
| Net Income Margin | -0.8% | -4.0% | -11.8% | -6.8% | -5.4% | 1.4% |
| SG&A, % of revenue | | 4.7% | 9.4% | 10.1% | 9.4% | -0.7% |
| CAPEX, % of revenue | 0.6% | 0.7% | 1.3% | 2.1% | 2.4% | 0.4% |
| ROIC | 3.2% | 0.7% | -9.2% | -9.1% | -5.2% | 3.9% |
| ROE | -4.9% | -18.9% | -33.6% | -22.7% | -18.3% | 4.4% |
| Net Debt/EBITDA | 10.2x | 23.8x | | | | 0.0x |
Revenue and profitability
The company's Revenue dropped on 15.7%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.3 pp from -9.5% to -5.2% in FY2016.
Gross Margin decreased slightly on 0.97 pp from 29.3% to 28.3% in FY2016. SG&A as a % of Revenue decreased slightly on 0.70 pp from 10.1% to 9.4% in FY2016.
Net Income marign increased slightly on 1.4 pp from -6.8% to -5.4% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Hong Kong Resources Holdings Co Ltd's CAPEX/Revenue was 2.4% in FY2016. CAPEX/Revenue increased slightly on 1.8 pp from 0.65% in FY2013 to 2.4% in FY2016. It's average CAPEX/Revenue for the last three years was 1.9%.
Return on investment
The company operates at negative ROIC (-5.20%) and ROE (-18.35%). ROIC increased on 3.9 pp from -9.1% to -5.2% in FY2016. ROE increased on 4.4 pp from -22.7% to -18.3% in FY2016.
Leverage (Debt)
Debt level is -12.3x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2016. Debt increased slightly on 1.2% while cash dropped on 64.1%.
Appendix 1: Peers in Retail
Below you can find Hong Kong Resources Holdings Co Ltd benchmarking vs. other companies in Retail 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 |
|---|
| China Nuclear Industry 23 International Corp Ltd ($611) | 1.4% | 85.6% | -42.1% | 419.8% | |
| Noble House China Holdings Ltd ($8246) | -5.0% | -20.2% | -24.8% | 117.2% | |
| Vongroup Ltd ($318) | | 23.7% | -80.2% | 90.3% | -7.2% |
| Nanjing Sinolife United Co Ltd ($3332) | 45.6% | 29.5% | 29.6% | 57.3% | |
| Shanghai La Chapelle Fashion Co Ltd ($6116) | 54.9% | 72.8% | 23.0% | 48.3% | |
| |
|---|
| Median (117 companies) | 7.4% | 6.5% | 3.1% | -1.0% | -7.6% |
|---|
| Hong Kong Resources Holdings Co Ltd ($2882) | | -24.8% | -45.9% | -12.2% | -15.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vongroup Ltd ($318) | | | 95.1% | 99.1% | 99.0% |
| Modern Beauty Salon Holdings Ltd ($919) | 97.4% | 95.9% | 96.8% | 96.7% | 96.8% |
| Moiselle International Holdings Ltd ($130) | 81.2% | 83.8% | 80.6% | 83.2% | 77.6% |
| Embry Holdings Ltd ($1388) | 81.2% | 80.4% | 82.3% | 81.6% | |
| Nanjing Sinolife United Co Ltd ($3332) | 86.5% | 89.3% | 90.9% | 80.6% | |
| |
|---|
| Median (103 companies) | 37.2% | 36.4% | 35.5% | 33.9% | 44.4% |
|---|
| Hong Kong Resources Holdings Co Ltd ($2882) | 18.7% | 21.1% | 24.2% | 29.3% | 28.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Energy Development Holdings Ltd ($228) | -58.1% | -72.3% | -84.0% | 1,070.6% | |
| Golden Eagle Retail Group Ltd ($3308) | 48.5% | 47.3% | 42.8% | 55.4% | |
| Nanjing Sinolife United Co Ltd ($3332) | 51.6% | 56.9% | 54.4% | 44.8% | |
| Lifestyle International Holdings Ltd ($1212) | 47.5% | 47.0% | 44.7% | 43.4% | |
| China Dongxiang Group Co Ltd ($3818) | 6.0% | 5.6% | 58.3% | 41.4% | |
| |
|---|
| Median (117 companies) | 10.8% | 7.8% | 9.1% | 7.4% | 5.1% |
|---|
| Hong Kong Resources Holdings Co Ltd ($2882) | 1.7% | 1.2% | -8.7% | -9.5% | -5.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Culture Landmark Investment Ltd ($674) | 11.6% | 19.4% | 15.7% | 47.2% | 3.9% |
| Springland International Holdings Ltd ($1700) | 31.9% | 17.4% | 26.5% | 36.9% | |
| Merry Garden Holdings Ltd ($1237) | 18.6% | 28.6% | 15.1% | 34.2% | |
| China Energy Development Holdings Ltd ($228) | 1.6% | 0.2% | 0.0% | 27.4% | |
| Golden Eagle Retail Group Ltd ($3308) | 28.5% | 9.4% | 26.7% | 25.4% | |
| |
|---|
| Median (117 companies) | 4.1% | 3.6% | 3.8% | 3.5% | 1.8% |
|---|
| Hong Kong Resources Holdings Co Ltd ($2882) | 0.6% | 0.7% | 1.3% | 2.1% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 50.7% | -4.6% | 81.3% | 71.8% | 13.3% |
| JC Group Holdings Ltd ($8326) | | 215.6% | 92.8% | 66.3% | 81.7% |
| Starbucks Corp ($4337) | 36.4% | -6.0% | 52.8% | 51.4% | |
| Sa Sa International Holdings Ltd ($178) | 53.5% | 52.7% | 49.0% | 39.8% | 19.0% |
| Noble House China Holdings Ltd ($8246) | 17.7% | -67.7% | -113.8% | 35.6% | |
| |
|---|
| Median (117 companies) | 12.3% | 8.9% | 8.7% | 5.8% | 2.0% |
|---|
| Hong Kong Resources Holdings Co Ltd ($2882) | 3.2% | 0.7% | -9.2% | -9.1% | -5.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sparkle Roll Group Ltd ($970) | 0.6x | 4.0x | 9.3x | 23.5x | 8.5x |
| Trinity Ltd ($891) | -0.2x | 0.2x | 0.6x | 18.2x | |
| Parkson Retail Group Ltd ($3368) | 0.8x | 2.3x | 3.6x | 9.8x | |
| Maoye International Holdings Ltd ($848) | 2.9x | 3.3x | 3.4x | 9.0x | |
| Century Ginwa Retail Holdings Ltd ($162) | 2.0x | 2.5x | 4.8x | 7.3x | |
| |
|---|
| Median (92 companies) | -0.5x | -0.6x | -0.2x | -0.5x | -0.7x |
|---|
