New World Development Co Ltd reports 54.7% Net Income decline while 7.8% Revenue growth
21/09/2016 • About New World Development Co Ltd (
$17) • By InTwits
New World Development Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- New World Development Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.4%. At the same time it's in pair with industry average of 21.1%.
- CAPEX is quite volatile: 8,921 in FY2016, 8,987 in FY2015, 6,352 in FY2014, 5,487 in FY2013, 2,755 in FY2012
- The company has potentially unprofitable business model: ROIC is at 5.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.1x 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.
New World Development Co Ltd ($17) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 35,620 | 46,780 | 56,501 | 55,245 | 59,570 | 7.8% |
| Gross Profit | 15,694 | 18,425 | 21,553 | 19,306 | 18,522 | -4.1% |
| SG&A | 6,483 | 7,797 | 8,716 | 9,809 | 9,624 | -1.9% |
| EBITDA | 17,361 | 20,225 | 19,193 | 30,159 | 19,551 | -35.2% |
| Net Income | 10,139 | 14,149 | 9,725 | 19,112 | 8,666 | -54.7% |
Balance Sheet
|
|---|
| Cash | 27,910 | 40,091 | 61,726 | 59,352 | 54,965 | -7.4% |
| Short Term Debt | 20,866 | 27,183 | 32,349 | 33,518 | 20,090 | -40.1% |
| Long Term Debt | 67,751 | 77,398 | 86,350 | 82,709 | 114,842 | 38.9% |
Cash flow
|
|---|
| Capex | 2,755 | 5,487 | 6,352 | 8,987 | 8,921 | -0.7% |
Ratios
|
|---|
| Revenue growth | 8.3% | 31.3% | 20.8% | -2.2% | 7.8% | |
| EBITDA growth | 40.9% | 16.5% | -5.1% | 57.1% | -35.2% | |
| Gross Margin | 44.1% | 39.4% | 38.1% | 34.9% | 31.1% | -3.9% |
| EBITDA Margin | 48.7% | 43.2% | 34.0% | 54.6% | 32.8% | -21.8% |
| Net Income Margin | 28.5% | 30.2% | 17.2% | 34.6% | 14.5% | -20.0% |
| SG&A, % of revenue | 18.2% | 16.7% | 15.4% | 17.8% | 16.2% | -1.6% |
| CAPEX, % of revenue | 7.7% | 11.7% | 11.2% | 16.3% | 15.0% | -1.3% |
| ROIC | 6.8% | 6.6% | 5.4% | 8.1% | 5.0% | -3.1% |
| ROE | 8.9% | 10.8% | 6.5% | 11.3% | 4.8% | -6.4% |
| Net Debt/EBITDA | 3.5x | 3.2x | 3.0x | 1.9x | 4.1x | 2.2x |
Revenue and profitability
The company's Revenue increased on 7.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 8.2 pp from 11.9% to 20.1% in 2016.
Gross Margin decreased on 3.9 pp from 34.9% to 31.1% in FY2016. SG&A as a % of Revenue decreased slightly on 1.6 pp from 17.8% to 16.2% in FY2016.
Net Income marign dropped on 20.0 pp from 34.6% to 14.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 15.0% in FY2016. CAPEX/Revenue increased on 3.2 pp from 11.7% in FY2013 to 15.0% in FY2016. For the last three years the average CAPEX/Revenue was 14.2%.
Return on investment
The company operates at low ROIC (5.00%) and ROE (4.83%). ROIC decreased on 3.1 pp from 8.1% to 5.0% in FY2016. ROE decreased on 6.4 pp from 11.3% to 4.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.1x and Debt / EBITDA is 6.9x. Net Debt / EBITDA jumped on 2.2x from 1.9x to 4.1x in FY2016. Debt surged on 16.1% while cash decreased on 7.4%.
Appendix 1: Peers in Real Estate
Below you can find New World Development Co 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% | 4.8% |
|---|
| New World Development Co Ltd ($17) | | 31.3% | 20.8% | -2.2% | 7.8% |
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% | 41.9% | 39.3% | 38.4% | 43.6% |
|---|
| New World Development Co Ltd ($17) | 44.1% | 39.4% | 38.1% | 34.9% | 31.1% |
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% | 30.3% |
|---|
| New World Development Co Ltd ($17) | 48.7% | 43.2% | 34.0% | 54.6% | 32.8% |
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% |
|---|
| New World Development Co Ltd ($17) | 7.7% | 11.7% | 11.2% | 16.3% | 15.0% |
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% |
|---|
| New World Development Co Ltd ($17) | 6.8% | 6.6% | 5.4% | 8.1% | 5.0% |
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) | 2.3x | 2.7x | 3.0x | 3.3x | 1.7x |
|---|
| New World Development Co Ltd ($17) | 3.5x | 3.2x | 3.0x | 1.9x | 4.1x |
