Lai Fung Holdings Ltd reports 22.4% CAPEX growth in 2016 and 7.5% Revenue growth
19/10/2016 • About Lai Fung Holdings Ltd (
$1125) • By InTwits
Lai Fung Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lai Fung Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.2%. At the same time it's a lot of higher than industry average of 27.5%.
- CAPEX is quite volatile: 547 in FY2016, 447 in FY2015, 968 in FY2014, 238 in FY2013, 254 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.0x 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.
Lai Fung Holdings Ltd ($1125) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,394 | 1,895 | 1,207 | 1,901 | 2,044 | 7.5% |
| Gross Profit | 813 | 998 | 746 | 1,037 | 1,089 | 5.0% |
| SG&A | 307 | 376 | 340 | 344 | 351 | 2.1% |
| EBITDA | 625 | 765 | 602 | 817 | 847 | 3.7% |
| Net Income | 813 | 757 | 1,100 | 1,005 | 874 | -13.1% |
Balance Sheet
|
|---|
| Cash | 1,696 | 3,608 | 2,072 | 1,571 | 2,546 | 62.0% |
| Short Term Debt | 1,559 | 2,053 | 708 | 2,860 | 638 | -77.7% |
| Long Term Debt | 1,786 | 3,998 | 3,990 | 2,984 | 5,285 | 77.1% |
Cash flow
|
|---|
| Capex | 254 | 238 | 968 | 447 | 547 | 22.4% |
Ratios
|
|---|
| Revenue growth | 115.4% | 35.9% | -36.3% | 57.5% | 7.5% | |
| EBITDA growth | 133.9% | 22.4% | -21.3% | 35.7% | 3.7% | |
| Gross Margin | 58.3% | 52.6% | 61.8% | 54.5% | 53.3% | -1.2% |
| EBITDA Margin | 44.9% | 40.4% | 49.9% | 42.9% | 41.4% | -1.5% |
| Net Income Margin | 58.3% | 40.0% | 91.1% | 52.9% | 42.7% | -10.1% |
| SG&A, % of revenue | 22.1% | 19.8% | 28.2% | 18.1% | 17.2% | -0.9% |
| CAPEX, % of revenue | 18.2% | 12.6% | 80.1% | 23.5% | 26.8% | 3.3% |
| ROIC | 3.8% | 3.8% | 2.6% | 3.5% | 3.5% | -0.0% |
| ROE | 8.6% | 6.9% | 9.1% | 7.7% | 6.5% | -1.2% |
| Net Debt/EBITDA | 2.6x | 3.2x | 4.4x | 5.2x | 4.0x | -1.2x |
Revenue and profitability
Lai Fung Holdings Ltd's Revenue increased on 7.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.52 pp from 6.3% to 6.8% in FY2016.
Gross Margin decreased slightly on 1.2 pp from 54.5% to 53.3% in FY2016. SG&A as a % of Revenue decreased slightly on 0.91 pp from 18.1% to 17.2% in FY2016.
Net Income marign dropped on 10.1 pp from 52.9% to 42.7% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Lai Fung Holdings Ltd had CAPEX/Revenue of 26.8%. CAPEX/Revenue jumped on 14.2 pp from 12.6% in FY2013 to 26.8% in FY2016. For the last three years the average CAPEX/Revenue was 43.5%.Lai Fung Holdings Ltd maintained rich investment policy and has spent a big chunk of EBITDA (64.6%) to CAPEX.
Return on investment
The company operates at low ROIC (3.50%) and ROE (6.52%). ROIC showed almost no change in FY2016. ROE decreased slightly on 1.2 pp from 7.7% to 6.5% in FY2016.
Leverage (Debt)
Debt level is 4.0x Net Debt / EBITDA and 7.0x Debt / EBITDA. Net Debt / EBITDA dropped on 1.2x from 5.2x to 4.0x in FY2016. Debt increased slightly on 1.3% while cash jumped on 62.0%.
Appendix 1: Peers in Real Estate
Below we provide Lai Fung Holdings 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) | 17.0% | 13.1% | 5.3% | 4.2% | 5.1% |
|---|
| Lai Fung Holdings Ltd ($1125) | | 35.9% | -36.3% | 57.5% | 7.5% |
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% |
|---|
| Lai Fung Holdings Ltd ($1125) | 58.3% | 52.6% | 61.8% | 54.5% | 53.3% |
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% | 31.2% |
|---|
| Lai Fung Holdings Ltd ($1125) | 44.9% | 40.4% | 49.9% | 42.9% | 41.4% |
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% | 1.7% |
|---|
| Lai Fung Holdings Ltd ($1125) | 18.2% | 12.6% | 80.1% | 23.5% | 26.8% |
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% | 2.4% | 1.7% |
|---|
| Lai Fung Holdings Ltd ($1125) | 3.8% | 3.8% | 2.6% | 3.5% | 3.5% |
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) | 2.3x | 2.7x | 3.0x | 3.2x | 2.3x |
|---|
| Lai Fung Holdings Ltd ($1125) | 2.6x | 3.2x | 4.4x | 5.2x | 4.0x |
