Pokfulam Development Co reports 50.2% Net Income growth in 2016 while 16.3 pp EBITDA Margin decline from 73.6% to 57.3%
11/11/2016 • About Pokfulam Development Co (
$225) • By InTwits
Pokfulam Development Co reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Pokfulam Development Co doesn't have a profitable business model yet: FY2016 ROIC is 1.8%
- EBITDA Margin is quite volatile: 57.3% in FY2016, 73.6% in FY2015, -7.3% in FY2014, -5.3% in FY2013, 5.2% in FY2012
- Pokfulam Development Co has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.4%. At the same time it's in pair with industry average of 6.5%.
- CAPEX is quite volatile: 21.7 in FY2016, 16.7 in FY2015, 30.7 in FY2014, 34.6 in FY2013, 7.5 in FY2012
- The company has potentially unprofitable business model: ROIC is at 1.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Pokfulam Development Co ($225) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 133.5 | 131.0 | 136.2 | 132.5 | 146.5 | 10.6% |
| Gross Profit | 86.1 | 82.4 | 86.7 | 83.2 | 96.0 | 15.3% |
| SG&A | 12.2 | 13.6 | 13.8 | 13.0 | 15.0 | 15.8% |
| EBITDA | 6.9 | -7.0 | -9.9 | 97.5 | 84.0 | -13.9% |
| Net Income | 459.5 | 223.5 | 178.0 | 172.4 | 259.0 | 50.2% |
Balance Sheet
|
|---|
| Cash | 72.6 | 118.9 | 151.5 | 173.5 | 199.9 | 15.2% |
| Short Term Debt | 42.0 | 70.0 | 85.0 | 70.0 | 70.0 | 0.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 7.5 | 34.6 | 30.7 | 16.7 | 21.7 | 30.5% |
Ratios
|
|---|
| Revenue growth | 10.5% | -1.9% | 4.0% | -2.7% | 10.6% | |
| EBITDA growth | -89.9% | -200.8% | 41.7% | -1,082.4% | -13.9% | |
| Gross Margin | 64.5% | 62.9% | 63.6% | 62.8% | 65.5% | 2.7% |
| EBITDA Margin | 5.2% | -5.3% | -7.3% | 73.6% | 57.3% | -16.3% |
| Net Income Margin | 344.1% | 170.6% | 130.7% | 130.2% | 176.8% | 46.6% |
| SG&A, % of revenue | 9.1% | 10.4% | 10.1% | 9.8% | 10.2% | 0.5% |
| CAPEX, % of revenue | 5.6% | 26.4% | 22.5% | 12.6% | 14.8% | 2.3% |
| ROIC | 0.1% | -0.2% | -0.3% | 2.2% | 1.8% | -0.4% |
| ROE | 13.3% | 5.6% | 4.3% | 4.0% | 5.8% | 1.8% |
| Net Debt/EBITDA | -4.4x | | | -1.1x | -1.5x | -0.5x |
Revenue and profitability
The company's Revenue surged on 10.6%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 16.3 pp from 73.6% to 57.3% in FY2016.
Gross Margin increased on 2.7 pp from 62.8% to 65.5% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign surged on 46.6 pp from 130% to 177% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Pokfulam Development Co had CAPEX/Revenue of 14.8%. Pokfulam Development Co showed big decline in CAPEX/Revenue of 11.6 pp from 26.4% in FY2013 to 14.8% in FY2016. It's average level of CAPEX/Revenue for the last three years was 16.6%.
Return on investment
The company operates at low ROIC (1.80%) and ROE (5.76%). ROIC showed almost no change in FY2016. ROE increased slightly on 1.8 pp from 4.0% to 5.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.5x and Debt / EBITDA is 0.8x. Net Debt / EBITDA dropped on 0.5x from -1.1x to -1.5x in FY2016. Debt didn't change in FY2016 while cash surged on 15.2%.
Appendix 1: Peers in Real Estate
Below we provide Pokfulam Development Co 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) | 17.5% | 13.5% | 5.3% | 4.5% | 5.4% |
|---|
| Pokfulam Development Co ($225) | | -1.9% | 4.0% | -2.7% | 10.6% |
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% | 46.0% |
|---|
| Pokfulam Development Co ($225) | 64.5% | 62.9% | 63.6% | 62.8% | 65.5% |
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% | 28.5% | 27.8% | 23.4% | 28.4% |
|---|
| Pokfulam Development Co ($225) | 5.2% | -5.3% | -7.3% | 73.6% | 57.3% |
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) | 5.9% | 6.1% | 4.7% | 3.2% | 1.7% |
|---|
| Pokfulam Development Co ($225) | 5.6% | 26.4% | 22.5% | 12.6% | 14.8% |
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% | 2.5% | 1.6% |
|---|
| Pokfulam Development Co ($225) | 0.1% | -0.2% | -0.3% | 2.2% | 1.8% |
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 | 2.7x | 3.0x | 3.3x | 3.1x |
|---|
| Pokfulam Development Co ($225) | -4.4x | | | -1.1x | -1.5x |
