Hang Lung Group Ltd CAPEX dropped on 56.7% in 2016 while Revenue surged on 43.2%
26/01/2017 • About Hang Lung Group Ltd (
$10) • By InTwits
Hang Lung Group Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 63.6% in 2016 vs. 73.3% in 2015 vs. 135.1% in 2012
- Hang Lung Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 56.7%. At the same time it's in pair with industry average of 57.6%.
- CAPEX is quite volatile: 2,682 in 2016, 6,188 in 2015, 5,305 in 2014, 9,896 in 2013, 5,360 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hang Lung Group Ltd ($10) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 7,986 | 9,734 | 17,606 | 9,528 | 13,648 | 43.2% |
| Gross Profit | 6,160 | 7,252 | 13,406 | 6,955 | 9,338 | 34.3% |
| SG&A | 695 | 698 | 705 | 728 | 671 | -7.8% |
| EBITDA | 10,791 | 9,255 | 14,470 | 6,988 | 8,681 | 24.2% |
| Net Income | 5,262 | 4,557 | 6,825 | 3,211 | 3,713 | 15.6% |
Balance Sheet
|
|---|
| Cash | 32,072 | 39,109 | 40,219 | 27,019 | 23,578 | -12.7% |
| Short Term Debt | 1,113 | 1,657 | 7,937 | 6,640 | 568 | -91.4% |
| Long Term Debt | 36,532 | 43,367 | 32,158 | 30,690 | 30,551 | -0.5% |
Cash flow
|
|---|
| Capex | 5,360 | 9,896 | 5,305 | 6,188 | 2,682 | -56.7% |
Ratios
|
|---|
| Revenue growth | 39.8% | 21.9% | 80.9% | -45.9% | 43.2% | |
| EBITDA growth | 41.6% | -14.2% | 56.3% | -51.7% | 24.2% | |
| Gross Margin | 77.1% | 74.5% | 76.1% | 73.0% | 68.4% | -4.6% |
| EBITDA Margin | 135.1% | 95.1% | 82.2% | 73.3% | 63.6% | -9.7% |
| Net Income Margin | 65.9% | 46.8% | 38.8% | 33.7% | 27.2% | -6.5% |
| SG&A, % of revenue | 8.7% | 7.2% | 4.0% | 7.6% | 4.9% | -2.7% |
| CAPEX, % of revenue | 67.1% | 101.7% | 30.1% | 64.9% | 19.7% | -45.3% |
| ROIC | 6.5% | 5.0% | 7.4% | 3.6% | 4.7% | 1.1% |
| ROE | 8.5% | 6.7% | 9.3% | 4.2% | 4.9% | 0.7% |
| Net Debt/EBITDA | 0.5x | 0.6x | -0.0x | 1.5x | 0.9x | -0.6x |
Revenue and profitability
Hang Lung Group Ltd's Revenue surged on 43.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 23.0 pp from 62.1% to 85.1% in FY2016.
Gross Margin decreased on 4.6 pp from 73.0% to 68.4% in 2016. SG&A as a % of Revenue decreased on 2.7 pp from 7.6% to 4.9% in 2016.
Net Income marign decreased on 6.5 pp from 33.7% to 27.2% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 19.7% in 2016. Hang Lung Group Ltd's CAPEX/Revenue dropped on 82.0 pp from 102% in 2013 to 19.7% in 2016. For the last three years the average CAPEX/Revenue was 38.2%.
Return on investment
The company operates at low ROIC (4.69%) and ROE (4.91%). ROIC increased slightly on 1.1 pp from 3.6% to 4.7% in 2016. ROE increased slightly on 0.67 pp from 4.2% to 4.9% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 3.6x. Net Debt / EBITDA dropped on 0.6x from 1.5x to 0.9x in 2016. Debt dropped on 16.6% while cash dropped on 12.7%.
Appendix 1: Peers in Real Estate
Below we provide Hang Lung Group 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) | 17.5% | 13.1% | 5.2% | 4.5% | 5.5% |
|---|
| Hang Lung Group Ltd ($10) | | 21.9% | 80.9% | -45.9% | 43.2% |
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% | 53.2% |
|---|
| Hang Lung Group Ltd ($10) | 77.1% | 74.5% | 76.1% | 73.0% | 68.4% |
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% | 31.7% |
|---|
| Hang Lung Group Ltd ($10) | 135.1% | 95.1% | 82.2% | 73.3% | 63.6% |
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% | 570.7% |
| 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% | 2.1% |
|---|
| Hang Lung Group Ltd ($10) | 67.1% | 101.7% | 30.1% | 64.9% | 19.7% |
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% | 1.7% |
|---|
| Hang Lung Group Ltd ($10) | 6.5% | 5.0% | 7.4% | 3.6% | 4.7% |
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 | 2.0x |
|---|
| Hang Lung Group Ltd ($10) | 0.5x | 0.6x | -0.0x | 1.5x | 0.9x |
