Hang Lung Properties Ltd CAPEX dropped on 56.7% in 2016 while Revenue jumped on 45.9%
26/01/2017 • About Hang Lung Properties Ltd (
$101) • By InTwits
Hang Lung Properties Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 63.5% in 2016 vs. 73.1% in 2015 vs. 133.2% in 2012
- Hang Lung Properties Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 60.2%. At the same time it's in pair with industry average of 57.6%.
- CAPEX is quite volatile: 2,677 in 2016, 6,180 in 2015, 5,301 in 2014, 9,886 in 2013, 5,328 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hang Lung Properties Ltd ($101) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 7,372 | 9,138 | 17,030 | 8,948 | 13,059 | 45.9% |
| Gross Profit | | 6,837 | 13,008 | 6,548 | 8,919 | 36.2% |
| SG&A | 626 | 642 | 644 | 655 | 607 | -7.3% |
| EBITDA | 9,821 | 8,722 | 14,121 | 6,543 | 8,290 | 26.7% |
| Net Income | 8,395 | 7,212 | 11,704 | 5,092 | 6,195 | 21.7% |
Balance Sheet
|
|---|
| Cash | 27,989 | 33,761 | 39,887 | 26,870 | 23,379 | -13.0% |
| Short Term Debt | 1,113 | 1,657 | 5,657 | 4,693 | 568 | -87.9% |
| Long Term Debt | 28,623 | 33,322 | 29,441 | 28,078 | 26,514 | -5.6% |
Cash flow
|
|---|
| Capex | 5,328 | 9,886 | 5,301 | 6,180 | 2,677 | -56.7% |
Ratios
|
|---|
| Revenue growth | 42.8% | 24.0% | 86.4% | -47.5% | 45.9% | |
| EBITDA growth | 39.2% | -11.2% | 61.9% | -53.7% | 26.7% | |
| Gross Margin | | 74.8% | 76.4% | 73.2% | 68.3% | -4.9% |
| EBITDA Margin | 133.2% | 95.4% | 82.9% | 73.1% | 63.5% | -9.6% |
| Net Income Margin | 113.9% | 78.9% | 68.7% | 56.9% | 47.4% | -9.5% |
| SG&A, % of revenue | 8.5% | 7.0% | 3.8% | 7.3% | 4.6% | -2.7% |
| CAPEX, % of revenue | 72.3% | 108.2% | 31.1% | 69.1% | 20.5% | -48.6% |
| ROIC | 6.4% | 5.1% | 7.8% | 3.6% | 4.8% | 1.2% |
| ROE | 7.4% | 5.9% | 9.1% | 3.9% | 4.8% | 1.0% |
| Net Debt/EBITDA | 0.2x | 0.1x | -0.3x | 0.9x | 0.4x | -0.5x |
Revenue and profitability
The company's Revenue jumped on 45.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.4 pp from 12.8% to 7.4% in FY2016.
Gross Margin decreased on 4.9 pp from 73.2% to 68.3% in 2016. SG&A as a % of Revenue decreased on 2.7 pp from 7.3% to 4.6% in 2016.
Net Income marign decreased on 9.5 pp from 56.9% to 47.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 20.5%. CAPEX/Revenue dropped on 87.7 pp from 108% in 2013 to 20.5% in 2016. It's average CAPEX/Revenue for the last three years was 40.2%.
Return on investment
The company operates at low ROIC (4.76%) and ROE (4.85%). ROIC increased slightly on 1.2 pp from 3.6% to 4.8% in 2016. ROE increased slightly on 0.95 pp from 3.9% to 4.8% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 3.3x. Net Debt / EBITDA dropped on 0.5x from 0.9x to 0.4x in 2016. Debt dropped on 17.4% while cash dropped on 13.0%.
Appendix 1: Peers in Real Estate
Below we provide Hang Lung Properties 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 Properties Ltd ($101) | | 24.0% | 86.4% | -47.5% | 45.9% |
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 Properties Ltd ($101) | | 74.8% | 76.4% | 73.2% | 68.3% |
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% | 31.7% |
|---|
| Hang Lung Properties Ltd ($101) | 133.2% | 95.4% | 82.9% | 73.1% | 63.5% |
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 Properties Ltd ($101) | 72.3% | 108.2% | 31.1% | 69.1% | 20.5% |
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 Properties Ltd ($101) | 6.4% | 5.1% | 7.8% | 3.6% | 4.8% |
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 | 2.8x | 3.0x | 3.3x | 2.0x |
|---|
| Hang Lung Properties Ltd ($101) | 0.2x | 0.1x | -0.3x | 0.9x | 0.4x |
