KWG Property Holding Ltd Debt surged on 53.4% in 2016 and Net Debt / EBITDA surged on 1.7x from 6.0x to 7.7x
21/03/2017 • About KWG Property Holding Ltd (
$1813) • By InTwits
KWG Property Holding Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has potentially unprofitable business model: ROIC is at 3.3%
- It operates with high leverage: Net Debt/EBITDA is 7.7x while industry average is 4.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
KWG Property Holding Ltd ($1813) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9,676 | 9,468 | 10,466 | 8,340 | 8,865 | 6.3% |
| Gross Profit | 3,536 | 3,432 | 3,718 | 3,009 | 3,070 | 2.0% |
| SG&A | 894 | 1,014 | 1,093 | 1,051 | 1,292 | 22.9% |
| EBITDA | 3,391 | 3,059 | 3,214 | 2,851 | 2,233 | -21.6% |
| Net Income | 2,406 | 2,750 | 3,272 | 3,416 | 3,465 | 1.4% |
Balance Sheet
|
|---|
| Cash | 4,927 | 9,414 | 10,094 | 10,946 | 25,771 | 135.4% |
| Short Term Debt | 3,100 | 3,065 | 3,465 | 3,983 | 4,754 | 19.4% |
| Long Term Debt | 13,090 | 17,840 | 21,048 | 24,015 | 38,196 | 59.1% |
Cash flow
|
|---|
| Capex | 1,017 | 575 | 554 | 245 | | -100.0% |
Ratios
|
|---|
| Revenue growth | -4.4% | -2.2% | 10.5% | -20.3% | 6.3% | |
| EBITDA growth | -16.9% | -9.8% | 5.1% | -11.3% | -21.6% | |
| Gross Margin | 36.5% | 36.2% | 35.5% | 36.1% | 34.6% | -1.5% |
| EBITDA Margin | 35.0% | 32.3% | 30.7% | 34.2% | 25.2% | -9.0% |
| Net Income Margin | 24.9% | 29.0% | 31.3% | 41.0% | 39.1% | -1.9% |
| SG&A, % of revenue | 9.2% | 10.7% | 10.4% | 12.6% | 14.6% | 2.0% |
| CAPEX, % of revenue | 10.5% | 6.1% | 5.3% | 2.9% | | -2.9% |
| ROIC | 10.1% | 7.7% | 6.7% | 5.2% | 3.3% | -1.9% |
| ROE | 16.7% | 16.6% | 17.1% | 16.0% | 15.0% | -1.0% |
| Net Debt/EBITDA | 3.3x | 3.8x | 4.5x | 6.0x | 7.7x | 1.7x |
Revenue and profitability
The company's Revenue increased on 6.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.2 pp from 24.1% to 26.3% in FY2016.
Gross Margin decreased slightly on 1.5 pp from 36.1% to 34.6% in FY2016. SG&A as a % of Revenue increased slightly on 2.0 pp from 12.6% to 14.6% in FY2016.
Net Income marign decreased slightly on 1.9 pp from 41.0% to 39.1% in FY2016.
Return on investment
The company operates at good ROE (14.97%) while ROIC is low (3.27%). ROIC decreased slightly on 1.9 pp from 5.2% to 3.3% in FY2016. ROE decreased slightly on 1.0 pp from 16.0% to 15.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.7x and Debt / EBITDA is 19.2x. Net Debt / EBITDA jumped on 1.7x from 6.0x to 7.7x in FY2016. Debt jumped on 53.4% while cash surged on 135%.
Management team
Kong Jian Tao is a KWG Property Holding Ltd's CEO. Kong Jian Tao has spent 23 years at the company. The company's CFO is Tsui Kam Tim. Tsui Kam Tim has 11 years tenure at the company.
Appendix 1: Peers in Real Estate
Below we provide KWG Property Holding 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% | -82.8% |
| Henderson Investment Ltd ($97) | | | | 737.1% | -0.9% |
| ITC Properties Group Ltd ($199) | | -95.2% | 75.7% | 678.6% | 206.4% |
| |
|---|
| Median (179 companies) | 18.3% | 13.5% | 5.2% | 4.5% | 8.5% |
|---|
| KWG Property Holding Ltd ($1813) | | -2.2% | 10.5% | -20.3% | 6.3% |
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) | 42.1% | 41.9% | 39.3% | 38.4% | 43.8% |
|---|
| KWG Property Holding Ltd ($1813) | 36.5% | 36.2% | 35.5% | 36.1% | 34.6% |
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% | 56.8% |
| 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% | 105.1% |
| |
|---|
| Median (179 companies) | 28.9% | 28.3% | 26.9% | 23.4% | 32.2% |
|---|
| KWG Property Holding Ltd ($1813) | 35.0% | 32.3% | 30.7% | 34.2% | 25.2% |
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% | 6.2% | 4.7% | 3.3% | 3.8% |
|---|
| KWG Property Holding Ltd ($1813) | 10.5% | 6.1% | 5.3% | 2.9% | |
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% | 17.9% |
| 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% | 13.1% |
| 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% | 3.1% |
|---|
| KWG Property Holding Ltd ($1813) | 10.1% | 7.7% | 6.7% | 5.2% | 3.3% |
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 | 37.0x |
| 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 | 2.5x |
|---|
| KWG Property Holding Ltd ($1813) | 3.3x | 3.8x | 4.5x | 6.0x | 7.7x |
