Guoco Group Ltd Net Debt / EBITDA jumped on 18.0x from 5.2x to 23.2x in 2020 while Revenue dropped on 23.4%
15/09/2020 • About Guoco Group Ltd (
$53) • By InTwits
Guoco Group Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Guoco Group Ltd is a company in decline: FY2020 revenue growth was -23.4%, 5 years revenue CAGR was -40.8%
- EBITDA Margin is declining: 10.5% in FY2020 vs. 23.3% in FY2019 vs. 33.7% in FY2016
- EBITDA Margin is quite volatile: 10.5% in FY2020, 23.3% in FY2019, 24.3% in FY2018, 39.1% in FY2017, 33.7% in FY2016
- Guoco Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.8%. At the same time it's a lot of higher than industry average of 9.7%.
- CAPEX is quite volatile: 116 HKDm in FY2020, 104 HKDm in FY2019, 1,102 HKDm in FY2018, 192 HKDm in FY2017, 2,187 HKDm in FY2016
- The company has unprofitable business model: ROIC is -0.6%
- It operates with high leverage: Net Debt/EBITDA is 23.2x while industry average is 3.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Guoco Group Ltd's Revenue dropped on 23.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 12.9 pp from 23.3% to 10.5% in FY2020. EBITDA Margin stuck to a declining trend at -6.2 pp per annum in FY2016-FY2020.
Net Income margin dropped on 25.6 pp from 19.1% to -6.5% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 6.7%. The company showed small CAPEX/Revenue decline of 1.6 pp from 8.3% in FY2017 to 6.7% in FY2020. For the last three years the average CAPEX/Revenue was 13.2%. The company invested a big chunk of EBITDA (64.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-0.6%) and ROE (-1.5%). ROIC decreased on 2.6 pp from 2.1% to -0.58% in FY2020. ROE decreased on 6.8 pp from 5.3% to -1.5% in FY2020. ROIC declined at -1.4 pp per annum in FY2016-FY2020. During the last 5 years ROE topped in FY2017 at 10.3% and was declining since that time.
Leverage (Debt)
Debt level is 23.2x Net Debt / EBITDA and 32.1x Debt / EBITDA. Net Debt / EBITDA jumped on 18.0x from 5.2x to 23.2x in FY2020. Debt jumped on 28.2% while cash dropped on 10.2%. During the last 5 years Net Debt/EBITDA bottomed in FY2017 at 1.7x and was growing since that time.
Guoco Group Ltd has no short term refinancing risk: cash is higher than short term debt (152.7%).
Financial and operational results
FY ended 30/06/2020
Guoco Group Ltd ($53) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 19,823 | 2,307 | 3,880 | 2,260 | 1,730 | -23.4% |
| EBITDA | 6,686 | 902 | 941 | 527 | 181 | -65.7% |
| Net Income | 3,088 | 785 | 624 | 432 | -113 | -126.1% |
Balance Sheet
|
|---|
| Cash | 18,977 | 3,229 | 2,531 | 1,790 | 1,606 | -10.2% |
| Short Term Debt | 14,654 | 2,349 | 1,481 | 715 | 1,052 | 47.2% |
| Long Term Debt | 19,850 | 2,411 | 3,318 | 3,816 | 4,758 | 24.7% |
Cash flow
|
|---|
| Capex | 2,187 | 192 | 1,102 | 104 | 116 | 11.1% |
Ratios
|
|---|
| Revenue growth | -16.7% | -88.4% | 68.1% | -41.7% | -23.4% | |
| EBITDA growth | -7.8% | -86.5% | 4.3% | -44.0% | -65.7% | |
|
|---|
| EBITDA Margin | 33.7% | 39.1% | 24.3% | 23.3% | 10.5% | -12.9% |
| Net Income Margin | 15.6% | 34.0% | 16.1% | 19.1% | -6.5% | -25.6% |
| CAPEX, % of revenue | 11.0% | 8.3% | 28.4% | 4.6% | 6.7% | 2.1% |
|
|---|
| ROIC | 4.7% | 5.1% | 4.9% | 2.1% | -0.6% | -2.6% |
| ROE | 5.4% | 10.3% | 7.7% | 5.3% | -1.5% | -6.8% |
| Net Debt/EBITDA | 2.3x | 1.7x | 2.4x | 5.2x | 23.2x | 18.0x |
Peers in Diversified Finan Serv
Below you can find Guoco Group Ltd benchmarking vs. other companies in Diversified Finan Serv industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sunwah Kingsway Capital Holdings Ltd ($188) | -52.3% | 110.6% | 43.9% | -29.3% | - |
| |
|---|
| Median (1 company) | 5.9% | 110.6% | 43.9% | -29.3% | - |
|---|
| Guoco Group Ltd ($53) | - | -88.4% | 68.1% | -41.7% | -23.4% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sunwah Kingsway Capital Holdings Ltd ($188) | -85.5% | 9.3% | 16.2% | -12.5% | - |
| |
|---|
| Median (1 company) | 50.5% | 9.3% | 16.2% | -12.5% | - |
|---|
| Guoco Group Ltd ($53) | 33.7% | 39.1% | 24.3% | 23.3% | 10.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sunwah Kingsway Capital Holdings Ltd ($188) | 10.1% | 0.0% | 0.5% | 0.4% | - |
| |
|---|
| Median (1 company) | 1.5% | 0.0% | 0.5% | 0.4% | - |
|---|
| Guoco Group Ltd ($53) | 11.0% | 8.3% | 28.4% | 4.6% | 6.7% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sunwah Kingsway Capital Holdings Ltd ($188) | -6.4% | -0.0% | 1.6% | -2.5% | - |
| |
|---|
| Median (1 company) | 3.9% | -0.0% | 1.6% | -2.5% | - |
|---|
| Guoco Group Ltd ($53) | 4.7% | 5.1% | 4.9% | 2.1% | -0.6% |
