New World Development Co Ltd Net Income dropped on 85.3% and Revenue dropped on 23.1%
30/09/2020 • About New World Development Co Ltd (
$17) • By InTwits
New World Development Co Ltd reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 26.7% in FY2020, 36.0% in FY2019, 55.0% in FY2018, 24.0% in FY2017, 32.8% in FY2016
- The company has potentially unprofitable business model: ROIC is 2.5%
- It operates with high leverage: Net Debt/EBITDA is 8.3x while industry average is 3.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 23.1%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 9.4 pp from 36.0% to 26.7% in FY2020.
Gross Margin increased slightly on 1.2 pp from 32.6% to 33.8% in FY2020. SG&A as a % of Revenue increased on 4.3 pp from 11.0% to 15.4% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 11.0%.
Net Income margin dropped on 20.0 pp from 24.7% to 4.7% in FY2020.
Return on investment
The company operates at low ROIC (2.5%) and ROE (0.5%). ROIC decreased on 3.3 pp from 5.8% to 2.5% in FY2020. ROE decreased on 7.8 pp from 8.3% to 0.50% in FY2020.
Leverage (Debt)
Debt level is 8.3x Net Debt / EBITDA and 12.6x Debt / EBITDA. Net Debt / EBITDA surged on 5.0x from 3.3x to 8.3x in FY2020. Debt jumped on 26.9% while cash increased on 5.6%.
New World Development Co Ltd has no short term refinancing risk: cash is higher than short term debt (116.4%).
Valuation and dividends
The company's trades at EV/EBITDA 14.7x and P/E 35.8x.
Management team
The company's CEO Cheng Chi-Kong "Adrian" has spent 6 months with the company.
Financial and operational results
New World Development Co Ltd ($17) key annual financial indicators| mln. HKD | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 59,570 | 56,629 | 60,689 | 76,764 | 59,008 | -23.1% |
| Gross Profit | 18,522 | 18,216 | 20,563 | 25,022 | 19,931 | -20.3% |
| SG&A | 9,624 | 8,786 | 9,226 | 8,460 | 9,059 | 7.1% |
| EBITDA | 19,551 | 13,608 | 33,386 | 27,651 | 15,735 | -43.1% |
| Net Income | 8,666 | 8,072 | 23,875 | 18,963 | 2,785 | -85.3% |
Balance Sheet
|
|---|
| Cash | 54,965 | 66,986 | 63,388 | 63,729 | 67,291 | 5.6% |
| Short Term Debt | 20,090 | 21,225 | 20,629 | 41,776 | 57,829 | 38.4% |
| Long Term Debt | 114,842 | 125,895 | 120,124 | 114,559 | 140,547 | 22.7% |
Cash flow
|
|---|
| Capex | 8,921 | 16,158 | 9,970 | 10,145 | | |
Ratios
|
|---|
| Revenue growth | 7.8% | -4.9% | 7.2% | 26.5% | -23.1% | |
| EBITDA growth | -35.2% | -30.4% | 145.3% | -17.2% | -43.1% | |
|
|---|
| Gross Margin | 31.1% | 32.2% | 33.9% | 32.6% | 33.8% | 1.2% |
| EBITDA Margin | 32.8% | 24.0% | 55.0% | 36.0% | 26.7% | -9.4% |
| SG&A, % of revenue | 16.2% | 15.5% | 15.2% | 11.0% | 15.4% | 4.3% |
| Net Income Margin | 14.5% | 14.3% | 39.3% | 24.7% | 4.7% | -20.0% |
| CAPEX, % of revenue | 15.0% | 28.5% | 16.4% | 13.2% | | |
|
|---|
| ROIC | 5.0% | 3.2% | 7.7% | 5.8% | 2.5% | -3.3% |
| ROE | 4.8% | 4.2% | 11.6% | 8.3% | 0.5% | -7.8% |
| Net Debt/EBITDA | 4.1x | 5.9x | 2.3x | 3.3x | 8.3x | 5.0x |
Peers in Real Estate
Below you can find New World Development Co Ltd benchmarking vs. other companies in Real Estate 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 |
|---|
| Sun Hung Kai Properties Ltd ($16) | - | -14.2% | 9.5% | -0.4% | -3.1% |
| China Motor Bus Co Ltd ($26) | - | -10.8% | 4.5% | 3.5% | -6.2% |
| Dynamic Holdings Ltd ($29) | - | -2.0% | 11.1% | -6.0% | -13.3% |
| |
|---|
| Median (3 companies) | 10.6% | 6.6% | 9.5% | -0.4% | -6.2% |
|---|
| New World Development Co Ltd ($17) | - | -4.9% | 7.2% | 26.5% | -23.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dynamic Holdings Ltd ($29) | 80.8% | 78.3% | 78.5% | 76.1% | 71.2% |
| Sun Hung Kai Properties Ltd ($16) | 38.1% | 45.7% | 48.9% | 52.6% | 51.0% |
| |
|---|
| Median (2 companies) | 42.3% | 40.3% | 63.7% | 64.3% | 61.1% |
|---|
| New World Development Co Ltd ($17) | 31.1% | 32.2% | 33.9% | 32.6% | 33.8% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| China Motor Bus Co Ltd ($26) | 88.9% | 64.4% | 62.1% | 58.3% | 59.3% |
| Sun Hung Kai Properties Ltd ($16) | 43.2% | 57.6% | 61.9% | 62.2% | 42.8% |
| Dynamic Holdings Ltd ($29) | 57.3% | 144.1% | 130.0% | 23.2% | -68.9% |
| |
|---|
| Median (3 companies) | 29.0% | 48.5% | 62.1% | 58.3% | 42.8% |
|---|
| New World Development Co Ltd ($17) | 32.8% | 24.0% | 55.0% | 36.0% | 26.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sun Hung Kai Properties Ltd ($16) | 7.3% | 11.8% | 27.1% | 14.7% | 59.6% |
| Dynamic Holdings Ltd ($29) | 0.1% | 0.8% | 0.1% | 1.1% | 0.2% |
| China Motor Bus Co Ltd ($26) | 0.3% | 0.2% | 0.2% | 0.2% | 0.3% |
| |
|---|
| Median (3 companies) | 3.3% | 2.2% | 0.2% | 1.1% | 0.3% |
|---|
| New World Development Co Ltd ($17) | 15.0% | 28.5% | 16.4% | 13.2% | - |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sun Hung Kai Properties Ltd ($16) | 6.5% | 7.3% | 8.0% | 7.3% | 4.3% |
| China Motor Bus Co Ltd ($26) | 1.1% | 0.7% | 0.6% | 0.5% | 0.5% |
| Dynamic Holdings Ltd ($29) | 2.4% | 5.8% | 5.5% | 0.9% | -2.6% |
| |
|---|
| Median (3 companies) | 3.4% | 7.9% | 5.5% | 0.9% | 0.5% |
|---|
| New World Development Co Ltd ($17) | 5.0% | 3.2% | 7.7% | 5.8% | 2.5% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sun Hung Kai Properties Ltd ($16) | 1.3x | 0.8x | 1.2x | 1.4x | 2.3x |
| Dynamic Holdings Ltd ($29) | -1.6x | -0.8x | -0.8x | -6.2x | - |
| China Motor Bus Co Ltd ($26) | -23.3x | -37.0x | -30.2x | -33.5x | -56.8x |
| |
|---|
| Median (3 companies) | 2.7x | 1.0x | -0.8x | -6.2x | -27.3x |
|---|
| New World Development Co Ltd ($17) | 4.1x | 5.9x | 2.3x | 3.3x | 8.3x |
