Mandarin Oriental International CAPEX jumped on 334% in 2016 while Revenue decreased slightly on 1.6%
02 Mar 2017 • About Mandarin Oriental International (
$MDOB) • By InTwits
Mandarin Oriental International reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Mandarin Oriental International has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.4%. At the same time it's in pair with industry average of 2.7%.
- CAPEX is quite volatile: 217 in FY2016, 50 in FY2015, 29.4 in FY2014, 35.9 in FY2013, 50.5 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.9%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 1.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Mandarin Oriental International ($MDOB) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 648.3 | 668.6 | 679.9 | 607.3 | 597.4 | -1.6% |
| Gross Profit | 233.1 | 260.2 | 269.9 | 245.2 | 214.0 | -12.7% |
| SG&A | 149.2 | 148.4 | 149.1 | 137.9 | 146.0 | 5.9% |
| EBITDA | 126.4 | 149.8 | 163.2 | 158.9 | 127.8 | -19.6% |
| Net Income | 70.7 | 96.3 | 97.0 | 89.3 | 55.2 | -38.2% |
Balance Sheet
|
|---|
| Cash | 453.7 | 316.4 | 324.6 | 308.6 | 182.6 | -40.8% |
| Short Term Debt | 9.7 | 556.2 | 217.0 | 4.2 | 2.5 | -40.5% |
| Long Term Debt | 580.5 | 238.7 | 510.7 | 436.2 | 477.4 | 9.4% |
Cash flow
|
|---|
| Capex | 50.5 | 35.9 | 29.4 | 50.0 | 217.0 | 334.0% |
Ratios
|
|---|
| Revenue growth | 5.6% | 3.1% | 1.7% | -10.7% | -1.6% | |
| EBITDA growth | -1.3% | 18.5% | 8.9% | -2.6% | -19.6% | |
| Gross Margin | 36.0% | 38.9% | 39.7% | 40.4% | 35.8% | -4.6% |
| EBITDA Margin | 19.5% | 22.4% | 24.0% | 26.2% | 21.4% | -4.8% |
| Net Income Margin | 10.9% | 14.4% | 14.3% | 14.7% | 9.2% | -5.5% |
| SG&A, % of revenue | 23.0% | 22.2% | 21.9% | 22.7% | 24.4% | 1.7% |
| CAPEX, % of revenue | 7.8% | 5.4% | 4.3% | 8.2% | 36.3% | 28.1% |
| ROIC | 4.6% | 5.2% | 5.4% | 6.1% | 3.9% | -2.1% |
| ROE | 7.6% | 10.0% | 10.0% | 8.2% | 4.6% | -3.6% |
| Net Debt/EBITDA | 1.1x | 3.2x | 2.5x | 0.8x | 2.3x | 1.5x |
Revenue and profitability
Mandarin Oriental International's Revenue decreased slightly on 1.6% in FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.8 pp from 26.2% to 21.4% in FY2016.
Gross Margin decreased on 4.6 pp from 40.4% to 35.8% in FY2016. SG&A as a % of Revenue increased slightly on 1.7 pp from 22.7% to 24.4% in FY2016.
Net Income marign decreased on 5.5 pp from 14.7% to 9.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 36.3% in FY2016. CAPEX/Revenue jumped on 31.0 pp from 5.4% in FY2013 to 36.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 16.3%.Battling declining revenue the company made large investments to CAPEX (170% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.94%) and ROE (4.61%). ROIC decreased on 2.1 pp from 6.1% to 3.9% in FY2016. ROE decreased on 3.6 pp from 8.2% to 4.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 3.8x. Net Debt / EBITDA surged on 1.5x from 0.8x to 2.3x in FY2016. Debt increased on 9.0% in FY2016 while cash dropped on 40.8% in FY2016.
Valuation
Mandarin Oriental International's trades at EV/EBITDA 2.4x and P/E 0.3x while industy averages are 15.6x and 19.1x.
Appendix 1: Peers in Travel & Leisure
Below you can find Mandarin Oriental International benchmarking vs. other companies in Travel & Leisure 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 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dalata Hotel Group ($DAL) | | 12.0% | 30.4% | 185.4% | 28.7% |
| Everyman Media Group ($EMAN) | 23.4% | 26.5% | 22.4% | 44.1% | |
| Webis Holdings ($WEB) | | 46.3% | -55.0% | 29.7% | 45.3% |
| Paddy Power ($PAP) | 30.9% | 14.0% | 18.3% | 24.1% | |
| Hanatour Service Inc ($TOUR) | | 14.6% | 9.3% | 19.2% | 29.6% |
| |
|---|
| Median (23 companies) | 12.3% | 8.8% | 7.2% | 7.7% | 9.0% |
|---|
| Mandarin Oriental International ($MDOB) | | 3.1% | 1.7% | -10.7% | -1.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclectic Bar Grp ($BAR) | 79.1% | 78.9% | 79.0% | 79.4% | 80.7% |
| Paddy Power ($PAP) | 84.7% | 82.8% | 81.0% | 74.7% | |
| Action Hotels ($AHCG) | 75.1% | 75.0% | 73.3% | 74.0% | |
| Dalata Hotel Group ($DAL) | 61.2% | 62.0% | 62.8% | 61.5% | 62.2% |
| Everyman Media Group ($EMAN) | 57.6% | 59.2% | 58.9% | 58.0% | |
| |
|---|
| Median (11 companies) | 23.0% | 22.6% | 20.7% | 22.1% | 22.2% |
|---|
| Mandarin Oriental International ($MDOB) | 36.0% | 38.9% | 39.7% | 40.4% | 35.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Action Hotels ($AHCG) | 31.0% | 27.9% | 28.6% | 34.3% | |
| Air China ($AIRC) | 19.7% | 16.0% | 18.4% | 27.3% | |
| Ryanair Hldgs ($RYA) | 22.6% | 21.5% | 20.1% | 25.1% | 28.9% |
| Irish Continental Group ($ICGC) | 17.1% | 18.6% | 27.3% | 23.6% | |
| Young & Co'S Brewery ($YNGN) | 21.2% | 21.8% | 21.7% | 22.9% | 22.9% |
| |
|---|
| Median (24 companies) | 12.8% | 12.9% | 12.3% | 12.5% | 15.5% |
|---|
| Mandarin Oriental International ($MDOB) | 19.5% | 22.4% | 24.0% | 26.2% | 21.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Action Hotels ($AHCG) | 21.0% | 25.6% | 90.0% | 172.4% | |
| Everyman Media Group ($EMAN) | 0.0% | 36.4% | 25.9% | 56.4% | |
| Marston'S ($MARS) | 18.0% | 19.3% | 17.5% | 16.2% | 15.3% |
| Young & Co'S Brewery ($YNGN) | 14.3% | 8.7% | 10.8% | 14.3% | 16.9% |
| Ana Hldgs Inc ($ANA) | 12.8% | 10.1% | 10.5% | 14.1% | 14.1% |
| |
|---|
| Median (24 companies) | 3.7% | 4.8% | 4.6% | 7.4% | 11.1% |
|---|
| Mandarin Oriental International ($MDOB) | 7.8% | 5.4% | 4.3% | 8.2% | 36.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Paddy Power ($PAP) | 53.4% | 47.2% | 47.6% | 53.2% | |
| Irish Continental Group ($ICGC) | 14.6% | 18.9% | 40.0% | 33.9% | |
| Aer Lingus Group ($AERL) | 3.0% | 3.3% | -11.9% | 31.7% | |
| Air Partner ($AIP) | 34.8% | 27.5% | 21.2% | 20.0% | 20.4% |
| Hanatour Service Inc ($TOUR) | 22.5% | 19.9% | 19.6% | 19.4% | 8.6% |
| |
|---|
| Median (24 companies) | 6.8% | 7.8% | 4.2% | 6.2% | 6.8% |
|---|
| Mandarin Oriental International ($MDOB) | 4.6% | 5.2% | 5.4% | 6.1% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Meikles Ltd ($MIK) | | 5.1x | 10.7x | 73.1x | |
| Action Hotels ($AHCG) | 11.2x | 7.8x | 9.6x | 12.3x | |
| Marston'S ($MARS) | | 6.5x | 14.0x | 8.2x | 6.2x |
| Peel Hotels ($PHO) | 8.2x | 7.3x | 5.9x | 4.4x | 3.9x |
| Rotala ($ROL) | 2.6x | 3.1x | 2.8x | 3.6x | |
| |
|---|
| Median (21 companies) | 1.4x | 2.2x | 1.1x | 2.3x | 2.3x |
|---|
| Mandarin Oriental International ($MDOB) | 1.1x | 3.2x | 2.5x | 0.8x | 2.3x |
