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Gazit-Globe Ltd Net Debt / EBITDA dropped on 6.9x from 22.1x to 15.2x in 2016 and Revenue showed almost no change

27.03.2017 • About Gazit-Globe Ltd ($GZT) • By InTwits

Gazit-Globe Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Gazit-Globe Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 68.1%. At the same time it's a lot of higher than industry average of 8.1%.
  • CAPEX is quite volatile: 109 in 2016, 88.1 in 2015, 39.6 in 2014, 22.3 in 2013, 16.6 in 2012
  • The company has potentially unprofitable business model: ROIC is at 3.1%
  • It operates with high leverage: Net Debt/EBITDA is 15.2x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Gazit-Globe Ltd ($GZT) key annual financial indicators

mln. ILS201220132014201520162016/2015
Net Income9579277362078726.9%
Balance Sheet
Short Term Debt2,7333,1713,2643,3413,81814.3%
Long Term Debt39,13036,14434,23941,85835,798-14.5%
Cash flow
Revenue growth22.8%-1.8%-10.1%-23.5%0.0%
EBITDA growth21.9%-3.9%-19.8%-19.2%28.6%
EBITDA Margin43.7%42.8%38.2%40.3%51.8%11.5%
Net Income Margin13.4%13.2%1.2%12.8%16.3%3.4%
CAPEX, % of revenue80.2%43.3%52.1%69.3%95.5%26.2%
Net Debt/EBITDA12.8x12.7x15.3x22.1x15.2x-6.9x

Gazit-Globe Ltd ($GZT) key quoterly financial indicators

mln. ILS16Q116Q216Q316Q4YoY change
Net Income-27897381587-173.9%-25.4%185.0%
Balance Sheet
Short Term Debt3,7073,8982,8213,818550.4%434.0%-16.8%14.3%
Long Term Debt41,10741,03441,61435,798-0.1%1.1%-1.9%-14.5%
EBITDA Margin 56.6% 57.8% 58.3% -67.0%38.1%11.9%10.0%-34.6%
Net Income Margin -18.0% 6.2% 25.2% 262.1%-38.0%-0.9%31.1%250.5%

Revenue and profitability

Gazit-Globe Ltd's Revenue showed almost no change in 2016. Revenue growth showed slow down in 16Q4 - it was -87.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 11.5 pp from 40.3% to 51.8% in 2016.

Net Income marign increased on 3.4 pp from 12.8% to 16.3% in 2016.

Capital expenditures (CAPEX) and working capital investments

In 2016 Gazit-Globe Ltd had CAPEX/Revenue of 95.5%. CAPEX/Revenue jumped on 52.2 pp from 43.3% in 2013 to 95.5% in 2016. It's average level of CAPEX/Revenue for the last three years was 72.3%.The company investments to CAPEX were large: 184% of EBITDA.

Return on investment

The company operates at low ROIC (3.10%) and ROE (10.04%). ROIC increased slightly on 0.59 pp from 2.5% to 3.1% in 2016. ROE increased on 2.1 pp from 8.0% to 10.0% in 2016.

Leverage (Debt)

Debt level is 15.2x Net Debt / EBITDA and 15.8x Debt / EBITDA. Net Debt / EBITDA dropped on 6.9x from 22.1x to 15.2x in 2016. Debt dropped on 12.4% while cash dropped on 25.4%.

Management team

The company's CEO is Dori Joseph Segal. Dori Joseph Segal is a founder and has 1 year tenure at the company. Gazit-Globe Ltd's CFO is Adi Jemini. Adi Jemini has 2 years tenure at the company.

Appendix 1: Peers in Financial

Below we provide Gazit-Globe Ltd benchmarking against other companies in Financial 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
Grenville Strategic Royalty Corp ($GRC)317.2%
StorageVault Canada Inc ($SVI)22.2%7.5%111.8%
Slate Retail REIT ($SRT.UN)316.8%229.7%92.5%21.6%
Mogo Finance Technology Inc ($GO)13.7%34.6%86.0%14.6%
Morguard Corp ($MRC)27.2%9.2%58.8%4.6%
Median (53 companies)7.5%9.1%3.6%5.8%
Gazit-Globe Ltd ($GZT)-1.8%-10.1%-23.5%0.0%

Top companies by Gross margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Olympia Financial Group Inc ($OLY)80.9%82.6%83.2%84.5%83.5%
Morguard Corp ($MRC)74.0%69.9%68.6%76.5%75.5%
Mogo Finance Technology Inc ($GO)70.4%64.5%63.4%62.3%
StorageVault Canada Inc ($SVI)18.2%22.6%18.3%52.4%
Clarke Inc ($CKI)28.1%20.0%18.9%43.4%41.6%
Median (9 companies)28.1%30.7%28.3%43.4%30.3%

Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Firm Capital Mortgage Investment Corp ($FC)87.6%87.9%88.8%86.6%
Equitable Group Inc ($EQB)88.1%87.4%86.0%84.7%83.0%
Atrium Mortgage Investment Corp ($AI)79.8%81.9%83.2%
Trez Capital Mortgage Investment Corp ($TZZ)76.2%
First National Financial Corp ($FN)67.8%76.5%77.1%74.6%
Median (36 companies)39.7%32.1%41.4%30.0%42.2%
Gazit-Globe Ltd ($GZT)43.7%42.8%38.2%40.3%51.8%

Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Dundee Corp ($DC.A)10.3%14.1%88.8%123.6%
First Capital Realty Inc ($FCR)127.9%76.1%73.8%56.7%79.7%
Killam Properties Inc ($KMP)80.7%114.1%143.5%46.7%59.9%
StorageVault Canada Inc ($SVI)150.5%73.3%79.1%21.4%
Morguard Corp ($MRC)114.3%71.2%11.4%21.1%16.3%
Median (55 companies)0.5%0.5%0.6%0.7%0.6%
Gazit-Globe Ltd ($GZT)80.2%43.3%52.1%69.3%95.5%

Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
CI Financial Corp ($CIX)24.1%
FirstService Corp ($FSV)17.4%
IGM Financial Inc ($IGM)14.2%14.2%13.7%13.7%13.1%
Alaris Royalty Corp ($AD)9.5%10.1%10.7%7.3%12.3%
Genworth MI Canada Inc ($MIC)11.9%9.6%9.7%9.5%9.4%
Median (55 companies)4.4%3.3%4.3%3.5%3.0%
Gazit-Globe Ltd ($GZT)4.8%4.5%3.6%2.5%3.1%

Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Element Financial Corp ($EFN)140.2x31.9x37.6x79.9x22.6x
First National Financial Corp ($FN)34.3x33.7x40.9x37.4x
StorageVault Canada Inc ($SVI)11.2x9.7x13.6x35.7x
Equitable Group Inc ($EQB)11.8x10.2x9.8x12.3x13.7x
Temple Hotels Inc ($TPH)10.6x8.8x11.2x11.7x11.2x
Median (27 companies)5.2x4.4x4.5x5.6x6.0x
Gazit-Globe Ltd ($GZT)12.8x12.7x15.3x22.1x15.2x