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Eye on China Vanke Co Ltd with its long history of healthy growth

02/04/2017 • About China Vanke Co Ltd ($2202) • By InTwits

China Vanke Co Ltd is a growth stock in Real Estate industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

China Vanke Co Ltd showed fast growth in the last financial year. The company's revenue surged on 23.1% in FY2016. At the same time China Vanke Co Ltd well managed its profitability and also showed EBITDA growth of 19.5% for the same period.

If we look for the longer period China Vanke Co Ltd showed fast revenue growth of 20.8% from 2013 to 2016 annualy. EBITDA surged on 14.7% from 2013 to 2016 annualy.

China Vanke Co Ltd ($2202) financials for the last 5 years

mln. CNY 2012 2013 2014 2015 2016
Revenue growth, %27.9%11.4%28.7%23.1%
Gross margin, %32.4%25.1%25.1%22.2%22.3%
SG&A, %6.09%5.54%6.17%5.00%5.47%
EBITDA growth, %-5.2%19.4%5.9%19.5%
EBITDA margin, %26.5%19.6%21.1%17.3%16.8%
Net Income12,55115,11915,74618,11921,023
Net Income margin, % 13.0%12.2%11.4%10.2%9.62%
CAPEX/Revenue, %0.156%1.97%1.33%1.16%0.983%
Net Debt/EBITDA0.8x2.0x0.3x1.4x1.4x
ROIC, %17.8%13.5%14.6%14.1%13.4%
ROE, %21.5%21.5%19.1%19.2%19.7%

Profitability and return on investment

Despite revenue growth EBITDA margin declined slightly from 17.3% in FY2015 to 16.8% in FY2016. In the last 3 years China Vanke Co Ltd showed big decline in EBITDA margin of 2.80 pp from 19.6% in 2013 to 16.8% in 2016.

China Vanke Co Ltd shows attractive ROIC at 13.4% for the last 12 months which assumes stable development model. During the last three years it decreased slightly - it was 13.5% in FY2013. It's average level of ROIC for the last three years was 14.0%.

China Vanke Co Ltd showed decline of 0.600 pp from 10.2% to 9.60% in 2016. If we look for the longer period China Vanke Co Ltd's Net Income margin dropped on 2.60 pp from 12.2% in 2013 to 9.60% in 2016.

China Vanke Co Ltd operates at ROE of 19.7%. It's average level of ROE for the last three years was 19.3%.

Capital expenditures (CAPEX)

The company's CAPEX/Revenue was 0.983% in FY2016. CAPEX/Revenue dropped on 0.987 pp from 1.97% in 2013 to 0.983% in 2016. It's average CAPEX/Revenue for the last three years was 1.16%.

Leverage (Debt)

China Vanke Co Ltd has medium debt level at 1.4x Net Debt/EBITDA to maintain high growth. In the last 3 years leverage dropped on 0.55x from 1.99x in 2013 to 1.44x in 2016.

Peers in Real Estate

Below you can find China Vanke 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, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Guangdong Land Holdings Ltd ($124)24,971.2%27.3%
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 (181 companies)18.3%14.0%5.2%4.2%9.7%
China Vanke Co Ltd ($2202)27.9%11.4%28.7%23.1%

Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
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 (162 companies)41.8%41.8%39.1%38.2%42.3%
China Vanke Co Ltd ($2202)32.4%25.1%25.1%22.2%22.3%

Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
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%175.0%
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 (181 companies)29.1%28.5%26.9%23.4%29.0%
China Vanke Co Ltd ($2202)26.5%19.6%21.1%17.3%16.8%

Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
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 (180 companies)5.5%6.1%4.7%3.3%4.0%
China Vanke Co Ltd ($2202)0.2%2.0%1.3%1.2%1.0%

Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
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)18.4%15.1%18.5%15.4%14.9%
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 (183 companies)4.2%4.1%4.1%2.5%3.4%
China Vanke Co Ltd ($2202)17.8%13.5%14.6%14.1%13.4%

Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Shui On Land Ltd ($272)22.1x13.2x17.1x54.2x7.3x
Beijing Capital Land Ltd ($2868)7.1x4.6x11.7x49.1x37.0x
Talent Property Group Ltd ($760)43.0x
Mingfa Group International Co Ltd ($846)2.5x3.0x6.3x42.9x
Sunshine 100 China Holdings Ltd ($2608)9.9x12.4x12.9x42.3x
Median (138 companies)2.4x2.7x3.0x3.3x2.9x
China Vanke Co Ltd ($2202)0.8x2.0x0.3x1.4x1.4x