Chinese Estates Holdings Ltd reports 202 pp EBITDA Margin growth from 195% to 397% in 2015 while 41.3% Revenue decline
15/03/2016 • About Chinese Estates Holdings Ltd (
$127) • By InTwits
Chinese Estates Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Chinese Estates Holdings Ltd is a company in decline: 2015 revenue growth was -41.3%, 5 years revenue CAGR was -10.4%
- EBITDA Margin is quite volatile: 397.4% in 2015, 195.5% in 2014, 91.6% in 2013, 356.2% in 2012, 340.9% in 2011
- Chinese Estates Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 80.6%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 220 in 2015, 1,121 in 2014, 1,108 in 2013, 835 in 2012, 1,556 in 2011
- The company has business model with average profitability: ROIC is at 10.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Chinese Estates Holdings Ltd ($127) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 528 | 2,434 | 6,453 | 2,627 | 1,542 | -41.3% |
| Gross Profit | 283 | 1,865 | 2,761 | 2,205 | 1,287 | -41.6% |
| SG&A | 273 | 282 | 308 | 296 | 345 | 16.4% |
| EBITDA | 1,799 | 8,669 | 5,908 | 5,135 | 6,129 | 19.4% |
| Net Income | 3,498 | 9,795 | 6,318 | 8,745 | 7,727 | -11.6% |
Balance Sheet
|
|---|
| Cash | 4,268 | 4,787 | 3,881 | 4,719 | 2,850 | -39.6% |
| Short Term Debt | 10,007 | 14,172 | 7,387 | 6,708 | 8,652 | 29.0% |
| Long Term Debt | 12,684 | 9,336 | 16,524 | 9,841 | 5,880 | -40.2% |
Cash flow
|
|---|
| Capex | 1,556 | 835 | 1,108 | 1,121 | 220 | -80.3% |
Ratios
|
|---|
| Revenue growth | -80.2% | 361.1% | 165.2% | -59.3% | -41.3% | |
| EBITDA growth | -119.4% | 381.7% | -31.8% | -13.1% | 19.4% | |
| Gross Margin | 53.7% | 76.6% | 42.8% | 83.9% | 83.4% | -0.5% |
| EBITDA Margin | 340.9% | 356.2% | 91.6% | 195.5% | 397.4% | 201.9% |
| Net Income Margin | 662.7% | 402.5% | 97.9% | 332.9% | 501.0% | 168.1% |
| SG&A, % of revenue | 51.7% | 11.6% | 4.8% | 11.3% | 22.4% | 11.1% |
| CAPEX, % of revenue | 294.8% | 34.3% | 17.2% | 42.6% | 14.3% | -28.4% |
| ROIC | 3.2% | 13.3% | 8.3% | 7.8% | 10.6% | 2.8% |
| ROE | 10.1% | 24.1% | 13.6% | 19.7% | 18.9% | -0.8% |
| Net Debt/EBITDA | 10.2x | 2.2x | 3.4x | 2.3x | 1.9x | -0.4x |
Revenue and profitability
Chinese Estates Holdings Ltd's Revenue dropped on 41.3% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 202 pp from 195% to 397% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue jumped on 11.1 pp from 11.3% to 22.4% in 2015.
Net Income marign surged on 168 pp from 333% to 501% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 14.3% in 2015. Chinese Estates Holdings Ltd's CAPEX/Revenue dropped on 20.0 pp from 34.3% in 2012 to 14.3% in 2015. It's average level of CAPEX/Revenue for the last three years was 24.7%.
Return on investment
The company operates at good ROE (18.89%) while ROIC is low (10.60%). ROIC increased on 2.8 pp from 7.8% to 10.6% in 2015. ROE decreased slightly on 0.83 pp from 19.7% to 18.9% in 2015.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 2.3x to 1.9x in 2015. Debt dropped on 12.2% in 2015 while cash dropped on 39.6% in 2015.
Management team
Chan Sze-Wan is a the company's CEO. Chan Sze-Wan has spent 3 years at the company.
Appendix 1: Peers in Real Estate
Below you can find Chinese Estates Holdings 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 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Common Splendor International Health Industry Group Ltd ($286) | -0.9% | -0.5% | 1.9% | 4,120.2% | |
| Landsea Green Properties Co Ltd ($106) | -91.1% | -35.1% | -51.2% | 3,097.3% | |
| LVGEM China Real Estate Invest ($95) | -0.1% | -27.5% | -21.9% | 3,008.3% | |
| Rivera Holdings Ltd ($281) | 222.2% | 197.1% | -89.9% | 2,067.2% | |
| Ceneric Holdings Ltd ($542) | -94.0% | -73.9% | -49.8% | 1,922.5% | |
| |
|---|
| Median (173 companies) | 12.6% | 15.4% | 13.0% | 5.2% | 4.2% |
|---|
| Chinese Estates Holdings Ltd ($127) | | 361.1% | 165.2% | -59.3% | -41.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tern Properties Co Ltd ($277) | 96.9% | 96.7% | 98.4% | 98.4% | 98.7% |
| GR Properties Ltd ($108) | 37.4% | 39.3% | | 98.2% | |
| Renhe Commercial Holdings Co Ltd ($1387) | 71.1% | 79.0% | 95.2% | 97.9% | |
| YT Realty Group Ltd ($75) | 91.5% | 94.4% | 96.6% | 96.7% | |
| ITC Properties Group Ltd ($199) | 29.8% | 22.8% | 92.9% | 95.2% | 62.7% |
| |
|---|
| Median (155 companies) | 43.6% | 41.9% | 40.5% | 39.1% | 48.5% |
|---|
| Chinese Estates Holdings Ltd ($127) | 53.7% | 76.6% | 42.8% | 83.9% | 83.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ITC Properties Group Ltd ($199) | 24.0% | -125.5% | -2,995.7% | 1,685.3% | -525.1% |
| Beijing Properties Holdings Ltd ($925) | 33.2% | -606.3% | 2,162.6% | 224.3% | |
| Zall Development Group Ltd ($2098) | 73.6% | 105.3% | 133.1% | 143.2% | |
| Ceneric Holdings Ltd ($542) | -5.9% | -382.7% | -1,024.0% | 126.8% | |
| Sino Land Co Ltd ($83) | 152.4% | 107.7% | 94.3% | 116.3% | 38.3% |
| |
|---|
| Median (173 companies) | 35.1% | 28.9% | 28.0% | 26.4% | 34.2% |
|---|
| Chinese Estates Holdings Ltd ($127) | 340.9% | 356.2% | 91.6% | 195.5% | 397.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| LT Commercial Real Estate Ltd ($112) | 0.0% | 0.0% | 18.0% | 27,965.5% | |
| ITC Properties Group Ltd ($199) | 25.6% | 56.2% | 4,202.4% | 1,304.7% | 189.7% |
| Wanda Hotel Development Co Ltd ($169) | | 5.9% | 24.1% | 1,091.1% | |
| Pacific Century Premium Developments Ltd ($432) | 6.5% | 2.9% | 323.1% | 351.2% | 340.6% |
| Liu Chong Hing Investment Ltd ($194) | 9.4% | 18.5% | 6.1% | 269.7% | 0.9% |
| |
|---|
| Median (174 companies) | 5.8% | 5.4% | 6.1% | 4.6% | 6.8% |
|---|
| Chinese Estates Holdings Ltd ($127) | 294.8% | 34.3% | 17.2% | 42.6% | 14.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Rykadan Capital Ltd ($2288) | 17.2% | -1.8% | -2.6% | 48.4% | -3.7% |
| Colour Life Services Group Co Ltd ($1778) | | 44.2% | 47.9% | 29.3% | 14.5% |
| LVGEM China Real Estate Invest ($95) | 0.2% | -0.2% | -1.1% | 22.1% | |
| Zall Development Group Ltd ($2098) | 39.0% | 19.2% | 17.6% | 18.7% | |
| China Overseas Land & Investment Ltd ($688) | 18.0% | 18.4% | 15.1% | 18.5% | |
| |
|---|
| Median (177 companies) | 4.6% | 4.0% | 3.8% | 3.8% | 3.0% |
|---|
| Chinese Estates Holdings Ltd ($127) | 3.2% | 13.3% | 8.3% | 7.8% | 10.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Properties Group Ltd ($1838) | 16.9x | 43.0x | 21.4x | 1,523.0x | |
| SRE Group Ltd ($1207) | 10.6x | 14.1x | 24.7x | 1,184.6x | |
| Cheuk Nang Holdings Ltd ($131) | 53.2x | | 177.3x | 901.7x | |
| Tian An China Investment Co Ltd ($28) | 2.4x | 13.2x | 15.1x | 486.6x | |
| Greenland Hong Kong Holdings Ltd ($337) | 3.7x | | 6.2x | 49.3x | |
| |
|---|
| Median (140 companies) | 2.1x | 2.4x | 2.7x | 3.0x | 2.2x |
|---|
| Chinese Estates Holdings Ltd ($127) | 10.2x | 2.2x | 3.4x | 2.3x | 1.9x |
