Chinese Estates Holdings Ltd reports 341 pp EBITDA Margin decline from 397% to 56.8% in 2016 in 2016 while 143% Revenue growth
09/03/2017 • About Chinese Estates Holdings Ltd (
$127) • By InTwits
Chinese Estates Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 56.8% in FY2016, 397.4% in FY2015, 195.5% in FY2014, 91.6% in FY2013, 356.2% in FY2012
- The company has potentially unprofitable business model: ROIC is at 4.2%
- It operates with high leverage: Net Debt/EBITDA is 6.4x while industry average is 3.6x
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 | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,434 | 6,453 | 2,627 | 1,542 | 3,745 | 142.8% |
| Gross Profit | 1,865 | 2,761 | 2,205 | 1,287 | 2,148 | 66.9% |
| SG&A | 282 | 308 | 296 | 345 | | -100.0% |
| EBITDA | 8,669 | 5,908 | 5,135 | 6,129 | 2,128 | -65.3% |
| Net Income | 9,795 | 6,318 | 8,745 | 7,727 | 6,360 | -17.7% |
Balance Sheet
|
|---|
| Cash | 4,787 | 3,881 | 4,719 | 2,850 | 1,070 | -62.4% |
| Short Term Debt | 14,172 | 7,387 | 6,708 | 8,652 | 10,798 | 24.8% |
| Long Term Debt | 9,336 | 16,524 | 9,841 | 5,880 | 3,794 | -35.5% |
Cash flow
|
|---|
| Capex | 835 | 1,108 | 1,121 | 220 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 361.1% | 165.2% | -59.3% | -41.3% | 142.8% | |
| EBITDA growth | 381.7% | -31.8% | -13.1% | 19.4% | -65.3% | |
| Gross Margin | 76.6% | 42.8% | 83.9% | 83.4% | 57.3% | -26.1% |
| EBITDA Margin | 356.2% | 91.6% | 195.5% | 397.4% | 56.8% | -340.6% |
| Net Income Margin | 402.5% | 97.9% | 332.9% | 501.0% | 169.8% | -331.2% |
| SG&A, % of revenue | 11.6% | 4.8% | 11.3% | 22.4% | | -22.4% |
| CAPEX, % of revenue | 34.3% | 17.2% | 42.6% | 14.3% | | -14.3% |
| ROIC | 13.3% | 8.3% | 7.8% | 10.6% | 4.2% | -6.4% |
| ROE | 24.1% | 13.6% | 19.7% | 18.9% | 18.2% | -0.7% |
| Net Debt/EBITDA | 2.2x | 3.4x | 2.3x | 1.9x | 6.4x | 4.4x |
Revenue and profitability
The company's Revenue surged on 143%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.8 pp from 10.7% to 8.9% in FY2016.
Gross Margin dropped on 26.1 pp from 83.4% to 57.3% in FY2016.
Net Income marign dropped on 331 pp from 501% to 170% in FY2016.
Return on investment
The company operates at good ROE (18.16%) while ROIC is low (4.21%). ROIC decreased on 6.4 pp from 10.6% to 4.2% in FY2016. ROE decreased slightly on 0.73 pp from 18.9% to 18.2% in FY2016.
Leverage (Debt)
Debt level is 6.4x Net Debt / EBITDA and 6.9x Debt / EBITDA. Net Debt / EBITDA surged on 4.4x from 1.9x to 6.4x in FY2016. Debt showed almost no change in FY2016 while cash dropped on 62.4%.
Management team
Chinese Estates Holdings Ltd's CEO is Chan Sze-Wan. Chan Sze-Wan has 3 years tenure at the company.
Appendix 1: Peers in Real Estate
Below we provide Chinese Estates Holdings Ltd benchmarking against other companies in Real Estate 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 |
|---|
| Guangdong Land Holdings Ltd ($124) | | | | 24,971.2% | |
| 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) | -78.9% | | | 737.1% | |
| ITC Properties Group Ltd ($199) | | -95.2% | 75.7% | 678.6% | 206.4% |
| |
|---|
| Median (179 companies) | 15.8% | 13.1% | 5.3% | 4.5% | 6.7% |
|---|
| Chinese Estates Holdings Ltd ($127) | | 165.2% | -59.3% | -41.3% | 142.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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 (160 companies) | 41.9% | 41.8% | 39.1% | 38.2% | 44.5% |
|---|
| Chinese Estates Holdings Ltd ($127) | 76.6% | 42.8% | 83.9% | 83.4% | 57.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | |
| 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% | |
| Tern Properties Co Ltd ($277) | 103.0% | 112.8% | 78.4% | 86.9% | 75.8% |
| |
|---|
| Median (179 companies) | 28.9% | 28.3% | 26.9% | 23.4% | 28.4% |
|---|
| Chinese Estates Holdings Ltd ($127) | 356.2% | 91.6% | 195.5% | 397.4% | 56.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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 (179 companies) | 5.6% | 6.1% | 4.7% | 3.2% | 3.3% |
|---|
| Chinese Estates Holdings Ltd ($127) | 34.3% | 17.2% | 42.6% | 14.3% | |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | |
| China Overseas Land & Investment Ltd ($688) | | 15.1% | 18.5% | 15.4% | 13.0% |
| Colour Life Services Group Co Ltd ($1778) | 44.2% | 47.9% | 29.3% | 14.5% | |
| Dalian Wanda Commercial Properties Co Ltd ($3699) | 26.8% | 19.6% | 12.3% | 14.4% | |
| |
|---|
| Median (181 companies) | 4.0% | 4.0% | 4.1% | 2.4% | 2.4% |
|---|
| Chinese Estates Holdings Ltd ($127) | 13.3% | 8.3% | 7.8% | 10.6% | 4.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shui On Land Ltd ($272) | 22.1x | 13.2x | 17.1x | 54.2x | |
| Beijing Capital Land Ltd ($2868) | 7.1x | 4.6x | 11.7x | 49.1x | 37.0x |
| Talent Property Group Ltd ($760) | | | | 43.0x | |
| Mingfa Group International Co Ltd ($846) | 2.5x | 3.0x | 6.3x | 42.9x | |
| Sunshine 100 China Holdings Ltd ($2608) | 9.9x | 12.4x | 12.9x | 42.3x | |
| |
|---|
| Median (136 companies) | 2.4x | 2.7x | 3.0x | 3.3x | 3.1x |
|---|
| Chinese Estates Holdings Ltd ($127) | 2.2x | 3.4x | 2.3x | 1.9x | 6.4x |
