China Overseas Land & Investment Ltd EBITDA Margin dropped on 32.9 pp from 32.9% to in 2016
22/03/2017 • About China Overseas Land & Investment Ltd (
$688) • By InTwits
China Overseas Land & Investment Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Overseas Land & Investment Ltd is a fast growth stock: 2016 revenue growth was 13.3%, 5 year revenue CAGR was 25.3% at 2016 ROIC 13.0%
- China Overseas Land & Investment Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 3,273 in 2016, 2,419 in 2015, 6,258 in 2014, 4,577 in 2013, 1,703 in 2012
- The company has highly profitable business model: ROIC is at 13.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Overseas Land & Investment Ltd ($688) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 64,581 | 82,469 | 130,957 | 140,131 | 158,717 | 13.3% |
| Gross Profit | 24,725 | 26,822 | 39,310 | 42,312 | 45,643 | 7.9% |
| SG&A | 2,037 | 2,817 | 3,990 | 4,213 | 6,551 | 55.5% |
| EBITDA | 26,758 | 27,785 | 43,067 | 46,170 | 57,278 | 24.1% |
| Net Income | 18,722 | 23,044 | 27,200 | 33,312 | 37,021 | 11.1% |
Balance Sheet
|
|---|
| Cash | 39,880 | 40,876 | 58,281 | 100,573 | 157,162 | 56.3% |
| Short Term Debt | 5,546 | 4,145 | 22,666 | 7,269 | 40,286 | 454.2% |
| Long Term Debt | 54,068 | 69,397 | 75,890 | 109,271 | 133,534 | 22.2% |
Cash flow
|
|---|
| Capex | 1,703 | 4,577 | 6,258 | 2,419 | 3,273 | 35.3% |
Ratios
|
|---|
| Revenue growth | 25.8% | 27.7% | 58.8% | 7.0% | 13.3% | |
| EBITDA growth | 20.3% | 3.8% | 55.0% | 7.2% | 24.1% | |
| Gross Margin | 38.3% | 32.5% | 30.0% | 30.2% | 28.8% | -1.4% |
| EBITDA Margin | 41.4% | 33.7% | 32.9% | 32.9% | 36.1% | 3.1% |
| Net Income Margin | 29.0% | 27.9% | 20.8% | 23.8% | 23.3% | -0.4% |
| SG&A, % of revenue | 3.2% | 3.4% | 3.0% | 3.0% | 4.1% | 1.1% |
| CAPEX, % of revenue | 2.6% | 5.5% | 4.8% | 1.7% | 2.1% | 0.3% |
| ROIC | 18.4% | 15.1% | 18.5% | 15.4% | 13.0% | -2.4% |
| ROE | 23.6% | 23.4% | 22.3% | 20.5% | 17.1% | -3.3% |
| Net Debt/EBITDA | 0.7x | 1.2x | 0.9x | 0.3x | 0.3x | -0.1x |
Revenue and profitability
China Overseas Land & Investment Ltd's Revenue surged on 13.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.77 pp from 9.8% to 10.5% in 2016.
Gross Margin decreased slightly on 1.4 pp from 30.2% to 28.8% in 2016. SG&A as a % of Revenue increased slightly on 1.1 pp from 3.0% to 4.1% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.1% in 2016. The company showed decline in CAPEX/Revenue of 3.5 pp from 5.5% in 2013 to 2.1% in 2016. It's average level of CAPEX/Revenue for the last three years was 2.9%.
Return on investment
The company operates at good ROIC (13.02%) and ROE (17.15%). ROIC decreased on 2.4 pp from 15.4% to 13.0% in 2016. ROE decreased on 3.3 pp from 20.5% to 17.1% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 3.0x. Net Debt / EBITDA decreased on 0.1x from 0.3x to 0.3x in 2016. Debt jumped on 49.2% while cash jumped on 56.3%.
Valuation
China Overseas Land & Investment Ltd's trades at EV/EBITDA 4.6x and P/E 6.7x while industy averages are 17.8x and 21.9x. China Overseas Land & Investment Ltd's EV/(EBITDA-CAPEX) is 4.9x with the industry average at 22.8x.
Management team
The company's CEO Yan Jianguo has spent 1 year at the company. China Overseas Land & Investment Ltd's CFO Nip Yun Wing "Horace" has spent 9 years at the company.
Appendix 1: Peers in Real Estate
Below we provide China Overseas Land & Investment 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) | | | | 737.1% | -0.9% |
| ITC Properties Group Ltd ($199) | | -95.2% | 75.7% | 678.6% | 206.4% |
| |
|---|
| Median (179 companies) | 17.9% | 13.1% | 5.2% | 4.2% | 8.3% |
|---|
| China Overseas Land & Investment Ltd ($688) | | | 58.8% | 7.0% | 13.3% |
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% | 41.9% | 39.3% | 38.4% | 43.6% |
|---|
| China Overseas Land & Investment Ltd ($688) | | 32.5% | 30.0% | 30.2% | 28.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | |
| 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 (179 companies) | 29.1% | 28.3% | 26.9% | 23.4% | 30.3% |
|---|
| China Overseas Land & Investment Ltd ($688) | | 33.7% | 32.9% | 32.9% | 36.1% |
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) | 5.7% | 6.2% | 4.7% | 3.3% | 4.0% |
|---|
| China Overseas Land & Investment Ltd ($688) | | 5.5% | 4.8% | 1.7% | 2.1% |
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% | 17.9% |
| 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% | |
| China Resources Land Ltd ($1109) | 12.3% | 14.7% | 13.5% | 13.9% | 14.4% |
| |
|---|
| Median (181 companies) | 4.1% | 4.0% | 4.1% | 2.4% | 3.3% |
|---|
| China Overseas Land & Investment Ltd ($688) | | 15.1% | 18.5% | 15.4% | 13.0% |
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 | 7.3x |
| 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 | 2.8x | 3.0x | 3.3x | 3.1x |
|---|
| China Overseas Land & Investment Ltd ($688) | | 1.2x | 0.9x | 0.3x | 0.3x |
