China Resources Land Ltd reports 18.4% EBITDA growth and 3.8 pp EBITDA Margin growth from 31.4% to 35.2%
22/03/2017 • About China Resources Land Ltd (
$1109) • By InTwits
China Resources Land Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Resources Land Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.8%. At the same time it's in pair with industry average of 16.0%.
- CAPEX is quite volatile: 7,480 in 2016, 9,265 in 2015, 13,573 in 2014, 7,033 in 2013, 5,289 in 2012
- The company has highly profitable business model: ROIC is at 14.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Resources Land Ltd ($1109) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 44,364 | 71,389 | 89,705 | 103,393 | 93,567 | -9.5% |
| Gross Profit | 16,696 | 20,107 | 27,353 | 32,298 | 31,571 | -2.3% |
| SG&A | 3,711 | 3,927 | 5,324 | 6,312 | 5,416 | -14.2% |
| EBITDA | 17,879 | 24,112 | 27,922 | 32,511 | 31,360 | -3.5% |
| Net Income | 10,569 | 14,696 | 15,141 | 17,528 | 16,690 | -4.8% |
Balance Sheet
|
|---|
| Cash | 21,953 | 28,239 | 44,857 | 45,875 | 41,773 | -8.9% |
| Short Term Debt | 8,949 | 19,391 | 24,658 | 16,236 | 19,378 | 19.3% |
| Long Term Debt | 47,620 | 48,645 | 69,261 | 61,379 | 63,864 | 4.0% |
Cash flow
|
|---|
| Capex | 5,289 | 7,033 | 13,573 | 9,265 | 7,480 | -19.3% |
Ratios
|
|---|
| Revenue growth | 23.9% | 60.9% | 25.7% | 15.3% | -9.5% | |
| EBITDA growth | 17.1% | 34.9% | 15.8% | 16.4% | -3.5% | |
| Gross Margin | 37.6% | 28.2% | 30.5% | 31.2% | 33.7% | 2.5% |
| EBITDA Margin | 40.3% | 33.8% | 31.1% | 31.4% | 33.5% | 2.1% |
| Net Income Margin | 23.8% | 20.6% | 16.9% | 17.0% | 17.8% | 0.9% |
| SG&A, % of revenue | 8.4% | 5.5% | 5.9% | 6.1% | 5.8% | -0.3% |
| CAPEX, % of revenue | 11.9% | 9.9% | 15.1% | 9.0% | 8.0% | -1.0% |
| ROIC | 12.3% | 14.7% | 13.5% | 13.9% | 14.4% | 0.5% |
| ROE | 16.3% | 19.1% | 15.9% | 15.9% | 16.8% | 0.9% |
| Net Debt/EBITDA | 1.9x | 1.7x | 1.8x | 1.0x | 1.3x | 0.3x |
Revenue and profitability
The company's Revenue decreased on 9.5%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.1 pp from 31.4% to 33.5% in 2016.
Gross Margin increased on 2.5 pp from 31.2% to 33.7% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased slightly on 0.88 pp from 17.0% to 17.8% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 8.0% in 2016. The company's CAPEX/Revenue decreased slightly on 1.9 pp from 9.9% in 2013 to 8.0% in 2016. For the last three years the average CAPEX/Revenue was 10.7%.
Return on investment
The company operates at good ROIC (14.42%) and ROE (16.81%). ROIC showed almost no change in 2016. ROE increased slightly on 0.92 pp from 15.9% to 16.8% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 2.7x. Net Debt / EBITDA surged on 0.3x from 1.0x to 1.3x in 2016. Debt increased on 7.2% while cash decreased on 8.9%.
Valuation
China Resources Land Ltd's trades at EV/EBITDA 6.1x and P/E 8.9x while industy averages are 17.8x and 21.9x. China Resources Land Ltd's EV/(EBITDA-CAPEX) is 8.0x with the industry average at 22.8x.
Appendix 1: Peers in Real Estate
Below we provide China Resources Land 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% | 9.1% |
|---|
| China Resources Land Ltd ($1109) | | 60.9% | 25.7% | 15.3% | -9.5% |
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) | 42.1% | 41.9% | 39.3% | 38.4% | 43.6% |
|---|
| China Resources Land Ltd ($1109) | 37.6% | 28.2% | 30.5% | 31.2% | 33.7% |
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) | 28.9% | 28.3% | 26.9% | 23.4% | 30.3% |
|---|
| China Resources Land Ltd ($1109) | 40.3% | 33.8% | 31.1% | 31.4% | 33.5% |
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% |
|---|
| China Resources Land Ltd ($1109) | 11.9% | 9.9% | 15.1% | 9.0% | 8.0% |
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% |
| 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% | 13.1% |
| 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% | 3.3% |
|---|
| China Resources Land Ltd ($1109) | 12.3% | 14.7% | 13.5% | 13.9% | 14.4% |
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 Resources Land Ltd ($1109) | 1.9x | 1.7x | 1.8x | 1.0x | 1.3x |
