SOHO China Ltd reports 69.3% Net Income growth in 2016 while 26.9 pp EBITDA Margin decline from 202% to 175%
23/03/2017 • About SOHO China Ltd (
$410) • By InTwits
SOHO China 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: 175.0% in FY2016, 201.9% in FY2015, 104.0% in FY2014, 80.8% in FY2013, 113.6% in FY2012
- The company has potentially unprofitable business model: ROIC is at 4.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.2x while industry average is 4.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
SOHO China Ltd ($410) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 16,143 | 14,621 | 6,098 | 995 | 1,577 | 58.5% |
| Gross Profit | 9,007 | 8,114 | 3,078 | 734 | 1,242 | 69.3% |
| SG&A | 558 | 718 | 446 | 277 | 327 | 17.9% |
| EBITDA | 18,344 | 11,818 | 6,343 | 2,009 | 2,759 | 37.3% |
| Net Income | 10,585 | 7,388 | 4,080 | 538 | 910 | 69.3% |
Balance Sheet
|
|---|
| Cash | 18,492 | 9,069 | 11,962 | 8,406 | 3,864 | -54.0% |
| Short Term Debt | 3,922 | 2,760 | 1,353 | 1,921 | 2,955 | 53.8% |
| Long Term Debt | 19,082 | 14,310 | 18,909 | 15,960 | 12,481 | -21.8% |
Cash flow
|
|---|
| Capex | 545 | 6,472 | 2,129 | 1,532 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 184.0% | -9.4% | -58.3% | -83.7% | 58.5% | |
| EBITDA growth | 183.5% | -35.6% | -46.3% | -68.3% | 37.3% | |
| Gross Margin | 55.8% | 55.5% | 50.5% | 73.7% | 78.8% | 5.0% |
| EBITDA Margin | 113.6% | 80.8% | 104.0% | 201.9% | 175.0% | -26.9% |
| Net Income Margin | 65.6% | 50.5% | 66.9% | 54.0% | 57.7% | 3.7% |
| SG&A, % of revenue | 3.5% | 4.9% | 7.3% | 27.8% | 20.7% | -7.1% |
| CAPEX, % of revenue | 3.4% | 44.3% | 34.9% | 153.9% | | -153.9% |
| ROIC | 33.4% | 17.5% | 9.1% | 2.9% | 4.3% | 1.4% |
| ROE | 40.4% | 21.7% | 10.6% | 1.4% | 2.6% | 1.1% |
| Net Debt/EBITDA | 0.2x | 0.7x | 1.3x | 4.7x | 4.2x | -0.5x |
Revenue and profitability
SOHO China Ltd's Revenue surged on 58.5%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 26.9 pp from 202% to 175% in FY2016.
Gross Margin increased on 5.0 pp from 73.7% to 78.8% in FY2016. SG&A as a % of Revenue decreased on 7.1 pp from 27.8% to 20.7% in FY2016.
Net Income marign increased on 3.7 pp from 54.0% to 57.7% in FY2016.
Return on investment
The company operates at low ROIC (4.26%) and ROE (2.56%). ROIC increased slightly on 1.4 pp from 2.9% to 4.3% in FY2016. ROE increased slightly on 1.1 pp from 1.4% to 2.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.2x and Debt / EBITDA is 5.6x. Net Debt / EBITDA dropped on 0.5x from 4.7x to 4.2x in FY2016. Debt dropped on 13.7% while cash dropped on 54.0%.
Appendix 1: Peers in Real Estate
Below you can find SOHO China 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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 (179 companies) | 18.3% | 13.5% | 5.3% | 4.5% | 9.3% |
|---|
| SOHO China Ltd ($410) | | -9.4% | -58.3% | -83.7% | 58.5% |
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) | 41.9% | 41.8% | 39.1% | 38.2% | 42.5% |
|---|
| SOHO China Ltd ($410) | 55.8% | 55.5% | 50.5% | 73.7% | 78.8% |
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% | |
| 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% |
| 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% | 29.4% |
|---|
| SOHO China Ltd ($410) | 113.6% | 80.8% | 104.0% | 201.9% | 175.0% |
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) | 5.9% | 6.1% | 4.7% | 3.2% | 3.8% |
|---|
| SOHO China Ltd ($410) | 3.4% | 44.3% | 34.9% | 153.9% | |
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% | 3.4% |
|---|
| SOHO China Ltd ($410) | 33.4% | 17.5% | 9.1% | 2.9% | 4.3% |
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 | 3.2x | 2.5x |
|---|
| SOHO China Ltd ($410) | 0.2x | 0.7x | 1.3x | 4.7x | 4.2x |
