Evergrande Real Estate Group Ltd revenue growth accelerated to 58.8% in 2016 vs. 19.5% a year earliner
28/03/2017 • About Evergrande Real Estate Group Ltd (
$3333) • By InTwits
Evergrande Real Estate Group Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 22.4% in 2016 vs. 24.6% in 2015 vs. 26.0% in 2012
- Evergrande Real Estate Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.5%. 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 business model with low profitability: ROIC is at 7.1%
- It operates with high leverage: Net Debt/EBITDA is 7.1x while industry average is 3.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Evergrande Real Estate Group Ltd ($3333) key annual financial indicators
| mln. | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 65,261 | 93,672 | 111,398 | 133,130 | 211,444 | 58.8% |
| Gross Profit | 18,210 | 27,649 | 31,784 | 37,413 | 59,422 | 58.8% |
| SG&A | 5,618 | 7,782 | 13,192 | 19,464 | 25,581 | 31.4% |
| EBITDA | 16,996 | 25,948 | 29,167 | 32,720 | 47,322 | 44.6% |
| Net Income | 9,171 | 13,268 | 16,943 | 15,548 | 15,737 | 1.2% |
Balance Sheet
|
|---|
| Cash | 17,790 | 40,118 | 29,847 | 103,090 | 198,420 | 92.5% |
| Short Term Debt | 19,031 | 35,796 | 79,663 | 158,744 | 202,906 | 27.8% |
| Long Term Debt | 41,243 | 73,021 | 76,401 | 138,162 | 332,164 | 140.4% |
Cash flow
|
|---|
| Capex | 7,618 | 12,259 | 8,997 | 15,700 | 16,271 | 3.6% |
Ratios
|
|---|
| Revenue growth | 5.4% | 43.5% | 18.9% | 19.5% | 58.8% | |
| EBITDA growth | -15.7% | 52.7% | 12.4% | 12.2% | 44.6% | |
| Gross Margin | 27.9% | 29.5% | 28.5% | 28.1% | 28.1% | 0.0% |
| EBITDA Margin | 26.0% | 27.7% | 26.2% | 24.6% | 22.4% | -2.2% |
| Net Income Margin | 14.1% | 14.2% | 15.2% | 11.7% | 7.4% | -4.2% |
| SG&A, % of revenue | 8.6% | 8.3% | 11.8% | 14.6% | 12.1% | -2.5% |
| CAPEX, % of revenue | 11.7% | 13.1% | 8.1% | 11.8% | 7.7% | -4.1% |
| ROIC | 15.5% | 15.5% | 11.2% | 8.1% | 7.1% | -1.0% |
| ROE | 26.1% | 29.0% | 25.3% | 20.5% | 10.7% | -9.8% |
| Net Debt/EBITDA | 2.5x | 2.6x | 4.3x | 5.9x | 7.1x | 1.2x |
Revenue and profitability
The company's Revenue jumped on 58.8%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.2 pp from 24.6% to 22.4% in 2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue decreased on 2.5 pp from 14.6% to 12.1% in 2016.
Net Income marign decreased on 4.2 pp from 11.7% to 7.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
Evergrande Real Estate Group Ltd's CAPEX/Revenue was 7.7% in 2016. The company's CAPEX/Revenue decreased on 5.4 pp from 13.1% in 2013 to 7.7% in 2016. For the last three years the average CAPEX/Revenue was 9.2%.
Return on investment
The company operates at low ROIC (7.11%) and ROE (10.69%). ROIC decreased slightly on 0.99 pp from 8.1% to 7.1% in 2016. ROE decreased on 9.8 pp from 20.5% to 10.7% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.1x and Debt / EBITDA is 11.3x. Net Debt / EBITDA jumped on 1.2x from 5.9x to 7.1x in 2016. Debt jumped on 80.2% while cash jumped on 92.5%.
Appendix 1: Peers in Real Estate
Below we provide Evergrande Real Estate Group 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% | 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 (180 companies) | 19.5% | 13.1% | 5.1% | 4.1% | 10.1% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | | 43.5% | 18.9% | 19.5% | 58.8% |
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 (161 companies) | 41.9% | 41.9% | 39.2% | 38.2% | 42.2% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 27.9% | 29.5% | 28.5% | 28.1% | 28.1% |
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% | 175.0% |
| 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 (180 companies) | 29.1% | 28.5% | 27.3% | 23.2% | 29.2% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 26.0% | 27.7% | 26.2% | 24.6% | 22.4% |
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) | 5.5% | 6.1% | 4.7% | 3.2% | 3.8% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 11.7% | 13.1% | 8.1% | 11.8% | 7.7% |
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 (182 companies) | 4.1% | 4.0% | 4.0% | 2.5% | 3.4% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 15.5% | 15.5% | 11.2% | 8.1% | 7.1% |
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 (137 companies) | 2.4x | 2.8x | 3.0x | 3.2x | 2.7x |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 2.5x | 2.6x | 4.3x | 5.9x | 7.1x |
