Evergrande Real Estate Group Ltd reports 75.0% EBITDA growth in 2017 and 4.2 pp EBITDA Margin growth from 22.4% to 26.6%
26/03/2018 • About Evergrande Real Estate Group Ltd (
$3333) • By InTwits
Evergrande Real Estate Group Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Evergrande Real Estate Group Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.1%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 4,631 in 2017, 3,273 in 2016, 2,419 in 2015, 6,258 in 2014, 4,577 in 2013
- The company has business model with low profitability: ROIC is at 8.6%
- It operates with high leverage: Net Debt/EBITDA is 7.0x 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. | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 93,672 | 111,398 | 133,130 | 211,444 | 311,022 | 47.1% |
| Gross Profit | 27,649 | 31,784 | 37,413 | 59,422 | 112,262 | 88.9% |
| SG&A | 7,782 | 13,192 | 19,464 | 25,581 | 29,456 | 15.1% |
| EBITDA | 25,948 | 29,167 | 32,720 | 47,322 | 82,797 | 75.0% |
| Net Income | 13,268 | 16,943 | 15,548 | 15,737 | 24,372 | 54.9% |
Balance Sheet
|
|---|
| Cash | 40,118 | 29,847 | 103,090 | 198,420 | 152,008 | -23.4% |
| Short Term Debt | 35,796 | 79,663 | 158,744 | 202,906 | 356,381 | 75.6% |
| Long Term Debt | 73,021 | 76,401 | 138,162 | 332,164 | 376,244 | 13.3% |
Cash flow
|
|---|
| Capex | 12,259 | 8,997 | 15,700 | 16,271 | 14,742 | -9.4% |
Ratios
|
|---|
| Revenue growth | 43.5% | 18.9% | 19.5% | 58.8% | 47.1% | |
| EBITDA growth | 52.7% | 12.4% | 12.2% | 44.6% | 75.0% | |
| Gross Margin | 29.5% | 28.5% | 28.1% | 28.1% | 36.1% | 8.0% |
| EBITDA Margin | 27.7% | 26.2% | 24.6% | 22.4% | 26.6% | 4.2% |
| Net Income Margin | 14.2% | 15.2% | 11.7% | 7.4% | 7.8% | 0.4% |
| SG&A, % of revenue | 8.3% | 11.8% | 14.6% | 12.1% | 9.5% | -2.6% |
| CAPEX, % of revenue | 13.1% | 8.1% | 11.8% | 7.7% | 4.7% | -3.0% |
| ROIC | 15.5% | 11.2% | 8.1% | 7.1% | 8.6% | 1.4% |
| ROE | 29.0% | 25.3% | 20.5% | 10.7% | 30.7% | 20.0% |
| Net Debt/EBITDA | 2.6x | 4.3x | 5.9x | 7.1x | 7.0x | -0.1x |
Revenue and profitability
Evergrande Real Estate Group Ltd's Revenue jumped on 47.1%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.2 pp from 22.4% to 26.6% in 2017.
Gross Margin increased on 8.0 pp from 28.1% to 36.1% in 2017. SG&A as a % of Revenue decreased on 2.6 pp from 12.1% to 9.5% in 2017.
Net Income marign showed almost no change in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 Evergrande Real Estate Group Ltd had CAPEX/Revenue of 4.7%. The company's CAPEX/Revenue decreased on 3.3 pp from 8.1% in 2014 to 4.7% in 2017. Average CAPEX/Revenue for the last three years was 8.1%.
Return on investment
The company operates at good ROE (30.65%) while ROIC is low (8.55%). ROIC increased slightly on 1.4 pp from 7.1% to 8.6% in 2017. ROE surged on 20.0 pp from 10.7% to 30.7% in 2017.
Leverage (Debt)
Debt level is 7.0x Net Debt / EBITDA and 8.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 7.1x to 7.0x in 2017. Debt jumped on 36.9% while cash dropped on 23.4%.
Appendix 1: Peers in Real Estate
Below you can find Evergrande Real Estate Group 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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| South China Land Ltd ($8155) | | | | 896.2% | |
| Hon Kwok Land Investment Co Ltd ($160) | -73.5% | 60.4% | -5.6% | 335.1% | |
| Golden Wheel Tiandi Holdings Co Ltd ($1232) | -9.6% | -4.6% | -72.4% | 309.9% | |
| LVGEM China Real Estate Invest ($95) | -21.9% | 3,008.3% | -77.4% | 259.3% | |
| ITC Properties Group Ltd ($199) | -95.2% | 75.7% | 678.6% | 206.4% | |
| |
|---|
| Median (136 companies) | 12.4% | 5.1% | 4.1% | 9.9% | 14.5% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | | 18.9% | 19.5% | 58.8% | 47.1% |
Top companies by Gross margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Tern Properties Co Ltd ($277) | 98.4% | 98.4% | 98.7% | 98.8% | |
| Wah Ha Realty Co Ltd ($278) | 96.0% | 93.2% | 95.9% | 92.9% | |
| China Oceanwide Holdings Ltd ($715) | 81.2% | 82.0% | 80.9% | 90.0% | |
| Tian Teck Land Ltd ($266) | 86.9% | 88.9% | 87.5% | 87.9% | |
| Hysan Development Co Ltd ($14) | 86.8% | 87.5% | 87.9% | 87.9% | |
| |
|---|
| Median (88 companies) | 41.9% | 39.2% | 38.2% | 42.3% | 36.8% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 29.5% | 28.5% | 28.1% | 28.1% | 36.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| China Oceanwide Holdings Ltd ($715) | 110.5% | 48.4% | 69.2% | 204.5% | |
| SOHO China Ltd ($410) | 80.8% | 104.0% | 201.9% | 175.0% | |
| Wanda Hotel Development Co Ltd ($169) | 43.2% | -125.7% | 28.3% | 109.9% | |
| Swire Properties Ltd ($1972) | 114.6% | 73.2% | 100.3% | 105.1% | |
| Sinolink Worldwide Holdings Ltd ($1168) | 42.2% | 28.8% | 15.8% | 97.2% | |
| |
|---|
| Median (95 companies) | 28.5% | 27.3% | 23.2% | 29.4% | 37.7% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 27.7% | 26.2% | 24.6% | 22.4% | 26.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Qingdao Holdings International Ltd ($499) | 0.9% | 0.1% | 0.7% | 607.5% | |
| Pacific Century Premium Developments Ltd ($432) | 323.1% | 351.2% | 340.6% | 570.7% | |
| Wah Ha Realty Co Ltd ($278) | 0.0% | | 0.0% | 289.2% | |
| Cheuk Nang Holdings Ltd ($131) | 130.3% | 67.5% | 144.9% | 117.6% | |
| Beijing Capital Juda Ltd ($1329) | 0.1% | 0.1% | 83.1% | 104.7% | |
| |
|---|
| Median (54 companies) | 6.1% | 4.7% | 3.2% | 3.3% | 2.2% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 13.1% | 8.1% | 11.8% | 7.7% | 4.7% |
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Gemdale Properties & Investment Corp Ltd ($535) | 19.6% | 10.8% | 15.9% | 17.9% | |
| China Resources Land Ltd ($1109) | 14.7% | 13.5% | 13.9% | 14.4% | 15.4% |
| Colour Life Services Group Co Ltd ($1778) | 47.9% | 29.3% | 14.5% | 13.1% | |
| China Overseas Land & Investment Ltd ($688) | 15.1% | 18.5% | 15.4% | 13.0% | 12.8% |
| Future Land Development Holdings Ltd ($1030) | 16.0% | 11.3% | 12.3% | 11.9% | |
| |
|---|
| Median (137 companies) | 4.0% | 4.0% | 2.5% | 3.4% | 13.5% |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 15.5% | 11.2% | 8.1% | 7.1% | 8.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Henry Group Holdings Ltd ($859) | 103.1x | | -23.1x | 65.0x | |
| Asia Standard International Group Ltd ($129) | 3.3x | 4.4x | | 38.3x | |
| Beijing Capital Land Ltd ($2868) | 4.6x | 11.7x | 49.1x | 37.0x | |
| Beijing Capital Juda Ltd ($1329) | 0.6x | 1.6x | 11.5x | 36.3x | |
| Asia Orient Holdings Ltd ($214) | 2.1x | 2.7x | 6.1x | 33.8x | |
| |
|---|
| Median (82 companies) | 2.8x | 3.0x | 3.2x | 2.7x | 1.4x |
|---|
| Evergrande Real Estate Group Ltd ($3333) | 2.6x | 4.3x | 5.9x | 7.1x | 7.0x |
