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Etalon Group Ltd reports 35.3% Net Income decline and 17.6% Revenue decline

22 Mar 2016 • About Etalon Group Ltd ($ETLN) • By InTwits

Etalon Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Etalon Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 17.4%.
  • CAPEX is quite volatile: 2,434 in 2015, 4,212 in 2014, 6,632 in 2013, 5,691 in 2012, 4,244 in 2011
  • The company has business model with average profitability: ROIC is at 10.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Etalon Group Ltd ($ETLN) key annual financial indicators

mln. RUB201120122013201420152015/2014
P&L
Revenue22,74126,89439,92151,48142,404-17.6%
Gross Profit10,8539,40012,36815,79612,999-17.7%
SG&A5,759
EBITDA6,6266,3058,4769,5207,672-19.4%
Net Income7,3324,9796,6298,3455,399-35.3%
Balance Sheet
Cash14,48410,7168,13914,63111,532-21.2%
Short Term Debt1,9503,8323,0683,9216,32861.4%
Long Term Debt8,45612,97510,37312,53713,1995.3%
Cash flow
Capex726844431653369-43.5%
Ratios
Revenue growth11.9%18.3%48.4%29.0%-17.6%
EBITDA growth-1.3%-4.8%34.4%12.3%-19.4%
Gross Margin47.7%35.0%31.0%30.7%30.7%-0.0%
EBITDA Margin29.1%23.4%21.2%18.5%18.1%-0.4%
Net Income Margin32.2%18.5%16.6%16.2%12.7%-3.5%
SG&A, % of revenue13.6%13.6%
CAPEX, % of revenue3.2%3.1%1.1%1.3%0.9%-0.4%
ROIC20.1%12.1%14.4%14.3%10.2%-4.1%
ROE32.7%14.2%16.2%17.4%10.2%-7.3%
Net Debt/EBITDA-0.6x1.0x0.6x0.2x1.0x0.9x

Revenue and profitability


Etalon Group Ltd's Revenue dropped on 17.6% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 37.9% to 34.8% in 2015.

Gross Margin showed almost no change in 2015.

Net Income marign decreased on 3.5 pp from 16.2% to 12.7% in 2015.

Capital expenditures (CAPEX) and working capital investments


The company's CAPEX/Revenue was 0.87% in 2015. CAPEX/Revenue decreased on 2.3 pp from 3.1% in 2012 to 0.87% in 2015. Average CAPEX/Revenue for the last three years was 1.1%.

Return on investment


The company operates at low ROIC (10.18%) and ROE (10.17%). ROIC decreased on 4.1 pp from 14.3% to 10.2% in 2015. ROE decreased on 7.3 pp from 17.4% to 10.2% in 2015.

Leverage (Debt)


Debt level is 1.0x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA jumped on 0.9x from 0.2x to 1.0x in 2015. Debt surged on 18.6% in 2015 while cash dropped on 21.2% in 2015.

Valuation


The company's trades at EV/EBITDA 1.0x and P/E 0.0x while industy averages are 10.5x and 26.1x. Etalon Group Ltd's EV/(EBITDA-CAPEX) is 1.1x with the industry average at 4.7x.

Appendix 1: Peers in Real Estate Investment & Services


Below you can find Etalon Group Ltd benchmarking vs. other companies in Real Estate Investment & Services 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 FY2011 FY2012 FY2013 FY2014 FY2015
Plaza Centers Nv ($PLAZ)-37.7%28.0%-10.0%131.0%
Formation Group ($FRM)-60.8%147.9%35.8%199.3%
Safeland ($SAF)38.2%-40.1%21.2%-1.5%
Hml Hldgs ($HMLH)12.9%20.8%15.3%16.7%
Hagl JSC ($HAG)39.5%-36.9%10.2%104.7%
 
Median (16 companies)1.6%3.2%13.0%-0.1%46.8%
Etalon Group Ltd ($ETLN)18.3%48.4%29.0%-17.6%


Top companies by Gross margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Arricano Real Estate ($ARO)96.1%96.5%
Taliesin Property Fund Ltd ($TPFZ)75.2%76.6%74.9%76.3%
Songbird Estates ($SBD)69.2%71.5%68.3%70.7%
Panther Securities ($PNS)65.3%69.2%77.2%68.0%
Damac Real Estate Development Ltd ($DMC)37.5%40.7%64.4%59.6%59.4%
 
Median (12 companies)39.2%40.8%46.7%39.3%29.7%
Etalon Group Ltd ($ETLN)47.7%35.0%31.0%30.7%30.7%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Summit Germany Ltd ($SMTG)77.8%78.3%78.7%89.3%
Panther Securities ($PNS)39.9%44.8%56.9%50.3%
Damac Real Estate Development Ltd ($DMC)31.2%32.9%54.5%46.4%53.5%
Quintain Estates & Development ($QED)-101.5%-81.5%-70.4%43.6%76.3%
Hagl JSC ($HAG)37.0%23.1%40.5%39.6%28.2%
 
Median (15 companies)32.5%32.8%20.9%11.8%28.2%
Etalon Group Ltd ($ETLN)29.1%23.4%21.2%18.5%18.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Quintain Estates & Development ($QED)136.2%210.6%162.3%217.2%173.3%
Hagl JSC ($HAG)152.8%134.2%171.2%145.6%127.1%
Taliesin Property Fund Ltd ($TPFZ)14.1%21.3%45.2%43.7%
Raven Russia Ltd ($RUS)19.8%27.5%41.0%9.1%
Panther Securities ($PNS)176.0%87.9%42.6%26.0%
 
Median (16 companies)1.7%2.1%1.2%1.8%14.3%
Etalon Group Ltd ($ETLN)3.2%3.1%1.1%1.3%0.9%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Damac Real Estate Development Ltd ($DMC)163.1%127.1%31.3%41.5%
PIK Group OJSC ($PIK)25.6%21.2%25.6%13.5%
Hml Hldgs ($HMLH)5.6%8.2%9.9%12.5%12.5%
Farglory Land Development Co Ltd ($FLDS)16.0%9.7%13.0%7.7%
Summit Germany Ltd ($SMTG)5.8%6.9%5.6%7.1%
 
Median (16 companies)3.8%3.6%3.0%2.3%4.3%
Etalon Group Ltd ($ETLN)20.1%12.1%14.4%14.3%10.2%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Raven Russia Ltd ($RUS)6.4x4.1x75.5x
Plaza Centers Nv ($PLAZ)17.9x41.9x
Quintain Estates & Development ($QED)15.3x4.5x
Hagl JSC ($HAG)7.5x13.4x10.5x14.2x14.8x
London & Associated Properties ($LAS)10.8x40.8x11.1x13.0x
 
Median (12 companies)7.9x8.2x7.3x11.0x1.2x
Etalon Group Ltd ($ETLN)-0.6x1.0x0.6x0.2x1.0x


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