Damac Real Estate Development Ltd Net Income dropped on 58.3% and EBITDA Margin dropped on 17.7 pp from 38.5% to 20.8%
14 Feb 2019 • About Damac Real Estate Development Ltd (
$DMC) • By InTwits
Damac Real Estate Development Ltd reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is declining: 20.8% in 2018 vs. 38.5% in 2017 vs. 46.4% in 2014
- Damac Real Estate Development Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- The company has potentially unprofitable business model: ROIC is 6.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Damac Real Estate Development Ltd's Revenue dropped on 17.7%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 17.7 pp from 38.5% to 20.8% in 2018. During 2014-2018 EBITDA Margin topped in 2015 at 53.5% and was declining since that time.
Gross Margin dropped on 14.2 pp from 48.8% to 34.6% in 2018. Gross Margin declined at -6.1 pp per annum in 2014-2018. SG&A as a % of Revenue showed almost no change in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2015 at 11.9% and was growing since that time.
Net Income margin dropped on 18.2 pp from 37.0% to 18.8% in 2018. Net Income margin stuck to a declining trend at -15.1 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.18% in 2018. The company showed almost no change in CAPEX/Revenue from 2015 to 2018. For the last three years the average CAPEX/Revenue was 0.20%.
Return on investment
The company operates at low ROIC (6.5%) and ROE (8.2%). ROIC decreased on 9.5 pp from 16.0% to 6.5% in 2018. ROE dropped on 12.6 pp from 20.8% to 8.2% in 2018. ROIC followed a declining trend at -7.5 pp per annum in 2014-2018. ROE stuck to a declining trend at -21.2 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.0x and Debt / EBITDA is 3.9x. Debt increased on 4.1% while cash dropped on 17.2%.
Damac Real Estate Development Ltd has no short term refinancing risk: cash is higher than short term debt (925.3%).
Management team
Damac Real Estate Development Ltd's CFO Adil Mohammed Hassan Taqi has spent 6 years with the company.
Financial and operational results
FY ended 31 Dec 2018
Damac Real Estate Development Ltd ($DMC) key annual financial indicators| mln. AED | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,018 | 2,324 | 1,948 | 2,030 | 1,670 | -17.7% |
| Gross Profit | 607 | 1,380 | 1,088 | 989 | 577 | -41.6% |
| SG&A | 145 | 276 | 234 | 290 | 245 | -15.5% |
| EBITDA | 472 | 1,243 | 1,018 | 782 | 347 | -55.6% |
| Net Income | 881 | 1,229 | 1,006 | 751 | 314 | -58.3% |
Balance Sheet
|
|---|
| Cash | 1,800 | 2,587 | 2,264 | 2,031 | 1,681 | -17.2% |
| Short Term Debt | 75 | 279 | 317 | 222 | 182 | -18.2% |
| Long Term Debt | 645 | 746 | 722 | 1,072 | 1,165 | 8.7% |
Cash flow
|
|---|
| Capex | 4 | 5 | 3 | 6 | 3 | -47.0% |
Ratios
|
|---|
| Revenue growth | -16.8% | 128.2% | -16.2% | 4.2% | -17.7% | |
| EBITDA growth | -29.2% | 163.2% | -18.2% | -23.1% | -55.6% | |
|
|---|
| Gross Margin | 59.6% | 59.4% | 55.9% | 48.8% | 34.6% | -14.2% |
| EBITDA Margin | 46.4% | 53.5% | 52.2% | 38.5% | 20.8% | -17.7% |
| SG&A, % of revenue | 14.2% | 11.9% | 12.0% | 14.3% | 14.7% | 0.4% |
| Net Income Margin | 86.5% | 52.9% | 51.6% | 37.0% | 18.8% | -18.2% |
| CAPEX, % of revenue | 0.4% | 0.2% | 0.1% | 0.3% | 0.2% | -0.1% |
|
|---|
| ROIC | 31.3% | 41.5% | 24.5% | 16.0% | 6.5% | -9.5% |
| ROE | 93.3% | 62.9% | 32.9% | 20.8% | 8.2% | -12.6% |
| Net Debt/EBITDA | -2.3x | -1.3x | -1.2x | -0.9x | -1.0x | -0.0x |
Peers in Real Estate Investment & Services
Below you can find Damac Real Estate Development 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Plaza Centers Nv ($PLAZ) | 131.0% | -13.4% | -53.3% | 664.4% | |
| PIK Group OJSC ($PIK) | -2.1% | -16.5% | 17.5% | 191.5% | |
| London & Associated Properties ($LAS) | -22.6% | -2.6% | -9.1% | 51.4% | |
| Etalon Group Ltd ($ETLN) | 29.0% | -17.6% | 15.6% | 44.1% | |
| Formation Group ($FRM) | | 199.3% | 23.8% | 25.8% | 4.4% |
| |
|---|
| Median (20 companies) | -0.1% | 5.5% | 8.9% | 11.7% | 24.2% |
|---|
| Damac Real Estate Development Ltd ($DMC) | | 128.2% | -16.2% | 4.2% | -17.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Arricano Real Estate ($ARO) | 96.5% | 96.1% | 96.4% | 96.5% | |
| Summit Germany Ltd ($SMTG) | | 92.3% | 92.2% | 92.2% | |
| Caledonian Trust ($CNN) | 43.2% | | 50.4% | 80.5% | 74.8% |
| Panther Securities ($PNS) | 68.0% | 73.5% | 75.2% | 70.8% | |
| Songbird Estates ($SBD) | 70.7% | 72.5% | 72.8% | 68.6% | |
| |
|---|
| Median (14 companies) | 35.2% | 34.2% | 41.1% | 28.3% | 10.5% |
|---|
| Damac Real Estate Development Ltd ($DMC) | 59.6% | 59.4% | 55.9% | 48.8% | 34.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Summit Germany Ltd ($SMTG) | 89.3% | 75.5% | 129.4% | 241.4% | |
| Arricano Real Estate ($ARO) | -138.3% | 12.7% | 190.4% | 238.1% | |
| Caledonian Trust ($CNN) | -59.1% | | 17.4% | 191.0% | 316.6% |
| Safestore Hldgs ($SAFE) | 77.7% | 128.4% | 95.1% | 84.8% | 137.7% |
| Raven Russia Ltd ($RUS) | 4.7% | -52.3% | 40.4% | 75.8% | |
| |
|---|
| Median (19 companies) | 16.7% | 24.8% | 28.0% | 20.8% | 21.3% |
|---|
| Damac Real Estate Development Ltd ($DMC) | 46.4% | 53.5% | 52.2% | 38.5% | 20.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Panther Securities ($PNS) | 26.0% | 15.7% | 3.7% | 68.6% | |
| Taliesin Property Fund Ltd ($TPFZ) | 45.2% | 43.7% | 37.2% | 40.5% | |
| Hagl JSC ($HAG) | 145.6% | 127.1% | 55.5% | 30.0% | |
| St.Modwen Properties ($SMP) | 36.7% | 55.8% | 31.3% | 19.3% | 25.8% |
| Safestore Hldgs ($SAFE) | 6.3% | 7.2% | 24.5% | 16.7% | 19.2% |
| |
|---|
| Median (20 companies) | 6.3% | 8.1% | 1.5% | 1.8% | 1.5% |
|---|
| Damac Real Estate Development Ltd ($DMC) | 0.4% | 0.2% | 0.1% | 0.3% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Arricano Real Estate ($ARO) | -12.3% | 1.7% | 34.2% | 43.8% | |
| Summit Germany Ltd ($SMTG) | 7.1% | 5.6% | 9.2% | 15.8% | |
| Taliesin Property Fund Ltd ($TPFZ) | 0.3% | -3.0% | 15.3% | 15.1% | |
| Etalon Group Ltd ($ETLN) | 14.3% | 10.2% | 6.6% | 12.6% | |
| Safestore Hldgs ($SAFE) | 10.3% | 17.8% | 12.1% | 10.3% | 16.5% |
| |
|---|
| Median (20 companies) | 3.2% | 4.9% | 6.4% | 6.4% | 8.9% |
|---|
| Damac Real Estate Development Ltd ($DMC) | 31.3% | 41.5% | 24.5% | 16.0% | 6.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Development Securities ($DSC) | 10.3x | 3.5x | 5.7x | 70.8x | 3.9x |
| Hagl JSC ($HAG) | 14.2x | 14.8x | 30.8x | 11.7x | |
| Songbird Estates ($SBD) | | 12.3x | 12.4x | 11.3x | |
| Farglory Land Development Co Ltd ($FLDS) | 5.7x | 4.4x | 4.8x | 8.9x | |
| Panther Securities ($PNS) | 11.8x | 9.7x | 9.4x | 8.5x | |
| |
|---|
| Median (17 companies) | 9.9x | 4.5x | 5.2x | 4.0x | 2.5x |
|---|
| Damac Real Estate Development Ltd ($DMC) | -2.3x | -1.3x | -1.2x | -0.9x | -1.0x |
