Segro reports 52.4 pp EBITDA Margin decline from 322% to 270% in 2018 in 2018 while 10.2% Revenue growth
15 Feb 2019 • About Segro (
$SGRO) • By InTwits
Segro reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Segro has high CAPEX intensity: 5 year average CAPEX/Revenue was 147.2%. At the same time it's a lot of higher than industry average of 78.6%.
- CAPEX is quite volatile: £18m in 2018, £10m in 2017, £21m in 2016, £5m in 2015, £2m in 2014
- The company has highly profitable business model: ROIC is 12.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 10.2%. During the last 5 years Revenue growth topped in 2017 at 18.1%. Having stable revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 25.2 pp from -416% to -390% in FY2018.
SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin increased on 3.3 pp from 285% to 288% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 173% in 2018. The company's CAPEX/Revenue dropped on 16.8 pp from 189% in 2015 to 173% in 2018. It's average level of CAPEX/Revenue for the last three years was 154%. To maintain its fast growth the company invested a large share of EBITDA (64.0%) to CAPEX.
Return on investment
The company operates at good ROIC (12.0%) and ROE (17.5%). ROIC decreased on 3.9 pp from 15.9% to 12.0% in 2018. ROE decreased on 2.0 pp from 19.5% to 17.5% in 2018.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.3x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 1.8x to 2.2x in 2018. Debt increased on 8.7% while cash dropped on 39.2%.
Segro has short term refinancing risk: cash is only 3.0% of short term debt.
Valuation and dividends
Segro's trades at EV/EBITDA 9.3x and P/E 6.6x.
Management team
The company's CEO is David John Rivers Sleath. David John Rivers Sleath is a founder and has 8 years tenure with the company. Segro's CFO Soumen Das has spent 3 years with the company.
Financial and operational results
FY ended 31 Dec 2018
Segro ($SGRO) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 290.0 | 248.5 | 283.5 | 334.7 | 369.0 | 10.2% |
| SG&A | 35.2 | 35.7 | 39.3 | 48.1 | 52.1 | 8.3% |
| EBITDA | 545.7 | 601.5 | 400.3 | 1,078.6 | 995.6 | -7.7% |
| Net Income | 682.0 | 682.5 | 417.7 | 952.7 | 1,062.6 | 11.5% |
Balance Sheet
|
|---|
| Cash | 23.8 | 16.4 | 32.0 | 109.3 | 66.5 | -39.2% |
| Short Term Debt | 1,703.0 | 1,819.3 | 1,626.5 | 2,059.9 | 2,240.3 | 8.8% |
| Long Term Debt | 0.0 | 3.6 | 3.9 | 3.6 | 3.2 | -11.1% |
Cash flow
|
|---|
| Capex | 247.9 | 470.8 | 429.7 | 457.9 | 637.1 | 39.1% |
Ratios
|
|---|
| Revenue growth | -14.7% | -14.3% | 14.1% | 18.1% | 10.2% | |
| EBITDA growth | 87.7% | 10.2% | -33.4% | 169.4% | -7.7% | |
|
|---|
| EBITDA Margin | 188.2% | 242.1% | 141.2% | 322.3% | 269.8% | -52.4% |
| SG&A, % of revenue | 12.1% | 14.4% | 13.9% | 14.4% | 14.1% | -0.3% |
| Net Income Margin | 235.2% | 274.6% | 147.3% | 284.6% | 288.0% | 3.3% |
| CAPEX, % of revenue | 85.5% | 189.5% | 151.6% | 136.8% | 172.7% | 35.8% |
|
|---|
| ROIC | 12.6% | 12.0% | 7.1% | 15.9% | 12.0% | -3.9% |
| ROE | 26.1% | 21.4% | 10.9% | 19.5% | 17.5% | -2.0% |
| Net Debt/EBITDA | 3.1x | 3.0x | 4.0x | 1.8x | 2.2x | 0.4x |
Peers in Real Estate Investment Trusts
Below we provide Segro benchmarking against other companies in Real Estate Investment Trusts 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Great Portland Estates ($GPOR) | | -17.6% | 83.5% | -5.4% | 217.1% |
| Town Centre Securities ($50BF) | | 3.2% | 11.1% | 5.1% | 10.0% |
| Primary Health Properties ($PHP) | | 5.2% | 6.9% | 7.5% | 9.8% |
| Shaftesbury ($SHB) | | 8.2% | 7.6% | 5.0% | 9.5% |
| Green REIT ($GRN) | | 276.8% | 45.7% | 8.3% | 9.0% |
| |
|---|
| Median (9 companies) | | 4.2% | 10.2% | 5.0% | 9.0% |
|---|
| Segro ($SGRO) | | -14.3% | 14.1% | 18.1% | 10.2% |
Top companies by Gross margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Local Shopping REIT ($LSR) | 72.1% | 74.4% | 73.4% | 67.3% | 27.5% |
| |
|---|
| Median (1 company) | 72.1% | 74.4% | 73.4% | 67.3% | 27.5% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mucklow(A.& J.)Group ($MKLW) | 210.6% | 277.1% | 121.8% | 130.8% | 274.1% |
| Hibernia REIT ($HBRN) | | | 428.5% | 277.6% | 231.8% |
| Shaftesbury ($SHB) | 498.6% | 503.7% | 168.3% | 273.6% | 166.7% |
| British Land Co ($BA45) | 218.5% | 215.1% | 165.3% | 36.3% | 87.6% |
| Town Centre Securities ($50BF) | 150.0% | 119.7% | 70.6% | 49.3% | 73.5% |
| |
|---|
| Median (7 companies) | 210.6% | 246.1% | 165.3% | 90.0% | 87.6% |
|---|
| Segro ($SGRO) | 188.2% | 242.1% | 141.2% | 322.3% | 269.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hibernia REIT ($HBRN) | | 1,795.1% | 634.9% | 304.9% | 191.3% |
| Shaftesbury ($SHB) | 117.5% | 51.6% | 83.7% | 61.2% | 148.3% |
| Primary Health Properties ($PHP) | 91.6% | 46.7% | 144.4% | 104.0% | 128.0% |
| British Land Co ($BA45) | 186.5% | 59.2% | 84.6% | 53.0% | 55.6% |
| Great Portland Estates ($GPOR) | 0.0% | 0.0% | 284.0% | 153.7% | 33.3% |
| |
|---|
| Median (9 companies) | 73.5% | 55.4% | 83.7% | 61.2% | 33.3% |
|---|
| Segro ($SGRO) | 85.5% | 189.5% | 151.6% | 136.8% | 172.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mucklow(A.& J.)Group ($MKLW) | 15.9% | 18.5% | 8.2% | 8.7% | 16.9% |
| Green REIT ($GRN) | | 14.6% | 12.3% | 9.8% | 10.5% |
| Hibernia REIT ($HBRN) | | 2.1% | 16.3% | 11.6% | 9.0% |
| Primary Health Properties ($PHP) | 8.5% | 9.4% | 7.2% | 10.2% | 7.4% |
| Town Centre Securities ($50BF) | 11.2% | 8.3% | 5.0% | 3.4% | 5.7% |
| |
|---|
| Median (9 companies) | 11.2% | 10.4% | 7.5% | 8.7% | 5.7% |
|---|
| Segro ($SGRO) | 12.6% | 12.0% | 7.1% | 15.9% | 12.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Town Centre Securities ($50BF) | 4.6x | 6.2x | 9.8x | 13.6x | 8.4x |
| British Land Co ($BA45) | 3.6x | 3.2x | 3.7x | 14.8x | 5.4x |
| Shaftesbury ($SHB) | 1.2x | 1.3x | 4.7x | 3.0x | 4.1x |
| Hibernia REIT ($HBRN) | | | 0.4x | 1.2x | 1.7x |
| Mucklow(A.& J.)Group ($MKLW) | 1.5x | 1.2x | 2.4x | 2.4x | 1.0x |
| |
|---|
| Median (6 companies) | 3.6x | 2.2x | 3.7x | 3.0x | 2.9x |
|---|
| Segro ($SGRO) | 3.1x | 3.0x | 4.0x | 1.8x | 2.2x |
