Segro EBITDA Margin dropped on 96.5 pp from 270% to 173% in 2019 while Revenue surged on 17.2%
14 Feb 2020 • About Segro (
$SGRO) • By InTwits
Segro reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Segro has high CAPEX intensity: 5 year average CAPEX/Revenue was 158.0%. At the same time it's a lot of higher than industry average of 68.9%.
- CAPEX is quite volatile: £19m in FY2019, £18m in FY2018, £10m in FY2017, £21m in FY2016, £5m in FY2015
- The company has business model with low profitability: ROIC is 8.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 17.2%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 96.5 pp from 270% to 173% in FY2019.
SG&A as a % of Revenue showed almost no change in FY2019.
Net Income margin dropped on 89.6 pp from 288% to 198% in FY2019.
Investments (CAPEX, working capital and M&A)
Segro's CAPEX/Revenue was 139% in FY2019. CAPEX/Revenue dropped on 12.2 pp from 152% in FY2016 to 139% in FY2019. Average CAPEX/Revenue for the last three years was 150%. The company invested a big chunk of EBITDA (80.4%) to CAPEX to secure its growth.
Return on investment
The company operates at good ROE (12.0%) while ROIC is low (8.1%). ROIC decreased on 4.0 pp from 12.0% to 8.1% in FY2019. ROE decreased on 5.4 pp from 17.5% to 12.0% in FY2019.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from 2.2x to 2.4x in FY2019. Debt dropped on 13.4% while cash surged on 99.2%.
Segro has short term refinancing risk: cash is only 6.8% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 16.1x and P/E 11.9x.
Management team
Segro's CEO is David John Rivers Sleath. David John Rivers Sleath is a founder and has 8 years tenure with the company. Segro's CFO Soumen Das has spent 3 years with the company.
Financial and operational results
FY ended 30 Nov -0001
Segro ($SGRO) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 248.5 | 283.5 | 334.7 | 369.0 | 432.5 | 17.2% |
| SG&A | 35.7 | 39.3 | 48.1 | 52.1 | 60.0 | 15.2% |
| EBITDA | 601.5 | 400.3 | 1,078.6 | 995.6 | 749.7 | -24.7% |
| Net Income | 682.5 | 417.7 | 952.7 | 1,062.6 | 857.9 | -19.3% |
Balance Sheet
|
|---|
| Cash | 16.4 | 32.0 | 109.3 | 66.5 | 132.5 | 99.2% |
| Short Term Debt | 1,819.3 | 1,626.5 | 2,059.9 | 2,240.3 | 1,940.9 | -13.4% |
| Long Term Debt | 3.6 | 3.9 | 3.6 | 3.2 | 2.6 | -18.8% |
Cash flow
|
|---|
| Capex | 470.8 | 429.7 | 457.9 | 637.1 | 602.9 | -5.4% |
Ratios
|
|---|
| Revenue growth | -14.3% | 14.1% | 18.1% | 10.2% | 17.2% | |
| EBITDA growth | 10.2% | -33.4% | 169.4% | -7.7% | -24.7% | |
|
|---|
| EBITDA Margin | 242.1% | 141.2% | 322.3% | 269.8% | 173.3% | -96.5% |
| SG&A, % of revenue | 14.4% | 13.9% | 14.4% | 14.1% | 13.9% | -0.2% |
| Net Income Margin | 274.6% | 147.3% | 284.6% | 288.0% | 198.4% | -89.6% |
| CAPEX, % of revenue | 189.5% | 151.6% | 136.8% | 172.7% | 139.4% | -33.3% |
|
|---|
| ROIC | 12.0% | 7.1% | 15.9% | 12.0% | 8.1% | -4.0% |
| ROE | 21.4% | 10.9% | 19.5% | 17.5% | 12.0% | -5.4% |
| Net Debt/EBITDA | 3.0x | 4.0x | 1.8x | 2.2x | 2.4x | 0.2x |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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) | | 6.9% | 7.5% | 9.8% | 49.4% |
| Shaftesbury ($SHB) | 8.2% | 7.6% | 5.0% | 9.5% | |
| Green REIT ($GRN) | 276.8% | 45.7% | 8.3% | 9.0% | |
| |
|---|
| Median (9 companies) | 5.7% | 10.2% | 5.0% | 9.0% | -14.0% |
|---|
| Segro ($SGRO) | | 14.1% | 18.1% | 10.2% | 17.2% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Local Shopping REIT ($LSR) | 74.4% | 73.4% | 67.3% | 27.5% | 9.0% |
| |
|---|
| Median (1 company) | 74.4% | 73.4% | 67.3% | 27.5% | 9.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Mucklow(A.& J.)Group ($MKLW) | 277.1% | 121.8% | 130.8% | 274.1% | |
| Hibernia REIT ($HBRN) | | 428.5% | 277.6% | 231.8% | |
| Shaftesbury ($SHB) | 503.7% | 168.3% | 273.6% | 166.7% | |
| British Land Co ($BA45) | 215.1% | 165.3% | 36.3% | 87.6% | |
| Town Centre Securities ($50BF) | 119.7% | 70.6% | 49.3% | 73.5% | |
| |
|---|
| Median (7 companies) | 246.1% | 165.3% | 90.0% | 87.6% | |
|---|
| Segro ($SGRO) | 242.1% | 141.2% | 322.3% | 269.8% | 173.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Hibernia REIT ($HBRN) | 1,795.1% | 634.9% | 304.9% | 191.3% | |
| Shaftesbury ($SHB) | 51.6% | 83.7% | 61.2% | 148.3% | |
| Primary Health Properties ($PHP) | 46.7% | 144.4% | 104.0% | 128.0% | |
| British Land Co ($BA45) | 59.2% | 84.6% | 53.0% | 55.6% | |
| Great Portland Estates ($GPOR) | 0.0% | 284.0% | 153.7% | 33.3% | |
| |
|---|
| Median (9 companies) | 55.4% | 83.7% | 61.2% | 33.3% | 0.5% |
|---|
| Segro ($SGRO) | 189.5% | 151.6% | 136.8% | 172.7% | 139.4% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Mucklow(A.& J.)Group ($MKLW) | 18.5% | 8.2% | 8.7% | 16.9% | |
| Green REIT ($GRN) | 14.6% | 12.3% | 9.8% | 10.5% | |
| Hibernia REIT ($HBRN) | 2.1% | 16.3% | 11.6% | 9.0% | |
| Primary Health Properties ($PHP) | 9.4% | 7.2% | 10.2% | 7.4% | |
| Town Centre Securities ($50BF) | 8.3% | 5.0% | 3.4% | 5.7% | |
| |
|---|
| Median (9 companies) | 10.4% | 7.5% | 8.7% | 5.7% | -10.9% |
|---|
| Segro ($SGRO) | 12.0% | 7.1% | 15.9% | 12.0% | 8.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Town Centre Securities ($50BF) | 6.2x | 9.8x | 13.6x | 8.4x | |
| British Land Co ($BA45) | 3.2x | 3.7x | 14.8x | 5.4x | |
| Shaftesbury ($SHB) | 1.3x | 4.7x | 3.0x | 4.1x | |
| Hibernia REIT ($HBRN) | | 0.4x | 1.2x | 1.7x | |
| Mucklow(A.& J.)Group ($MKLW) | 1.2x | 2.4x | 2.4x | 1.0x | |
| |
|---|
| Median (6 companies) | 2.2x | 3.7x | 3.0x | 2.9x | |
|---|
| Segro ($SGRO) | 3.0x | 4.0x | 1.8x | 2.2x | 2.4x |
