Target Healthcare REIT revenue growth accelerated to 29.1% in FY2020 vs. 20.8% a year earliner
06 Oct 2020 • About Target Healthcare REIT (
$THRL) • By InTwits
Target Healthcare REIT reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Target Healthcare REIT is a fast growth stock: FY2020 revenue growth was 29.1%, 5 year revenue CAGR was 26.4% at FY2020 ROIC 6.4%
- Target Healthcare REIT has high CAPEX intensity: 5 year average CAPEX/Revenue was 247.9%. At the same time it's a lot of higher than industry average of 76.2%.
- CAPEX is quite volatile: £118m in FY2020, £100m in FY2019, £90m in FY2018, £38m in FY2017, £35m in FY2016
- The company has potentially unprofitable business model: ROIC is 6.4%
- It operates with high leverage: Net Debt/EBITDA is 3.1x while industry average is 2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Target Healthcare REIT's Revenue jumped on 29.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.2 pp from -4.0% to -2.9% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 104% and was declining since that time.
Net Income margin dropped on 15.7 pp from 87.2% to 71.4% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 97.3% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Target Healthcare REIT had CAPEX/Revenue of 265%. Target Healthcare REIT's CAPEX/Revenue jumped on 105 pp from 160% in FY2017 to 265% in FY2020. It's average level of CAPEX/Revenue for the last three years was 291%. The company has spent a lot to CAPEX (317% of EBITDA) to secure its growth.
Return on investment
The company operates at low ROIC (6.4%) and ROE (7.0%). ROIC decreased slightly on 0.64 pp from 7.0% to 6.4% in FY2020. ROE decreased slightly on 0.77 pp from 7.7% to 7.0% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 8.2% and was declining since that time. During FY2016-FY2020 ROE topped in FY2018 at 9.0% and was declining since that time.
Financial and operational results
FY ended 30 Jun 2020
Target Healthcare REIT ($THRL) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 16.874 | 23.558 | 28.366 | 34.277 | 44.267 | 29.1% |
| EBITDA | 12.655 | 20.149 | 29.608 | 32.988 | 37.040 | 12.3% |
| Net Income | 11.702 | 19.122 | 27.609 | 29.884 | 31.622 | 5.8% |
Balance Sheet
|
|---|
| Cash | 65.107 | 10.410 | 41.400 | 26.946 | 36.440 | 35.2% |
| Long Term Debt | 20.449 | 39.331 | 64.182 | 106.420 | 150.135 | 41.1% |
Cash flow
|
|---|
| Capex | 34.833 | 37.698 | 89.981 | 99.615 | 117.501 | 18.0% |
Ratios
|
|---|
| Revenue growth | 23.0% | 39.6% | 20.4% | 20.8% | 29.1% | |
| EBITDA growth | 20.5% | 59.2% | 46.9% | 11.4% | 12.3% | |
|
|---|
| EBITDA Margin | 75.0% | 85.5% | 104.4% | 96.2% | 83.7% | -12.6% |
| Net Income Margin | 69.3% | 81.2% | 97.3% | 87.2% | 71.4% | -15.7% |
| CAPEX, % of revenue | 206.4% | 160.0% | 317.2% | 290.6% | 265.4% | -25.2% |
|
|---|
| ROIC | 5.7% | 7.1% | 8.2% | 7.0% | 6.4% | -0.6% |
| ROE | 6.0% | 7.5% | 9.0% | 7.7% | 7.0% | -0.8% |
| Net Debt/EBITDA | -3.5x | 1.4x | 0.8x | 2.4x | 3.1x | 0.7x |
Peers in Equity Investment Instruments
Below we provide Target Healthcare REIT benchmarking against other companies in Equity Investment Instruments 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gcp Student Living ($DIGS) | - | 27.3% | 25.1% | 24.1% | 7.5% |
| Ground Rents Income Fund ($GRIO) | -64.4% | 7.9% | 4.3% | 5.3% | - |
| Ediston Ppty Inv Co ($EPIC) | 91.9% | 7.3% | 119.5% | -21.9% | - |
| |
|---|
| Median (3 companies) | 3.8% | 7.9% | 14.7% | 5.3% | 7.5% |
|---|
| Target Healthcare REIT ($THRL) | - | 39.6% | 20.4% | 20.8% | 29.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gcp Student Living ($DIGS) | 79.5% | 78.7% | 77.8% | 78.9% | 79.8% |
| |
|---|
| Median (1 company) | 72.4% | 76.4% | 77.8% | 78.9% | 79.8% |
|---|
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gcp Student Living ($DIGS) | 242.3% | 683.2% | 203.1% | 149.1% | 86.6% |
| Ediston Ppty Inv Co ($EPIC) | 389.8% | 225.9% | 569.8% | 16.4% | - |
| Ground Rents Income Fund ($GRIO) | 102.4% | 234.6% | 49.1% | 5.1% | - |
| |
|---|
| Median (3 companies) | 91.4% | 225.9% | 203.1% | 16.4% | 86.6% |
|---|
| Target Healthcare REIT ($THRL) | 206.4% | 160.0% | 317.2% | 290.6% | 265.4% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gcp Student Living ($DIGS) | 10.1% | 4.8% | 9.1% | 11.5% | 5.8% |
| Ediston Ppty Inv Co ($EPIC) | 5.1% | 7.3% | 8.3% | 5.0% | - |
| Ground Rents Income Fund ($GRIO) | - | - | -7.1% | -1.2% | - |
| |
|---|
| Median (3 companies) | 9.6% | 10.6% | 8.3% | 5.0% | 5.8% |
|---|
| Target Healthcare REIT ($THRL) | 5.7% | 7.1% | 8.2% | 7.0% | 6.4% |
