Palm Hills Development Co. :PHDC-GB: Earnings Analysis: Q4, 2016 By the Numbers : February 17, 2017

Palm Hills Development Co. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Palm Hills Development Co. – Klovern AB Class A (KLOV.A-SE) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 152.23 million, Net Earnings of USD 17.67 million.
  • Gross margins narrowed from 30.10% to 29.32% compared to the same period last year, operating (EBITDA) margins now 11.79% from 5.12%.
  • Year-on-year change in operating cash flow of -136.17% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from 4.53% to 11.33%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 152.23 169.25 126.87 136.41 129.53
Revenue Growth (%YOY) 17.52 13.1 29.46 36.5 12.65
Earnings (mil) 17.67 23.96 6.58 11.82 25.93
Earnings Growth (%YOY) -31.85 2.33 -88.26 -58.15 106.86
Net Margin (%) 11.61 14.15 5.19 8.67 20.02
EPS 0.15 0.05 0.01 0.03 0.23
Return on Equity (%) 13.19 13.64 3.79 6.16 12.41
Return on Assets (%) 3.96 4.14 1.17 2.05 4.33

Access our Ratings and Scores for Palm Hills Development Co.

Market Share Versus Profits

Revenues History
Earnings History

PHDC-GB‘s change in revenue this period compared to the same period last year of 17.52% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that PHDC-GB is holding onto its market share. Also, for comparison purposes, revenues changed by -10.06% and earnings by -26.25% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline was driven by the drop in gross margins from 30.10% to 29.32%. This drop in earnings would have been worse were in not for operational cost control activities, which helped the operating margins (EBITDA margins) improve from 5.12% to 11.79%. For comparison purposes, gross margins were 36.17% and EBITDA margins were 23.23% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

PHDC-GB‘s change in operating cash flow of -136.17% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from 4.53% to 11.33%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 21.90% to 11.41%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Palm Hills Development Co.

Company Profile

Palm Hills Development Co. engages in investing in real estate in the new cities and new urban communities. Its activities include building, constructing, possessing, and managing residential compounds, resorts, villas, and tourist villages. It also engages in the sale or lease as well as all the services, facilities, and construction of integrated projects, and the management of the entertainment activities associated with the company’s activities. The company was founded by Mohamed Mustafa Kamal Mohamed Ashraf Abu Al-Dahab and Shehab Mazhar Ahmed Hafez Mazhar in 2005 and is headquartered in Cairo, Egypt.

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