financial analysis of Vanke
Vanke financial analysis
1. Introduction of Vanke
Vanke is the largest residential real estate developer in the People’s Republic of China. It is engaged in developing, managing and selling properties with the provision of investment, trading, consultancy services and e-business. Its largest shareholder is China Resources. It is headquartered in Shenzhen, Guangdong province.
Vanke was listed on the Shenzhen Stock Exchange in 1991, the second listed company in the Shenzhen Stock Exchange after Shenzhen Development Bank. It had the largest market capitalisation in 2006 on the Shenzhen Stock Exchange. As of 28 May 2013 its market cap is HK$165 billion
2.Ratio analysis
1) Profitability ratios
2011
2012
Industry average
Gross profit margin（%）
39.78
36.56
Operating margin（%）
21.96
20.38
Net profit margin（%）
16.16
15.19
20.40
EBITDA margin（%）
27.90
25.40
A ratio used to measure a company's pricing strategy and operating efficiency. The operating margins of Vanke declined year by year, which indicates that the market competitiveness becomes weaker, the development potential is smaller and profitability is also weaker.
The net profit margin formula looks at how much of a company's revenues are kept as net income. Vanke's net profit margin declines from 16.16% in 2011 to 15.19% in 2012, it reflects the weaker ability to translate sales in to profits at different stages of measurement.
EBITDA margin is a measurement of a company's operating profitability. The higher the EBITDA margin, the less operating expenses eat into a company's bottom line, leading to a more profitable operation. And the table shows that Vanke's EBITDA margin reduced year by year, it means the profitable operation ability declines and it may caused by the decision-making error to the company's pricing strategy and the poorer ability to control operating costs.
As a conclusion，from 2011 to 2012, the company's business profitability
1. Introduction of Vanke
Vanke is the largest residential real estate developer in the People’s Republic of China. It is engaged in developing, managing and selling properties with the provision of investment, trading, consultancy services and e-business. Its largest shareholder is China Resources. It is headquartered in Shenzhen, Guangdong province.
Vanke was listed on the Shenzhen Stock Exchange in 1991, the second listed company in the Shenzhen Stock Exchange after Shenzhen Development Bank. It had the largest market capitalisation in 2006 on the Shenzhen Stock Exchange. As of 28 May 2013 its market cap is HK$165 billion
2.Ratio analysis
1) Profitability ratios
2011
2012
Industry average
Gross profit margin（%）
39.78
36.56
Operating margin（%）
21.96
20.38
Net profit margin（%）
16.16
15.19
20.40
EBITDA margin（%）
27.90
25.40
A ratio used to measure a company's pricing strategy and operating efficiency. The operating margins of Vanke declined year by year, which indicates that the market competitiveness becomes weaker, the development potential is smaller and profitability is also weaker.
The net profit margin formula looks at how much of a company's revenues are kept as net income. Vanke's net profit margin declines from 16.16% in 2011 to 15.19% in 2012, it reflects the weaker ability to translate sales in to profits at different stages of measurement.
EBITDA margin is a measurement of a company's operating profitability. The higher the EBITDA margin, the less operating expenses eat into a company's bottom line, leading to a more profitable operation. And the table shows that Vanke's EBITDA margin reduced year by year, it means the profitable operation ability declines and it may caused by the decision-making error to the company's pricing strategy and the poorer ability to control operating costs.
As a conclusion，from 2011 to 2012, the company's business profitability