Fast Retailing Co Ltd reports 32.2% EBITDA growth in 2018 and 1.8 pp EBITDA Margin growth from 11.5% to 13.2%
11/10/2018 • About Fast Retailing Co Ltd (
$6288) • By InTwits
Fast Retailing Co Ltd reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fast Retailing Co Ltd is a growth stock: FY2018 revenue growth was 14.4%, 5 year revenue CAGR was 13.3% at FY2018 ROIC 19.2%
- Fast Retailing Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%.
- The company has highly profitable business model: ROIC is at 19.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fast Retailing Co Ltd ($6288) key annual financial indicators
| mln. JPY | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,382,935 | 1,681,781 | 1,786,473 | 1,861,917 | 2,130,060 | 14.4% |
| Gross Profit | 699,774 | 848,538 | 864,998 | 909,249 | 1,049,937 | 15.5% |
| SG&A | 518,387 | 634,105 | 666,159 | 685,527 | 752,421 | 9.8% |
| EBITDA | 157,286 | 196,414 | 164,089 | 213,340 | 282,107 | 32.2% |
| Net Income | 74,546 | 110,027 | 48,052 | 119,280 | 154,811 | 29.8% |
Balance Sheet
|
|---|
| Cash | 314,049 | 355,212 | 385,431 | 683,802 | 999,697 | 46.2% |
| Short Term Debt | 3,894 | 4,188 | 4,821 | 5,596 | 7,952 | 42.1% |
| Long Term Debt | 27,604 | 25,513 | 274,090 | 273,467 | 502,671 | 83.8% |
Cash flow
|
|---|
| Capex | 41,414 | 44,663 | 34,158 | 33,600 | 31,962 | -4.9% |
Ratios
|
|---|
| Revenue growth | 21.0% | 21.6% | 6.2% | 4.2% | 14.4% | |
| EBITDA growth | -0.3% | 24.9% | -16.5% | 30.0% | 32.2% | |
| Gross Margin | 50.6% | 50.5% | 48.4% | 48.8% | 49.3% | 0.5% |
| EBITDA Margin | 11.4% | 11.7% | 9.2% | 11.5% | 13.2% | 1.8% |
| Net Income Margin | 5.4% | 6.5% | 2.7% | 6.4% | 7.3% | 0.9% |
| SG&A, % of revenue | 37.5% | 37.7% | 37.3% | 36.8% | 35.3% | -1.5% |
| CAPEX, % of revenue | 3.0% | 2.7% | 1.9% | 1.8% | 1.5% | -0.3% |
| ROIC | 17.9% | 19.8% | 14.8% | 18.3% | 19.2% | 0.9% |
| ROE | 12.5% | 16.1% | 7.3% | 18.3% | 19.4% | 1.2% |
| Net Debt/EBITDA | -1.8x | -1.7x | -0.6x | -1.9x | -1.7x | 0.2x |
Revenue and profitability
The company's Revenue surged on 14.4%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.8 pp from 11.5% to 13.2% in FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue decreased slightly on 1.5 pp from 36.8% to 35.3% in FY2018.
Net Income marign increased slightly on 0.86 pp from 6.4% to 7.3% in FY2018.
Capital expenditures (CAPEX) and working capital investments
In FY2018 the company had CAPEX/Revenue of 1.5%. Fast Retailing Co Ltd showed small CAPEX/Revenue decline of 1.2 pp from 2.7% in FY2015 to 1.5% in FY2018. It's average CAPEX/Revenue for the last three years was 1.7%.
Return on investment
The company operates at good ROIC (19.16%) and ROE (19.42%). ROIC increased slightly on 0.87 pp from 18.3% to 19.2% in FY2018. ROE increased slightly on 1.2 pp from 18.3% to 19.4% in FY2018.
Leverage (Debt)
Debt level is -1.7x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from -1.9x to -1.7x in FY2018. Debt surged on 83.0% while cash jumped on 46.2%.
Appendix 1: Peers in Retail
Below we provide Fast Retailing Co Ltd benchmarking against other companies in Retail 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | 6.6% | 5.0% | 4.2% | 1.9% | |
| |
|---|
| Median (1 company) | 3.1% | -1.0% | -4.1% | 1.9% | |
|---|
| Fast Retailing Co Ltd ($6288) | | 21.6% | 6.2% | 4.2% | 14.4% |
Top companies by Gross margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | 22.9% | 23.3% | 23.9% | 24.1% | |
| |
|---|
| Median (1 company) | 35.0% | 33.3% | 42.6% | 24.1% | |
|---|
| Fast Retailing Co Ltd ($6288) | 50.6% | 50.5% | 48.4% | 48.8% | 49.3% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | 7.1% | 6.5% | 6.8% | 7.2% | |
| |
|---|
| Median (1 company) | 8.9% | 7.1% | 6.7% | 7.2% | |
|---|
| Fast Retailing Co Ltd ($6288) | 11.4% | 11.7% | 9.2% | 11.5% | 13.2% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | 6.0% | 5.0% | 3.6% | 2.5% | |
| |
|---|
| Median (1 company) | 3.8% | 3.5% | 2.2% | 2.5% | |
|---|
| Fast Retailing Co Ltd ($6288) | 3.0% | 2.7% | 1.9% | 1.8% | 1.5% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | 18.9% | 15.0% | 16.1% | 17.7% | |
| |
|---|
| Median (1 company) | 8.5% | 5.8% | 6.3% | 17.7% | |
|---|
| Fast Retailing Co Ltd ($6288) | 17.9% | 19.8% | 14.8% | 18.3% | 19.2% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sun Art Retail Group Ltd ($6808) | -0.8x | -0.9x | -1.2x | -1.4x | |
| |
|---|
| Median (1 company) | -0.2x | -0.5x | -0.4x | -1.4x | |
|---|
| Fast Retailing Co Ltd ($6288) | -1.8x | -1.7x | -0.6x | -1.9x | -1.7x |
