Eye on Fast Retailing Co Ltd with its long history of healthy growth
16/10/2014 • About Fast Retailing Co Ltd (
$6288) • By InTwits
Fast Retailing Co Ltd is a fast-growing stock in Retail industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Fast Retailing Co Ltd showed fast growth in the last financial year. Fast Retailing Co Ltd's revenue surged on 21.0% in FY2014. EBITDA also increased: -0.268% for the same period.
In the longer period Fast Retailing Co Ltd showed fast revenue growth of 19.0% from FY2011 to FY2014 annualy. EBITDA surged on 3.54% from FY2011 to FY2014 annualy.
Fast Retailing Co Ltd ($6288) financials for the last 5 years
| mln. JPY | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 814,811 | 820,349 | 928,669 | 1,142,971 | 1,382,935 |
|---|
| Revenue growth, % | | 0.7% | 13.2% | 23.1% | 21.0% |
|---|
| Gross margin, % | 51.7% | 51.9% | 51.2% | 49.4% | 50.6% |
|---|
| SG&A, % | 33.0% | 35.1% | 35.0% | 35.2% | 37.5% |
|---|
| EBITDA | 152,141 | 141,716 | 150,687 | 157,708 | 157,286 |
|---|
| EBITDA growth, % | | -6.9% | 6.3% | 4.7% | -0.3% |
|---|
| EBITDA margin, % | 18.7% | 17.3% | 16.2% | 13.8% | 11.4% |
|---|
| Net Income | 61,681 | 54,354 | 71,654 | 104,595 | 74,546 |
|---|
| Net Income margin, % | 7.57% | 6.63% | 7.72% | 9.15% | 5.39% |
|---|
| |
| CAPEX | 17,150 | 18,902 | 23,980 | 27,668 | 41,414 |
|---|
| CAPEX/Revenue, % | 2.10% | 2.30% | 2.58% | 2.42% | 2.99% |
|---|
| Debt | 28,832 | 28,261 | 23,185 | 33,494 | 31,498 |
|---|
| Cash | 62,466 | 64,386 | 132,238 | 296,708 | 314,049 |
|---|
| Net Debt/EBITDA | -0.2x | -0.3x | -0.7x | -1.7x | -1.8x |
|---|
| |
| ROIC, % | 39.8% | 33.3% | 31.6% | 23.7% | 17.9% |
|---|
| ROE, % | 22.6% | 18.1% | 20.4% | 21.8% | 12.5% |
|---|
Profitability and return on investment
EBITDA margin declined slightly from 13.8% in FY2013 to 11.4% in FY2014. In the longer period EBITDA margin dropped on 5.90 pp from 17.3% in FY2011 to 11.4% in FY2014.
We call Fast Retailing Co Ltd an attractive growth stock as together with the growth it delivers high ROIC at 17.9%. Three years ago it was considerably higher at 33.3%. Average ROIC for the last three years was 24.4%.
The company showed big decline in Net Income margin of 3.80 pp from 9.20% to 5.40% in FY2014. In the last 3 years Fast Retailing Co Ltd's Net Income margin dropped on 1.20 pp from 6.60% in FY2011 to 5.40% in FY2014.
Fast Retailing Co Ltd operates at ROE of 12.5%. It's average level of ROE for the last three years was 18.3%.
Capital expenditures (CAPEX)
In FY2014 the company had CAPEX/Revenue of 2.99%. Fast Retailing Co Ltd's CAPEX/Revenue surged on 0.691 pp from 2.30% in FY2011 to 2.99% in FY2014. For the last three years the average CAPEX/Revenue was 2.67%.
Leverage (Debt)
Fast Retailing Co Ltd has negative net debt at -1.8x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period Fast Retailing Co Ltd's leverage surged on 1.54x from -0.25x in FY2011 to -1.80x in FY2014.
Management team
Fast Retailing Co Ltd is run by Tadashi Yanai as a CEO.
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, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Luk Fook Holdings International Ltd ($590) | | 50.2% | 47.2% | 12.6% | 43.3% |
| Tsui Wah Holdings Ltd ($1314) | | 35.9% | 27.5% | 42.2% | 35.9% |
| Chow Tai Fook Jewellery Group Ltd ($1929) | | 52.8% | 61.4% | 1.5% | 34.8% |
| Man Wah Holdings Ltd ($1999) | | 29.9% | 13.9% | 12.5% | 22.8% |
| Modern Beauty Salon Holdings Ltd ($919) | | 66.7% | 5.3% | -6.4% | 22.7% |
| |
|---|
| Median (35 companies) | | 20.3% | 14.8% | 3.5% | 3.1% |
|---|
| Fast Retailing Co Ltd ($6288) | | 0.7% | 13.2% | 23.1% | 21.0% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.0% | 77.5% | 91.1% | 99.4% | 99.5% |
| Modern Beauty Salon Holdings Ltd ($919) | 96.4% | 97.3% | 97.4% | 95.9% | 96.8% |
| Vongroup Ltd ($318) | | | | | 95.1% |
| Moiselle International Holdings Ltd ($130) | 80.5% | 81.4% | 81.2% | 83.8% | 80.6% |
| Tsui Wah Holdings Ltd ($1314) | 69.6% | 69.4% | 69.0% | 69.4% | 69.3% |
| |
|---|
| Median (34 companies) | 51.6% | 51.3% | 47.9% | 47.9% | 50.1% |
|---|
| Fast Retailing Co Ltd ($6288) | 51.7% | 51.9% | 51.2% | 49.4% | 50.6% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Coach Inc ($6388) | 35.4% | 34.4% | 34.5% | 33.2% | 27.2% |
| Combest Holdings Ltd ($8190) | 0.4% | 24.5% | -2.7% | 29.7% | 26.5% |
| New World Department Store China Ltd ($825) | 51.7% | 49.3% | 31.5% | 29.2% | 24.5% |
| Man Wah Holdings Ltd ($1999) | 24.5% | 17.8% | 9.6% | 15.6% | 22.2% |
| Modern Beauty Salon Holdings Ltd ($919) | -4.9% | 23.1% | 22.7% | 3.0% | 18.7% |
| |
|---|
| Median (35 companies) | 11.6% | 13.1% | 9.6% | 7.2% | 8.8% |
|---|
| Fast Retailing Co Ltd ($6288) | 18.7% | 17.3% | 16.2% | 13.8% | 11.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Tsui Wah Holdings Ltd ($1314) | 3.4% | 5.2% | 8.3% | 9.3% | 30.5% |
| Culture Landmark Investment Ltd ($674) | 13.2% | 4.6% | 11.6% | 19.4% | 15.7% |
| Sincere Co Ltd/The ($244) | 0.7% | 3.9% | 2.9% | 3.7% | 12.0% |
| New World Department Store China Ltd ($825) | 26.1% | 27.4% | 12.1% | 39.4% | 11.2% |
| Modern Beauty Salon Holdings Ltd ($919) | 31.6% | 3.1% | 5.6% | 12.5% | 6.9% |
| |
|---|
| Median (35 companies) | 2.6% | 3.7% | 4.0% | 3.0% | 2.7% |
|---|
| Fast Retailing Co Ltd ($6288) | 2.1% | 2.3% | 2.6% | 2.4% | 3.0% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | -24.3% | 48.1% | 50.7% | -4.6% | 81.3% |
| Sa Sa International Holdings Ltd ($178) | 39.2% | 45.7% | 53.5% | 52.7% | 49.0% |
| Coach Inc ($6388) | 73.9% | 82.0% | 82.3% | 68.7% | 45.0% |
| Luk Fook Holdings International Ltd ($590) | 36.3% | 36.6% | 34.1% | 24.3% | 30.6% |
| Fairwood Holdings Ltd ($52) | 27.4% | 27.4% | 28.0% | 29.1% | 28.6% |
| |
|---|
| Median (35 companies) | 12.8% | 17.2% | 11.8% | 6.2% | 8.2% |
|---|
| Fast Retailing Co Ltd ($6288) | 39.8% | 33.3% | 31.6% | 23.7% | 17.9% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.7x | -0.8x | 0.6x | 4.0x | 9.3x |
| Tse Sui Luen Jewellery International Ltd ($417) | -0.1x | 0.4x | 1.2x | 2.2x | 3.7x |
| Bosideng International Holdings Ltd ($3998) | -2.5x | -0.6x | -0.1x | 0.5x | 1.1x |
| Stelux Holdings International Ltd ($84) | 2.0x | 0.8x | 0.7x | 1.0x | 1.0x |
| Oriental Watch Holdings ($398) | 0.4x | -1.0x | 1.2x | 1.8x | 0.9x |
| |
|---|
| Median (25 companies) | -0.7x | -0.9x | -0.6x | -0.9x | -1.0x |
|---|
| Fast Retailing Co Ltd ($6288) | -0.2x | -0.3x | -0.7x | -1.7x | -1.8x |
