Sincere Co Ltd/The reports 16.6% revenue decline in FY2015 and 11.6 pp EBITDA Margin decline from -23.1% to -34.7%
28/05/2015 • About Sincere Co Ltd/The (
$244) • By InTwits
Sincere Co Ltd/The reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sincere Co Ltd/The doesn't have a profitable business model yet: FY2015 ROIC is -17.6%
- The company operates at negative EBITDA Margin: -34.7%
- Sincere Co Ltd/The motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2011-FY2015 was 0.0%. On average EBITDA Margin was -6.2% for the sames years0
- Sincere Co Ltd/The has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's in pair with industry average of 6.5%.
- CAPEX is quite volatile: 5.1 in FY2015, 53.3 in FY2014, 18.7 in FY2013, 15.3 in FY2012, 18.0 in FY2011
- The company has unprofitable business model: ROIC is at -17.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sincere Co Ltd/The ($244) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 458.4 | 526.5 | 498.1 | 444.1 | 370.3 | -16.6% |
| Gross Profit | 295.2 | 331.0 | 326.6 | 278.7 | 224.1 | -19.6% |
| SG&A | | 106.0 | 124.8 | 134.3 | 126.0 | -6.2% |
| EBITDA | 38.5 | 17.9 | 32.5 | -102.6 | -128.5 | 25.2% |
| Net Income | 10.5 | -8.5 | 64.3 | -85.1 | -122.6 | 44.1% |
Balance Sheet
|
|---|
| Cash | 72.4 | 52.6 | 227.6 | 233.9 | 82.0 | -64.9% |
| Short Term Debt | 23.7 | 43.0 | 52.0 | 239.8 | 370.2 | 54.4% |
| Long Term Debt | 16.9 | 19.3 | 16.2 | 22.0 | 12.0 | -45.4% |
Cash flow
|
|---|
| Capex | 18.0 | 15.3 | 18.7 | 53.3 | 5.1 | -90.4% |
Ratios
|
|---|
| Revenue growth | 20.3% | 14.8% | -5.4% | -10.8% | -16.6% | |
| EBITDA growth | -35.7% | -53.5% | 81.6% | -415.6% | 25.2% | |
| Gross Margin | 64.4% | 62.9% | 65.6% | 62.8% | 60.5% | -2.2% |
| EBITDA Margin | 8.4% | 3.4% | 6.5% | -23.1% | -34.7% | -11.6% |
| Net Income Margin | 2.3% | -1.6% | 12.9% | -19.2% | -33.1% | -13.9% |
| SG&A, % of revenue | | 20.1% | 25.1% | 30.2% | 34.0% | 3.8% |
| CAPEX, % of revenue | 3.9% | 2.9% | 3.7% | 12.0% | 1.4% | -10.6% |
| ROIC | 4.2% | 0.9% | 2.7% | -14.9% | -17.6% | -2.7% |
| ROE | 1.6% | -1.3% | 9.9% | -14.6% | -25.5% | -10.9% |
| Net Debt/EBITDA | -0.8x | 0.5x | -4.9x | | | 0.0x |
Revenue and profitability
Sincere Co Ltd/The's Revenue dropped on 16.6% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 11.6 pp from -23.1% to -34.7% in FY2015.
Gross Margin decreased on 2.2 pp from 62.8% to 60.5% in FY2015. SG&A as a % of Revenue increased on 3.8 pp from 30.2% to 34.0% in FY2015.
Net Income marign dropped on 13.9 pp from -19.2% to -33.1% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Sincere Co Ltd/The had CAPEX/Revenue of 1.4%. CAPEX/Revenue decreased slightly on 1.5 pp from 2.9% in FY2012 to 1.4% in FY2015. It's average level of CAPEX/Revenue for the last three years was 5.7%.
Return on investment
The company operates at negative ROIC (-17.60%) and ROE (-25.49%). ROIC decreased on 2.7 pp from -14.9% to -17.6% in FY2015. ROE dropped on 10.9 pp from -14.6% to -25.5% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -18.5x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2015. Debt surged on 46.0% in FY2015 while cash dropped on 64.9% in FY2015.
Appendix 1: Peers in Retail
Below you can find Sincere Co Ltd/The benchmarking vs. other companies in Retail industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Household Holdings Ltd ($692) | -87.0% | -32.8% | 5,357.9% | 76.2% | |
| Ming Fung Jewellery Group Ltd ($860) | 21.9% | 3.3% | -14.9% | 54.3% | |
| Merry Garden Holdings Ltd ($1237) | 53.9% | 37.1% | 12.8% | 47.6% | |
| Luk Fook Holdings International Ltd ($590) | 50.2% | 47.2% | 12.6% | 43.3% | |
| NewOcean Energy Holdings Ltd ($342) | 19.3% | 23.1% | 15.9% | 36.0% | |
| |
|---|
| Median (108 companies) | 20.8% | 9.9% | 5.9% | 2.9% | 4.9% |
|---|
| Sincere Co Ltd/The ($244) | | 14.8% | -5.4% | -10.8% | -16.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.5% | 91.1% | 99.4% | 99.5% | |
| Modern Beauty Salon Holdings Ltd ($919) | 97.3% | 97.4% | 95.9% | 96.8% | |
| Vongroup Ltd ($318) | | | | 95.1% | |
| Nanjing Sinolife United Co Ltd ($3332) | 80.6% | 86.5% | 89.3% | 90.9% | |
| Embry Holdings Ltd ($1388) | 82.3% | 81.2% | 80.4% | 82.3% | |
| |
|---|
| Median (97 companies) | 40.0% | 37.7% | 38.0% | 35.6% | 55.3% |
|---|
| Sincere Co Ltd/The ($244) | 64.4% | 62.9% | 65.6% | 62.8% | 60.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Maoye International Holdings Ltd ($848) | 45.5% | 47.4% | 46.3% | 73.2% | |
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 6.0% | 5.6% | 58.3% | |
| Nanjing Sinolife United Co Ltd ($3332) | 47.8% | 51.6% | 56.9% | 54.4% | |
| Lifestyle International Holdings Ltd ($1212) | 49.6% | 47.5% | 47.0% | 44.7% | |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | |
| |
|---|
| Median (108 companies) | 13.4% | 10.3% | 7.3% | 8.8% | 14.6% |
|---|
| Sincere Co Ltd/The ($244) | 8.4% | 3.4% | 6.5% | -23.1% | -34.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Intime Retail Group Co Ltd ($1833) | 58.4% | 28.3% | 55.4% | 37.0% | |
| Future Bright Holdings Ltd ($703) | 6.2% | 2.6% | 3.7% | 36.8% | |
| Sage International Group Ltd ($8082) | 20.4% | 236.6% | 28.2% | 35.4% | |
| Maoye International Holdings Ltd ($848) | 30.9% | 32.8% | 24.1% | 31.5% | |
| Tsui Wah Holdings Ltd ($1314) | 5.2% | 8.3% | 9.3% | 30.5% | |
| |
|---|
| Median (108 companies) | 3.8% | 4.1% | 3.6% | 3.4% | 3.4% |
|---|
| Sincere Co Ltd/The ($244) | 3.9% | 2.9% | 3.7% | 12.0% | 1.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 48.1% | 50.7% | -4.6% | 81.3% | |
| Starbucks Corp ($4337) | 36.4% | 36.4% | -6.0% | 52.8% | |
| Sa Sa International Holdings Ltd ($178) | 45.7% | 53.5% | 52.7% | 49.0% | |
| Coach Inc ($6388) | 82.0% | 82.3% | 68.7% | 45.0% | |
| Nanjing Sinolife United Co Ltd ($3332) | 57.4% | 67.3% | 68.1% | 32.2% | |
| |
|---|
| Median (108 companies) | 17.2% | 11.9% | 8.2% | 8.3% | 15.9% |
|---|
| Sincere Co Ltd/The ($244) | 4.2% | 0.9% | 2.7% | -14.9% | -17.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.8x | 0.6x | 4.0x | 9.3x | |
| China Yongda Automobiles Services Holdings Ltd ($3669) | 3.3x | 3.4x | 4.7x | 5.5x | |
| Zhongsheng Group Holdings Ltd ($881) | 2.2x | 4.6x | 4.5x | 5.3x | |
| NewOcean Energy Holdings Ltd ($342) | 35.2x | 6.2x | 6.1x | 5.3x | |
| Century Ginwa Retail Holdings Ltd ($162) | 6.5x | 2.0x | 2.5x | 4.8x | |
| |
|---|
| Median (85 companies) | -0.8x | -0.6x | -0.9x | -0.3x | -1.1x |
|---|
