Chow Tai Fook Jewellery Group Ltd reports 25.0% Net Income decline and 17.0% Revenue decline
05/06/2015 • About Chow Tai Fook Jewellery Group Ltd (
$1929) • By InTwits
Chow Tai Fook Jewellery Group Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Chow Tai Fook Jewellery Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 2,003 in FY2015, 1,189 in FY2014, 917 in FY2013, 867 in FY2012, 769 in FY2011
- The company has highly profitable business model: ROIC is at 12.3%
- It operates with high leverage: Net Debt/EBITDA is 0.9x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Chow Tai Fook Jewellery Group Ltd ($1929) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 35,043 | 56,571 | 57,434 | 77,407 | 64,277 | -17.0% |
| Gross Profit | 9,928 | 16,448 | 16,283 | 21,152 | 19,072 | -9.8% |
| SG&A | 5,313 | 8,035 | 9,181 | 12,207 | 12,344 | 1.1% |
| EBITDA | 4,869 | 8,818 | 7,788 | 9,782 | 7,680 | -21.5% |
| Net Income | 3,538 | 6,341 | 5,505 | 7,272 | 5,456 | -25.0% |
Balance Sheet
|
|---|
| Cash | 5,605 | 9,988 | 8,305 | 9,467 | 8,477 | -10.5% |
| Short Term Debt | 6,813 | 11,381 | 5,836 | 17,086 | 15,089 | -11.7% |
| Long Term Debt | 0 | 3,426 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 769 | 867 | 917 | 1,189 | 2,003 | 68.6% |
Ratios
|
|---|
| Revenue growth | 52.8% | 61.4% | 1.5% | 34.8% | -17.0% | |
| EBITDA growth | 66.8% | 81.1% | -11.7% | 25.6% | -21.5% | |
| Gross Margin | 28.3% | 29.1% | 28.4% | 27.3% | 29.7% | 2.3% |
| EBITDA Margin | 13.9% | 15.6% | 13.6% | 12.6% | 11.9% | -0.7% |
| Net Income Margin | 10.1% | 11.2% | 9.6% | 9.4% | 8.5% | -0.9% |
| SG&A, % of revenue | 15.2% | 14.2% | 16.0% | 15.8% | 19.2% | 3.4% |
| CAPEX, % of revenue | 2.2% | 1.5% | 1.6% | 1.5% | 3.1% | 1.6% |
| ROIC | 31.1% | 26.4% | 17.1% | 18.8% | 12.3% | -6.5% |
| ROE | 36.4% | 31.5% | 17.8% | 20.7% | 14.2% | -6.5% |
| Net Debt/EBITDA | 0.2x | 0.5x | -0.3x | 0.8x | 0.9x | 0.1x |
Revenue and profitability
Chow Tai Fook Jewellery Group Ltd's Revenue dropped on 17.0% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 51.7% to 53.3% in FY2015.
Gross Margin increased on 2.3 pp from 27.3% to 29.7% in FY2015. SG&A as a % of Revenue increased on 3.4 pp from 15.8% to 19.2% in FY2015.
Net Income marign decreased slightly on 0.91 pp from 9.4% to 8.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Chow Tai Fook Jewellery Group Ltd's CAPEX/Revenue was 3.1% in FY2015. Chow Tai Fook Jewellery Group Ltd showed small growth in CAPEX/Revenue of 1.6 pp from 1.5% in FY2012 to 3.1% in FY2015. For the last three years the average CAPEX/Revenue was 2.1%.
Return on investment
The company operates at good ROIC (12.30%) and ROE (14.24%). ROIC decreased on 6.5 pp from 18.8% to 12.3% in FY2015. ROE decreased on 6.5 pp from 20.7% to 14.2% in FY2015.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 0.8x to 0.9x in FY2015. Debt dropped on 11.7% in FY2015 while cash dropped on 10.5% in FY2015.
Appendix 1: Peers in Retail
Below we provide Chow Tai Fook Jewellery Group 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 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) | 20.7% | 9.9% | 5.9% | 2.7% | 1.3% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | | 61.4% | 1.5% | 34.8% | -17.0% |
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) | 40.8% | 38.0% | 39.9% | 39.5% | 54.5% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 28.3% | 29.1% | 28.4% | 27.3% | 29.7% |
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) | 13.2% | 9.7% | 7.1% | 8.3% | 8.1% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 13.9% | 15.6% | 13.6% | 12.6% | 11.9% |
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) | 3.9% | 4.1% | 3.6% | 3.5% | 2.5% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 2.2% | 1.5% | 1.6% | 1.5% | 3.1% |
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) | 16.6% | 11.8% | 8.1% | 8.2% | 8.7% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 31.1% | 26.4% | 17.1% | 18.8% | 12.3% |
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 (84 companies) | -0.8x | -0.6x | -0.9x | -0.3x | -0.7x |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 0.2x | 0.5x | -0.3x | 0.8x | 0.9x |
