Oriental Watch Holdings EBITDA dropped on 57.1% in 2015 and EBITDA Margin decreased slightly on 1.1 pp from 2.1% to 1.0%
17/06/2015 • About Oriental Watch Holdings (
$398) • By InTwits
Oriental Watch Holdings reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Oriental Watch Holdings doesn't have a profitable business model yet: FY2015 ROIC is -0.2%
- EBITDA Margin is declining: 1.0% in FY2015 vs. 2.1% in FY2014 vs. 7.7% in FY2011
- EBITDA Margin is quite volatile: 1.0% in FY2015, 2.1% in FY2014, 4.7% in FY2013, 6.6% in FY2012, 7.7% in FY2011
- Oriental Watch Holdings has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: 11.1 in FY2015, 40.5 in FY2014, 62.8 in FY2013, 135 in FY2012, 34.7 in FY2011
- The company has unprofitable business model: ROIC is at -0.2%
- It operates with high leverage: Net Debt/EBITDA is -0.2x 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.
Oriental Watch Holdings ($398) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,918 | 3,936 | 3,733 | 3,477 | 3,109 | -10.6% |
| Gross Profit | 719 | 828 | 700 | 612 | 519 | -15.3% |
| SG&A | | | 600 | 595 | 552 | -7.1% |
| EBITDA | 301 | 259 | 174 | 74 | 32 | -57.1% |
| Net Income | 219 | 164 | 163 | 21 | 5 | -78.1% |
Balance Sheet
|
|---|
| Cash | 601 | 207 | 373 | 425 | 344 | -19.1% |
| Short Term Debt | 241 | 476 | 393 | 289 | 228 | -21.0% |
| Long Term Debt | 60 | 30 | 293 | 203 | 109 | -46.1% |
Cash flow
|
|---|
| Capex | 35 | 135 | 63 | 41 | 11 | -72.7% |
Ratios
|
|---|
| Revenue growth | 20.8% | 0.5% | -5.2% | -6.9% | -10.6% | |
| EBITDA growth | 64.2% | -14.1% | -32.9% | -57.3% | -57.1% | |
| Gross Margin | 18.3% | 21.0% | 18.8% | 17.6% | 16.7% | -0.9% |
| EBITDA Margin | 7.7% | 6.6% | 4.7% | 2.1% | 1.0% | -1.1% |
| Net Income Margin | 5.6% | 4.2% | 4.4% | 0.6% | 0.1% | -0.4% |
| SG&A, % of revenue | | | 16.1% | 17.1% | 17.8% | 0.7% |
| CAPEX, % of revenue | 0.9% | 3.4% | 1.7% | 1.2% | 0.4% | -0.8% |
| ROIC | 14.2% | 9.3% | 4.8% | 1.0% | -0.2% | -1.2% |
| ROE | 13.5% | 8.3% | 7.5% | 0.9% | 0.2% | -0.7% |
| Net Debt/EBITDA | -1.0x | 1.2x | 1.8x | 0.9x | -0.2x | -1.1x |
Revenue and profitability
The company's Revenue dropped on 10.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 18.1 pp from 25.3% to 43.4% in 2015.
Gross Margin decreased slightly on 0.92 pp from 17.6% to 16.7% in FY2015. SG&A as a % of Revenue increased slightly on 0.66 pp from 17.1% to 17.8% in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Oriental Watch Holdings had CAPEX/Revenue of 0.36%. CAPEX/Revenue decreased on 3.1 pp from 3.4% in FY2012 to 0.36% in FY2015. It's average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at negative ROIC (-0.20%) and low but positive ROE (0.20%). ROIC decreased slightly on 1.2 pp from 0.98% to -0.20% in FY2015. ROE decreased slightly on 0.72 pp from 0.93% to 0.20% in FY2015.
Leverage (Debt)
Debt level is -0.2x Net Debt / EBITDA and 10.6x Debt / EBITDA. Net Debt / EBITDA dropped on 1.1x from 0.9x to -0.2x in FY2015. Debt dropped on 31.3% in FY2015 while cash dropped on 19.1% in FY2015.
Appendix 1: Peers in Retail
Below we provide Oriental Watch Holdings 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% | 10.2% | 5.9% | 2.9% | 1.3% |
|---|
| Oriental Watch Holdings ($398) | | 0.5% | -5.2% | -6.9% | -10.6% |
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) | 40.8% | 38.0% | 39.9% | 39.5% | 54.5% |
|---|
| Oriental Watch Holdings ($398) | 18.3% | 21.0% | 18.8% | 17.6% | 16.7% |
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) | 13.4% | 10.3% | 7.3% | 8.8% | 8.1% |
|---|
| Oriental Watch Holdings ($398) | 7.7% | 6.6% | 4.7% | 2.1% | 1.0% |
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% |
|---|
| Oriental Watch Holdings ($398) | 0.9% | 3.4% | 1.7% | 1.2% | 0.4% |
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% | 8.7% |
|---|
| Oriental Watch Holdings ($398) | 14.2% | 9.3% | 4.8% | 1.0% | -0.2% |
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 | -0.6x |
|---|
| Oriental Watch Holdings ($398) | -1.0x | 1.2x | 1.8x | 0.9x | -0.2x |
