Fairwood Holdings Ltd reports 33.8% Net Income growth and 0.60 pp EBITDA Margin growth from 11.8% to 12.4%
23/06/2015 • About Fairwood Holdings Ltd (
$52) • By InTwits
Fairwood Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 12.4% in FY2015 vs. 11.8% in FY2014 vs. 12.0% in FY2011
- Fairwood Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: 269 in 2015, 275 in 2014, 144 in 2013, 124 in 2012, 171 in 2011
- The company has highly profitable business model: ROIC is at 32.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fairwood Holdings Ltd ($52) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,666 | 1,829 | 1,929 | 2,038 | 2,245 | 10.2% |
| Gross Profit | 241 | 245 | 264 | 276 | 334 | 21.0% |
| SG&A | | 113 | 123 | 120 | 140 | 16.6% |
| EBITDA | 199 | 217 | 237 | 240 | 278 | 15.8% |
| Net Income | 124 | 130 | 139 | 108 | 144 | 33.8% |
Balance Sheet
|
|---|
| Cash | 251 | 265 | 291 | 326 | 419 | 28.5% |
| Short Term Debt | 11 | 5 | 5 | 10 | 4 | -55.5% |
| Long Term Debt | 31 | 26 | 21 | 11 | 7 | -40.0% |
Cash flow
|
|---|
| Capex | 66 | 74 | 99 | 75 | 88 | 16.8% |
Ratios
|
|---|
| Revenue growth | 6.6% | 9.8% | 5.5% | 5.6% | 10.2% | |
| EBITDA growth | 16.2% | 8.8% | 9.6% | 1.2% | 15.8% | |
| Gross Margin | 14.5% | 13.4% | 13.7% | 13.6% | 14.9% | 1.3% |
| EBITDA Margin | 12.0% | 11.8% | 12.3% | 11.8% | 12.4% | 0.6% |
| Net Income Margin | 7.4% | 7.1% | 7.2% | 5.3% | 6.4% | 1.1% |
| SG&A, % of revenue | | 6.2% | 6.4% | 5.9% | 6.2% | 0.3% |
| CAPEX, % of revenue | 4.0% | 4.0% | 5.1% | 3.7% | 3.9% | 0.2% |
| ROIC | 27.4% | 28.0% | 29.1% | 28.6% | 32.1% | 3.5% |
| ROE | 28.1% | 26.9% | 27.3% | 20.4% | 25.4% | 5.0% |
| Net Debt/EBITDA | -1.1x | -1.1x | -1.1x | -1.3x | -1.5x | -0.2x |
Revenue and profitability
Fairwood Holdings Ltd's Revenue surged on 10.2% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.5 pp from 11.7% to 15.2% in 2015.
Gross Margin increased slightly on 1.3 pp from 13.6% to 14.9% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign increased slightly on 1.1 pp from 5.3% to 6.4% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 3.9% in FY2015. CAPEX/Revenue showed almost no change from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 4.2%.
Return on investment
The company operates at high and attractive ROIC (32.08%) and ROE (25.36%). ROIC increased on 3.5 pp from 28.6% to 32.1% in FY2015. ROE increased on 5.0 pp from 20.4% to 25.4% in FY2015.
Leverage (Debt)
Debt level is -1.5x Net Debt / EBITDA and 0.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from -1.3x to -1.5x in FY2015. Debt dropped on 47.3% in FY2015 while cash jumped on 28.5% in FY2015.
Appendix 1: Peers in Retail
Below you can find Fairwood Holdings Ltd 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) | 21.8% | 10.2% | 5.9% | 2.7% | -1.0% |
|---|
| Fairwood Holdings Ltd ($52) | | 9.8% | 5.5% | 5.6% | 10.2% |
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% | 46.5% |
|---|
| Fairwood Holdings Ltd ($52) | 14.5% | 13.4% | 13.7% | 13.6% | 14.9% |
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% | 9.7% | 7.1% | 8.3% | 4.5% |
|---|
| Fairwood Holdings Ltd ($52) | 12.0% | 11.8% | 12.3% | 11.8% | 12.4% |
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% | 2.5% |
|---|
| Fairwood Holdings Ltd ($52) | 4.0% | 4.0% | 5.1% | 3.7% | 3.9% |
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% | 5.3% |
|---|
| Fairwood Holdings Ltd ($52) | 27.4% | 28.0% | 29.1% | 28.6% | 32.1% |
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 | -0.2x | -0.7x |
|---|
| Fairwood Holdings Ltd ($52) | -1.1x | -1.1x | -1.1x | -1.3x | -1.5x |
