YGM Trading Ltd CAPEX jumped on 268% in 2015 while Revenue dropped on 11.7%
23/06/2015 • About YGM Trading Ltd (
$375) • By InTwits
YGM Trading Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 7.1% in FY2015 vs. 16.5% in FY2014 vs. 23.5% in FY2011
- EBITDA Margin is quite volatile: 7.1% in FY2015, 16.5% in FY2014, 19.7% in FY2013, 22.7% in FY2012, 23.5% in FY2011
- YGM Trading Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's a lot of higher than industry average of 4.0%.
- CAPEX is quite volatile: 160 in FY2015, 43.5 in FY2014, 28.3 in FY2013, 24.4 in FY2012, 22.5 in FY2011
- The company has potentially unprofitable business model: ROIC is at 2.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
YGM Trading Ltd ($375) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,155 | 1,378 | 1,364 | 1,246 | 1,100 | -11.7% |
| Gross Profit | 775 | 916 | 920 | 798 | 687 | -13.9% |
| SG&A | | | 686 | 630 | 650 | 3.2% |
| EBITDA | 272 | 313 | 268 | 206 | 79 | -61.9% |
| Net Income | 283 | 633 | 222 | 219 | 81 | -62.9% |
Balance Sheet
|
|---|
| Cash | 427 | 1,085 | 656 | 621 | 189 | -69.6% |
| Short Term Debt | 43 | 9 | 6 | 19 | 13 | -27.8% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 23 | 24 | 28 | 43 | 160 | 268.1% |
Ratios
|
|---|
| Revenue growth | 16.5% | 19.3% | -1.0% | -8.6% | -11.7% | |
| EBITDA growth | 37.0% | 15.2% | -14.3% | -23.2% | -61.9% | |
| Gross Margin | 67.1% | 66.5% | 67.4% | 64.0% | 62.5% | -1.5% |
| EBITDA Margin | 23.5% | 22.7% | 19.7% | 16.5% | 7.1% | -9.4% |
| Net Income Margin | 24.5% | 45.9% | 16.3% | 17.5% | 7.4% | -10.2% |
| SG&A, % of revenue | | | 50.3% | 50.6% | 59.1% | 8.6% |
| CAPEX, % of revenue | 2.0% | 1.8% | 2.1% | 3.5% | 14.5% | 11.1% |
| ROIC | 21.8% | 16.6% | 13.1% | 11.3% | 2.8% | -8.5% |
| ROE | 26.3% | 38.1% | 12.4% | 14.4% | 5.5% | -9.0% |
| Net Debt/EBITDA | -1.4x | -3.4x | -2.4x | -2.9x | -2.2x | 0.7x |
Revenue and profitability
YGM Trading Ltd's Revenue dropped on 11.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.95 pp from 4.6% to 5.5% in 2015.
Gross Margin decreased slightly on 1.5 pp from 64.0% to 62.5% in FY2015. SG&A as a % of Revenue increased on 8.6 pp from 50.6% to 59.1% in FY2015.
Net Income marign dropped on 10.2 pp from 17.5% to 7.4% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 14.5%. YGM Trading Ltd's CAPEX/Revenue surged on 12.8 pp from 1.8% in FY2012 to 14.5% in FY2015. It's average CAPEX/Revenue for the last three years was 6.7%.The company has spent a lot to CAPEX (204% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.82%) and ROE (5.45%). ROIC decreased on 8.5 pp from 11.3% to 2.8% in FY2015. ROE decreased on 9.0 pp from 14.4% to 5.5% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.2x and Debt / EBITDA is 0.2x. Net Debt / EBITDA jumped on 0.7x from -2.9x to -2.2x in FY2015. Debt dropped on 27.8% in FY2015 while cash dropped on 69.6% in FY2015.
Appendix 1: Peers in Distribution/Wholesale
Below we provide YGM Trading Ltd benchmarking against other companies in Distribution/Wholesale 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 |
|---|
| Forefront Group Ltd ($885) | | | 504.6% | 3,871.0% | |
| China LNG Group Ltd ($931) | -84.5% | 694.8% | 13.6% | 1,341.3% | |
| Sheng Yuan Holdings Ltd ($851) | 571.1% | -86.1% | 756.9% | 567.2% | |
| China Infrastructure Investment Ltd ($600) | 346.9% | 412.1% | -50.9% | 557.9% | |
| China-Hongkong Photo Products Holdings Ltd ($1123) | 2.5% | 24.9% | 9.0% | 81.2% | |
| |
|---|
| Median (37 companies) | 17.0% | 2.6% | 2.1% | 1.4% | 12.1% |
|---|
| YGM Trading Ltd ($375) | | 19.3% | -1.0% | -8.6% | -11.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Goldin Financial Holdings Ltd ($530) | 67.0% | 75.3% | 71.7% | 74.8% | |
| Forefront Group Ltd ($885) | | | | 69.8% | |
| Goldlion Holdings Ltd ($533) | 57.3% | 56.4% | 54.1% | 55.7% | |
| Sincere Watch Hong Kong Ltd ($444) | 34.2% | 35.6% | 39.7% | 38.8% | 38.3% |
| E.Bon Holdings Ltd ($599) | 36.6% | 40.3% | 37.4% | 35.8% | 39.6% |
| |
|---|
| Median (33 companies) | 15.5% | 17.3% | 17.1% | 18.0% | 32.6% |
|---|
| YGM Trading Ltd ($375) | 67.1% | 66.5% | 67.4% | 64.0% | 62.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Goldin Financial Holdings Ltd ($530) | -134.6% | 163.7% | 613.4% | 285.7% | |
| China LNG Group Ltd ($931) | 195.2% | 95.1% | 76.4% | 97.9% | |
| Forefront Group Ltd ($885) | | -2,113.8% | -803.1% | 57.7% | |
| China Infrastructure Investment Ltd ($600) | -1,171.2% | -274.9% | 120.0% | 52.0% | |
| GA Holdings Ltd ($8126) | -4.5% | 8.0% | 19.7% | 22.9% | |
| |
|---|
| Median (37 companies) | 2.2% | 2.1% | 1.9% | 4.5% | 6.1% |
|---|
| YGM Trading Ltd ($375) | 23.5% | 22.7% | 19.7% | 16.5% | 7.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| C Y Foundation Group Ltd ($1182) | 9.8% | 2.5% | 5.2% | 82.2% | 9.3% |
| Inspur International Ltd ($596) | 0.9% | 8.4% | 12.2% | 33.6% | |
| SIS International Holdings ($529) | 0.2% | 13.4% | 31.8% | 14.8% | |
| HKC International Holdings Ltd ($248) | 0.9% | 5.5% | 0.8% | 11.4% | |
| Tan Chong International Ltd ($693) | 7.6% | 6.0% | 7.6% | 7.0% | |
| |
|---|
| Median (36 companies) | 1.3% | 1.3% | 1.7% | 1.6% | 1.8% |
|---|
| YGM Trading Ltd ($375) | 2.0% | 1.8% | 2.1% | 3.5% | 14.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China LNG Group Ltd ($931) | 2.2% | 8.4% | 7.4% | 87.0% | |
| Yestar International Holdings Co Ltd ($2393) | 29.4% | 28.8% | 24.1% | 26.2% | |
| Powerwell Pacific Holdings Ltd ($8265) | 27.8% | 6.4% | 6.4% | 23.6% | |
| Forefront Group Ltd ($885) | -37.7% | -4.9% | -11.0% | 19.5% | |
| Sincere Watch Hong Kong Ltd ($444) | 46.4% | 51.7% | 27.7% | 14.6% | 5.5% |
| |
|---|
| Median (38 companies) | 2.2% | 2.1% | 0.9% | 3.1% | 3.9% |
|---|
| YGM Trading Ltd ($375) | 21.8% | 16.6% | 13.1% | 11.3% | 2.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sheng Yuan Holdings Ltd ($851) | | | | 19.3x | |
| Takson Holdings Ltd ($918) | | | 11.5x | 11.7x | |
| Huiyin Household Appliances Holdings Co Ltd ($1280) | 10.1x | | | 10.9x | |
| Pacific Andes International Holdings Ltd ($1174) | 4.9x | 5.1x | 9.1x | 7.8x | |
| SIS International Holdings ($529) | -62.1x | -1.8x | 7.0x | 7.2x | |
| |
|---|
| Median (26 companies) | -0.2x | -0.1x | -0.5x | 0.3x | -0.7x |
|---|
| YGM Trading Ltd ($375) | -1.4x | -3.4x | -2.4x | -2.9x | -2.2x |
