Luk Fook Holdings International Ltd reports 17.1% revenue decline in FY2015 and 0.67 pp EBITDA Margin growth from 12.7% to 13.3%
25/06/2015 • About Luk Fook Holdings International Ltd (
$590) • By InTwits
Luk Fook Holdings International Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Luk Fook Holdings International Ltd 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 19.2%.
- CAPEX is quite volatile: 181 in FY2015, 258 in FY2014, 307 in FY2013, 153 in FY2012, 101 in FY2011
- The company has highly profitable business model: ROIC is at 20.6%
- 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.
Luk Fook Holdings International Ltd ($590) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 8,091 | 11,907 | 13,412 | 19,215 | 15,923 | -17.1% |
| Gross Profit | 1,917 | 2,759 | 2,830 | 4,214 | 3,832 | -9.1% |
| SG&A | 912 | 1,212 | 1,448 | 2,074 | 2,084 | 0.5% |
| EBITDA | 1,074 | 1,659 | 1,594 | 2,434 | 2,123 | -12.8% |
| Net Income | 866 | 1,334 | 1,243 | 1,865 | 1,615 | -13.4% |
Balance Sheet
|
|---|
| Cash | 966 | 1,538 | 1,187 | 1,646 | 1,375 | -16.5% |
| Short Term Debt | 0 | 0 | 0 | 568 | 1,713 | 201.7% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 101 | 153 | 307 | 258 | 181 | -29.8% |
Ratios
|
|---|
| Revenue growth | 50.2% | 47.2% | 12.6% | 43.3% | -17.1% | |
| EBITDA growth | 58.2% | 54.5% | -3.9% | 52.7% | -12.8% | |
| Gross Margin | 23.7% | 23.2% | 21.1% | 21.9% | 24.1% | 2.1% |
| EBITDA Margin | 13.3% | 13.9% | 11.9% | 12.7% | 13.3% | 0.7% |
| Net Income Margin | 10.7% | 11.2% | 9.3% | 9.7% | 10.1% | 0.4% |
| SG&A, % of revenue | 11.3% | 10.2% | 10.8% | 10.8% | 13.1% | 2.3% |
| CAPEX, % of revenue | 1.2% | 1.3% | 2.3% | 1.3% | 1.1% | -0.2% |
| ROIC | 36.6% | 34.1% | 24.3% | 30.6% | 20.6% | -10.0% |
| ROE | 34.1% | 29.6% | 20.7% | 26.5% | 20.0% | -6.6% |
| Net Debt/EBITDA | -0.9x | -0.9x | -0.7x | -0.4x | 0.2x | 0.6x |
Revenue and profitability
Luk Fook Holdings International Ltd's Revenue dropped on 17.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.67 pp from 12.7% to 13.3% in FY2015.
Gross Margin increased on 2.1 pp from 21.9% to 24.1% in FY2015. SG&A as a % of Revenue increased on 2.3 pp from 10.8% to 13.1% in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 1.1%. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at high and attractive ROIC (20.62%) while ROE is a bit lower (19.96%). ROIC dropped on 10.0 pp from 30.6% to 20.6% in FY2015. ROE decreased on 6.6 pp from 26.5% to 20.0% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 0.8x. Net Debt / EBITDA jumped on 0.6x from -0.4x to 0.2x in FY2015. Debt jumped on 202% in FY2015 while cash dropped on 16.5% in FY2015.
Management team
Luk Fook Holdings International Ltd's CEO Wong Wai Sheung has spent 13 years at the company. Chan So Kuen "Kathy" is a Luk Fook Holdings International Ltd's CFO. Chan So Kuen "Kathy" has spent 6 years at the company.
Appendix 1: Peers in Retail
Below you can find Luk Fook Holdings International 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% | |
| NewOcean Energy Holdings Ltd ($342) | 19.3% | 23.1% | 15.9% | 36.0% | |
| Tsui Wah Holdings Ltd ($1314) | | 27.5% | 42.2% | 35.9% | 22.2% |
| |
|---|
| Median (108 companies) | 21.8% | 9.9% | 5.7% | 2.7% | 2.0% |
|---|
| Luk Fook Holdings International Ltd ($590) | | 47.2% | 12.6% | 43.3% | -17.1% |
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% | 45.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | 23.7% | 23.2% | 21.1% | 21.9% | 24.1% |
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) | 13.3% | 9.7% | 7.1% | 8.3% | 8.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | 13.3% | 13.9% | 11.9% | 12.7% | 13.3% |
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% | 10.6% |
| |
|---|
| Median (108 companies) | 3.9% | 4.1% | 3.6% | 3.5% | 2.5% |
|---|
| Luk Fook Holdings International Ltd ($590) | 1.2% | 1.3% | 2.3% | 1.3% | 1.1% |
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% | 39.8% |
| 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% | 10.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | 36.6% | 34.1% | 24.3% | 30.6% | 20.6% |
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 (84 companies) | -0.8x | -0.6x | -0.9x | -0.2x | -0.7x |
|---|
| Luk Fook Holdings International Ltd ($590) | -0.9x | -0.9x | -0.7x | -0.4x | 0.2x |
