Zhong Fa Zhan Holdings Ltd revenue dropped on 15.5% in 2015 and EBITDA Margin decreased on 8.3 pp from -28.6% to -36.9%
26/06/2015 • About Zhong Fa Zhan Holdings Ltd (
$475) • By InTwits
Zhong Fa Zhan Holdings Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhong Fa Zhan Holdings Ltd is a company in decline: FY2015 revenue growth was -15.5%, 5 years revenue CAGR was -35.7%
- The company operates at negative EBITDA Margin: -36.9%
- Zhong Fa Zhan Holdings Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2011-FY2015 is 0.0%. Average EBITDA Margin for the same period was -18.0%0
- Zhong Fa Zhan Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.2%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 0.90 in FY2015, 3.2 in FY2014, 0.10 in FY2013, 2.6 in FY2012, 41.9 in FY2011
- The company has unprofitable business model: ROIC is at -104.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Zhong Fa Zhan Holdings Ltd ($475) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 46.001 | 74.358 | 75.770 | 67.591 | 57.092 | -15.5% |
| Gross Profit | 5.703 | 11.964 | 6.881 | 7.385 | 7.222 | -2.2% |
| SG&A | | | 39.148 | 28.359 | 29.968 | 5.7% |
| EBITDA | 10.478 | 2.954 | -30.783 | -19.298 | -21.061 | 9.1% |
| Net Income | 7.613 | 10.119 | -31.123 | -19.992 | -22.154 | 10.8% |
Balance Sheet
|
|---|
| Cash | 14.303 | 10.538 | 7.552 | 13.372 | 14.758 | 10.4% |
| Short Term Debt | 258.064 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 41.855 | 2.555 | 0.100 | 3.168 | 0.904 | -71.5% |
Ratios
|
|---|
| Revenue growth | -91.2% | 61.6% | 1.9% | -10.8% | -15.5% | |
| EBITDA growth | -42.6% | -71.8% | -1,142.1% | -37.3% | 9.1% | |
| Gross Margin | 12.4% | 16.1% | 9.1% | 10.9% | 12.6% | 1.7% |
| EBITDA Margin | 22.8% | 4.0% | -40.6% | -28.6% | -36.9% | -8.3% |
| Net Income Margin | 16.5% | 13.6% | -41.1% | -29.6% | -38.8% | -9.2% |
| SG&A, % of revenue | | | 51.7% | 42.0% | 52.5% | 10.5% |
| CAPEX, % of revenue | 91.0% | 3.4% | 0.1% | 4.7% | 1.6% | -3.1% |
| ROIC | 0.0% | -1.4% | -70.8% | -75.5% | -104.7% | -29.2% |
| ROE | 2.9% | 6.2% | -70.3% | -74.1% | -103.6% | -29.4% |
| Net Debt/EBITDA | 23.3x | -3.6x | | | | 0.0x |
Revenue and profitability
Zhong Fa Zhan Holdings Ltd's Revenue dropped on 15.5% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 38.0 pp from -70.9% to -33.0% in 2015.
Gross Margin increased slightly on 1.7 pp from 10.9% to 12.6% in FY2015. SG&A as a % of Revenue jumped on 10.5 pp from 42.0% to 52.5% in FY2015.
Net Income marign decreased on 9.2 pp from -29.6% to -38.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Zhong Fa Zhan Holdings Ltd had CAPEX/Revenue of 1.6%. Zhong Fa Zhan Holdings Ltd's CAPEX/Revenue decreased slightly on 1.9 pp from 3.4% in FY2012 to 1.6% in FY2015. It's average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at negative ROIC (-104.66%) and ROE (-103.57%). ROIC dropped on 29.2 pp from -75.5% to -105% in FY2015. ROE dropped on 29.4 pp from -74.1% to -104% in FY2015.
Leverage (Debt)
The company has no debt. Cash surged on 10.4% in FY2015.
Appendix 1: Peers in Retail
Below we provide Zhong Fa Zhan Holdings 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) | | 47.2% | 12.6% | 43.3% | -17.1% |
| NewOcean Energy Holdings Ltd ($342) | 19.3% | 23.1% | 15.9% | 36.0% | |
| |
|---|
| Median (108 companies) | 21.8% | 9.9% | 5.9% | 2.9% | -0.0% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | | 61.6% | 1.9% | -10.8% | -15.5% |
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% | 96.7% |
| 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% | 44.9% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 12.4% | 16.1% | 9.1% | 10.9% | 12.6% |
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% | 10.3% | 7.3% | 8.8% | 8.7% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 22.8% | 4.0% | -40.6% | -28.6% | -36.9% |
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% | 10.6% |
| |
|---|
| Median (108 companies) | 3.8% | 4.1% | 3.6% | 3.4% | 2.5% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 91.0% | 3.4% | 0.1% | 4.7% | 1.6% |
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% | 71.8% |
| 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) | 17.2% | 11.9% | 8.2% | 8.3% | 10.7% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 0.0% | -1.4% | -70.8% | -75.5% | -104.7% |
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 | 23.5x |
| 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 (85 companies) | -0.8x | -0.6x | -0.9x | -0.3x | -0.6x |
|---|
