New World Department Store China Ltd reports 86.6% Net Income decline and 2.6% Revenue decline
23/09/2015 • About New World Department Store China Ltd (
$825) • By InTwits
New World Department Store China Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 14.0% in FY2015 vs. 24.5% in FY2014 vs. 49.3% in FY2011
- EBITDA Margin is quite volatile: 14.0% in FY2015, 24.5% in FY2014, 29.2% in FY2013, 31.5% in FY2012, 49.3% in FY2011
- New World Department Store China Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.6%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 325 in FY2015, 462 in FY2014, 1,583 in FY2013, 421 in FY2012, 749 in FY2011
- The company has potentially unprofitable business model: ROIC is at 2.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
New World Department Store China Ltd ($825) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,736 | 3,490 | 4,012 | 4,136 | 4,029 | -2.6% |
| EBITDA | 1,350 | 1,099 | 1,171 | 1,014 | 565 | -44.2% |
| Net Income | 856 | 608 | 642 | 521 | 70 | -86.6% |
Balance Sheet
|
|---|
| Cash | 2,948 | 3,243 | 2,474 | 897 | 2,089 | 133.0% |
| Short Term Debt | 0 | 9 | 50 | 0 | 129 | |
| Long Term Debt | 0 | 999 | 609 | 697 | 1,578 | 126.5% |
Cash flow
|
|---|
| Capex | 749 | 421 | 1,583 | 462 | 325 | -29.6% |
Ratios
|
|---|
| Revenue growth | 46.1% | 27.6% | 14.9% | 3.1% | -2.6% | |
| EBITDA growth | 39.5% | -18.6% | 6.6% | -13.4% | -44.2% | |
| EBITDA Margin | 49.3% | 31.5% | 29.2% | 24.5% | 14.0% | -10.5% |
| Net Income Margin | 31.3% | 17.4% | 16.0% | 12.6% | 1.7% | -10.9% |
| CAPEX, % of revenue | 27.4% | 12.1% | 39.4% | 11.2% | 8.1% | -3.1% |
| ROIC | 20.0% | 12.3% | 11.2% | 8.8% | 2.6% | -6.2% |
| ROE | 16.5% | 10.5% | 10.2% | 8.0% | 1.1% | -6.9% |
| Net Debt/EBITDA | -2.2x | -2.0x | -1.6x | -0.2x | -0.7x | -0.5x |
Revenue and profitability
New World Department Store China Ltd's Revenue decreased on 2.6% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.5 pp from 24.5% to 14.0% in FY2015.
Net Income marign dropped on 10.9 pp from 12.6% to 1.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 8.1%. New World Department Store China Ltd's CAPEX/Revenue decreased on 4.0 pp from 12.1% in FY2012 to 8.1% in FY2015. It's average CAPEX/Revenue for the last three years was 19.6%.Battling declining revenue New World Department Store China Ltd invested a large share of EBITDA (57.5%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.65%) and ROE (1.10%). ROIC decreased on 6.2 pp from 8.8% to 2.6% in FY2015. ROE decreased on 6.9 pp from 8.0% to 1.1% in FY2015.
Leverage (Debt)
Debt level is -0.7x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from -0.2x to -0.7x in FY2015. Debt jumped on 145% in FY2015 while cash surged on 133% in FY2015.
Appendix 1: Peers in Retail
Below we provide New World Department Store China 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 (109 companies) | 21.9% | 10.0% | 5.9% | 2.8% | -4.6% |
|---|
| New World Department Store China Ltd ($825) | | 27.6% | 14.9% | 3.1% | -2.6% |
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% | 96.7% |
| Vongroup Ltd ($318) | | | | 95.1% | 99.1% |
| 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 (99 companies) | 40.0% | 37.7% | 38.0% | 35.6% | 46.0% |
|---|
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 (109 companies) | 13.1% | 9.6% | 7.1% | 7.9% | 6.0% |
|---|
| New World Department Store China Ltd ($825) | 49.3% | 31.5% | 29.2% | 24.5% | 14.0% |
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% | 10.6% |
| |
|---|
| Median (109 companies) | 3.8% | 4.0% | 3.6% | 3.4% | 2.4% |
|---|
| New World Department Store China Ltd ($825) | 27.4% | 12.1% | 39.4% | 11.2% | 8.1% |
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% | 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% | 20.8% |
| Nanjing Sinolife United Co Ltd ($3332) | 57.4% | 67.3% | 68.1% | 32.2% | |
| |
|---|
| Median (109 companies) | 16.6% | 11.8% | 8.2% | 8.2% | 5.3% |
|---|
| New World Department Store China Ltd ($825) | 20.0% | 12.3% | 11.2% | 8.8% | 2.6% |
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 | 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 | -0.5x | -0.8x | -0.3x | -0.5x |
|---|
| New World Department Store China Ltd ($825) | -2.2x | -2.0x | -1.6x | -0.2x | -0.7x |
