Parkson Retail Group Ltd reports 192% CAPEX growth while 6.4% Revenue decline
23/02/2016 • About Parkson Retail Group Ltd (
$3368) • By InTwits
Parkson Retail Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Parkson Retail Group Ltd doesn't have a profitable business model yet: 2015 ROIC is -1.0%
- EBITDA Margin is declining: 7.4% in 2015 vs. 16.1% in 2014 vs. 39.9% in 2011
- EBITDA Margin is quite volatile: 7.4% in 2015, 16.1% in 2014, 20.5% in 2013, 30.8% in 2012, 39.9% in 2011
- Parkson Retail Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.7%. At the same time it's a lot of higher than industry average of 6.7%.
- CAPEX is quite volatile: 882 in 2015, 302 in 2014, 442 in 2013, 333 in 2012, 389 in 2011
- The company has unprofitable business model: ROIC is at -1.0%
- It operates with high leverage: Net Debt/EBITDA is 9.8x while industry average is -0.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Parkson Retail Group Ltd ($3368) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,364 | 4,450 | 4,537 | 4,524 | 4,233 | -6.4% |
| EBITDA | 1,741 | 1,371 | 931 | 729 | 311 | -57.3% |
| Net Income | 1,123 | 851 | 354 | 235 | -186 | -179.2% |
Balance Sheet
|
|---|
| Cash | 1,690 | 1,424 | 1,036 | 1,124 | 981 | -12.8% |
| Short Term Debt | 0 | 2,491 | 0 | 700 | 644 | -8.0% |
| Long Term Debt | 2,467 | 0 | 3,196 | 3,035 | 3,373 | 11.2% |
Cash flow
|
|---|
| Capex | 389 | 333 | 442 | 302 | 882 | 191.9% |
Ratios
|
|---|
| Revenue growth | 14.3% | 2.0% | 2.0% | -0.3% | -6.4% | |
| EBITDA growth | 7.3% | -21.3% | -32.1% | -21.7% | -57.3% | |
| EBITDA Margin | 39.9% | 30.8% | 20.5% | 16.1% | 7.4% | -8.8% |
| Net Income Margin | 25.7% | 19.1% | 7.8% | 5.2% | -4.4% | -9.6% |
| CAPEX, % of revenue | 8.9% | 7.5% | 9.7% | 6.7% | 20.8% | 14.2% |
| ROIC | 17.7% | 13.3% | 6.3% | 3.5% | -1.0% | -4.5% |
| ROE | 23.0% | 15.7% | 6.3% | 4.2% | -3.5% | -7.7% |
| Net Debt/EBITDA | 0.4x | 0.8x | 2.3x | 3.6x | 9.8x | 6.2x |
Revenue and profitability
The company's Revenue decreased on 6.4% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.2 pp from 11.2% to 12.4% in 2015.
Net Income marign decreased on 9.6 pp from 5.2% to -4.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 20.8%. CAPEX/Revenue jumped on 13.3 pp from 7.5% in 2012 to 20.8% in 2015. Average CAPEX/Revenue for the last three years was 12.4%.The company has spent a lot to CAPEX (283% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-1.02%) and ROE (-3.53%). ROIC decreased on 4.5 pp from 3.5% to -1.0% in 2015. ROE decreased on 7.7 pp from 4.2% to -3.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 9.8x and Debt / EBITDA is 12.9x. Net Debt / EBITDA jumped on 6.2x from 3.6x to 9.8x in 2015. Debt increased on 7.6% in 2015 while cash dropped on 12.8% in 2015.
Management team
Chong Sui Hiong "Shaun" is a the company's CEO. Chong Sui Hiong "Shaun" has spent 4 years at the company. Parkson Retail Group Ltd's CFO is Au Chen Sum. Au Chen Sum has 5 years tenure at the company.
Appendix 1: Peers in Retail
Below we provide Parkson Retail Group 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) | | 3.3% | -14.9% | 54.3% | -70.8% |
| 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) | 23.5% | 10.3% | 6.0% | 3.1% | -3.6% |
|---|
| Parkson Retail Group Ltd ($3368) | | 2.0% | 2.0% | -0.3% | -6.4% |
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% | 45.3% |
|---|
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% | 6.5% |
|---|
| Parkson Retail Group Ltd ($3368) | 39.9% | 30.8% | 20.5% | 16.1% | 7.4% |
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% | 10.6% |
| |
|---|
| Median (109 companies) | 3.8% | 4.0% | 3.6% | 3.4% | 2.4% |
|---|
| Parkson Retail Group Ltd ($3368) | 8.9% | 7.5% | 9.7% | 6.7% | 20.8% |
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% | 51.4% |
| 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% | 8.4% | 4.4% |
|---|
| Parkson Retail Group Ltd ($3368) | 17.7% | 13.3% | 6.3% | 3.5% | -1.0% |
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 | -0.7x |
|---|
| Parkson Retail Group Ltd ($3368) | 0.4x | 0.8x | 2.3x | 3.6x | 9.8x |
