HOSA International Ltd reports 33.7% Net Income decline and 3.2% Revenue decline
08/03/2016 • About HOSA International Ltd (
$2200) • By InTwits
HOSA International Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 26.7% in 2015 vs. 37.6% in 2014 vs. 46.3% in 2011
- HOSA International Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 33.2%.
- CAPEX is quite volatile: 6.2 in 2015, 31.2 in 2014, 17.5 in 2013, 3.6 in 2012, 2.6 in 2011
- The company has highly profitable business model: ROIC is at 16.5%
- It operates with high leverage: Net Debt/EBITDA is 0.7x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HOSA International Ltd ($2200) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 695 | 848 | 1,022 | 1,217 | 1,178 | -3.2% |
| Gross Profit | 433 | 514 | 590 | 640 | 605 | -5.6% |
| SG&A | | 162 | 180 | 222 | 326 | 47.0% |
| EBITDA | 322 | 376 | 431 | 458 | 314 | -31.4% |
| Net Income | 274 | 331 | 370 | 403 | 267 | -33.7% |
Balance Sheet
|
|---|
| Cash | 636 | 731 | 335 | 37 | 21 | -43.9% |
| Short Term Debt | 62 | 133 | 61 | 48 | 249 | 415.5% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 3 | 4 | 17 | 31 | 6 | -80.1% |
Ratios
|
|---|
| Revenue growth | 99.9% | 22.0% | 20.5% | 19.1% | -3.2% | |
| EBITDA growth | 172.0% | 16.9% | 14.4% | 6.3% | -31.4% | |
| Gross Margin | 62.2% | 60.6% | 57.8% | 52.6% | 51.3% | -1.3% |
| EBITDA Margin | 46.3% | 44.4% | 42.2% | 37.6% | 26.7% | -11.0% |
| Net Income Margin | 39.4% | 39.0% | 36.3% | 33.1% | 22.7% | -10.5% |
| SG&A, % of revenue | | 19.1% | 17.6% | 18.2% | 27.7% | 9.4% |
| CAPEX, % of revenue | 0.4% | 0.4% | 1.7% | 2.6% | 0.5% | -2.0% |
| ROIC | 44.2% | 34.6% | 32.0% | 28.2% | 16.5% | -11.8% |
| ROE | 46.6% | 34.3% | 30.3% | 26.5% | 15.9% | -10.6% |
| Net Debt/EBITDA | -1.8x | -1.6x | -0.6x | 0.0x | 0.7x | 0.7x |
Revenue and profitability
The company's Revenue decreased on 3.2% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 11.0 pp from 37.6% to 26.7% in 2015.
Gross Margin decreased slightly on 1.3 pp from 52.6% to 51.3% in 2015. SG&A as a % of Revenue increased on 9.4 pp from 18.2% to 27.7% in 2015.
Net Income marign dropped on 10.5 pp from 33.1% to 22.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 0.53%. HOSA International Ltd showed almost no change in CAPEX/Revenue from 2012 to 2015. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at good ROIC (16.49%) and ROE (15.95%). ROIC dropped on 11.8 pp from 28.2% to 16.5% in 2015. ROE dropped on 10.6 pp from 26.5% to 15.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 0.8x. Net Debt / EBITDA jumped on 0.7x from 0.024x to 0.7x in 2015. Debt jumped on 416% in 2015 while cash dropped on 43.9% in 2015.
Appendix 1: Peers in Apparel
Below we provide HOSA International Ltd benchmarking against other companies in Apparel 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 |
|---|
| Ares Asia Ltd ($645) | | | | 144.2% | 14.7% |
| Texhong Textile Group Ltd ($2678) | | 6.8% | 12.1% | 27.2% | 1.0% |
| Win Hanverky Holdings Ltd ($3322) | 11.5% | -7.5% | -0.3% | 21.1% | |
| Symphony Holdings Ltd/Hong Kong ($1223) | 27.3% | -94.0% | 46.8% | 20.4% | |
| L & A International Holdings Ltd/ Hong Kong ($8387) | 33.1% | 27.9% | 7.9% | 20.4% | |
| |
|---|
| Median (47 companies) | 24.5% | 5.2% | 0.8% | 5.0% | -0.9% |
|---|
| HOSA International Ltd ($2200) | | 22.0% | 20.5% | 19.1% | -3.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Prada SpA ($1913) | 67.8% | 71.5% | 72.1% | 73.8% | 71.8% |
| China Outfitters Holdings Ltd ($1146) | 76.1% | 74.9% | 74.3% | 70.0% | |
| C.banner International Holdings Ltd ($1028) | 63.5% | 63.3% | 62.0% | 63.4% | |
| S Culture International Holdings Ltd ($1255) | 62.8% | 64.7% | 63.7% | 62.9% | |
| Crocodile Garments ($122) | 65.5% | 64.7% | 60.7% | 60.4% | 62.1% |
| |
|---|
| Median (46 companies) | 24.0% | 24.4% | 23.0% | 23.4% | 17.8% |
|---|
| HOSA International Ltd ($2200) | 62.2% | 60.6% | 57.8% | 52.6% | 51.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Prada SpA ($1913) | 25.9% | 29.6% | 31.7% | 31.7% | 26.8% |
| China Lilang Ltd ($1234) | 26.7% | 26.3% | 26.9% | 29.4% | |
| Cabbeen Fashion Ltd ($2030) | 16.0% | 25.0% | 29.7% | 28.4% | 29.0% |
| Fuguiniao Co Ltd ($1819) | 22.2% | 24.5% | 26.1% | 26.7% | |
| China Outfitters Holdings Ltd ($1146) | 43.9% | 42.0% | 38.2% | 26.5% | |
| |
|---|
| Median (47 companies) | 10.4% | 9.5% | 8.9% | 5.6% | 2.0% |
|---|
| HOSA International Ltd ($2200) | 46.3% | 44.4% | 42.2% | 37.6% | 26.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Prada SpA ($1913) | 9.2% | 9.7% | 10.6% | 15.3% | 10.2% |
| Symphony Holdings Ltd/Hong Kong ($1223) | 14.9% | 136.9% | 70.3% | 13.5% | |
| Mascotte Holdings Ltd ($136) | 0.4% | 74.2% | 45.0% | 12.2% | 0.6% |
| Addchance Holdings Ltd ($3344) | 12.2% | 8.6% | 9.3% | 10.9% | |
| Active Group Holdings Ltd ($1096) | 1.3% | 17.4% | 3.5% | 10.7% | |
| |
|---|
| Median (47 companies) | 1.9% | 2.2% | 3.1% | 2.0% | 1.5% |
|---|
| HOSA International Ltd ($2200) | 0.4% | 0.4% | 1.7% | 2.6% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Prada SpA ($1913) | 24.6% | 32.1% | 37.4% | 34.0% | 21.9% |
| Sitoy Group Holdings Ltd ($1023) | 62.1% | 39.3% | 28.7% | 31.8% | 22.0% |
| Miko International Holdings Ltd ($1247) | 75.1% | 60.9% | 48.8% | 27.3% | |
| Cabbeen Fashion Ltd ($2030) | 25.7% | 32.3% | 32.9% | 26.5% | 27.0% |
| Fuguiniao Co Ltd ($1819) | 27.8% | 34.1% | 31.6% | 22.9% | |
| |
|---|
| Median (47 companies) | 11.5% | 8.6% | 6.7% | 3.2% | 0.4% |
|---|
| HOSA International Ltd ($2200) | 44.2% | 34.6% | 32.0% | 28.2% | 16.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| High Fashion International Ltd ($608) | 4.9x | 16.7x | 27.7x | 11.2x | |
| Citychamp Watch & Jewellery Group Ltd ($256) | -0.9x | 0.6x | 0.4x | 2.6x | |
| S Culture International Holdings Ltd ($1255) | 0.8x | 1.4x | 0.7x | 2.4x | |
| UKF Holdings Ltd ($1468) | 0.9x | 1.2x | -3.2x | 2.4x | 0.4x |
| Texhong Textile Group Ltd ($2678) | 3.9x | 1.4x | 1.3x | 2.3x | 1.4x |
| |
|---|
| Median (33 companies) | -0.7x | -0.3x | -0.7x | -0.3x | -0.2x |
|---|
| HOSA International Ltd ($2200) | -1.8x | -1.6x | -0.6x | 0.0x | 0.7x |
