Li & Fung Ltd reports 15.7% EBITDA decline and 2.4% Revenue decline
17/03/2016 • About Li & Fung Ltd (
$494) • By InTwits
Li & Fung Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 3.8% in 2015 vs. 4.4% in 2014 vs. 5.5% in 2011
- Li & Fung Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
- The company has highly profitable business model: ROIC is at 13.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Li & Fung Ltd ($494) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 20,030 | 20,222 | 19,026 | 19,288 | 18,831 | -2.4% |
| Gross Profit | 2,986 | 2,868 | 2,219 | 2,182 | 2,159 | -1.0% |
| SG&A | 2,111 | 2,363 | 1,479 | 1,538 | 1,587 | 3.2% |
| EBITDA | 1,100 | 1,082 | 927 | 843 | 711 | -15.7% |
| Net Income | 681 | 622 | 755 | 471 | 451 | -4.3% |
Balance Sheet
|
|---|
| Cash | 426 | 680 | 460 | 539 | 342 | -36.4% |
| Short Term Debt | 112 | 118 | 94 | 163 | 96 | -41.2% |
| Long Term Debt | 1,366 | 1,355 | 1,372 | 1,271 | 1,354 | 6.5% |
Cash flow
|
|---|
| Capex | 113 | 176 | 59 | 75 | 78 | 3.7% |
Ratios
|
|---|
| Revenue growth | 25.9% | 1.0% | -5.9% | 1.4% | -2.4% | |
| EBITDA growth | 30.5% | -1.6% | -14.4% | -9.0% | -15.7% | |
| Gross Margin | 14.9% | 14.2% | 11.7% | 11.3% | 11.5% | 0.2% |
| EBITDA Margin | 5.5% | 5.4% | 4.9% | 4.4% | 3.8% | -0.6% |
| Net Income Margin | 3.4% | 3.1% | 4.0% | 2.4% | 2.4% | -0.0% |
| SG&A, % of revenue | 10.5% | 11.7% | 7.8% | 8.0% | 8.4% | 0.5% |
| CAPEX, % of revenue | 0.6% | 0.9% | 0.3% | 0.4% | 0.4% | 0.0% |
| ROIC | 16.2% | 13.0% | 11.8% | 12.3% | 13.1% | 0.8% |
| ROE | 18.0% | 14.4% | 15.0% | 11.6% | 16.5% | 4.9% |
| Net Debt/EBITDA | 1.0x | 0.7x | 1.1x | 1.1x | 1.6x | 0.5x |
Revenue and profitability
The company's Revenue decreased on 2.4% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.60 pp from 4.4% to 3.8% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
Li & Fung Ltd's CAPEX/Revenue was 0.41% in 2015. The company showed almost no change in CAPEX/Revenue from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 0.37%.
Return on investment
The company operates at good ROIC (13.07%) and ROE (16.51%). ROIC increased slightly on 0.76 pp from 12.3% to 13.1% in 2015. ROE increased on 4.9 pp from 11.6% to 16.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.6x and Debt / EBITDA is 2.0x. Net Debt / EBITDA jumped on 0.5x from 1.1x to 1.6x in 2015. Debt increased slightly on 1.1% in 2015 while cash dropped on 36.4% in 2015.
Management team
Spencer Theodore Fung is a the company's CEO. Spencer Theodore Fung has spent 4 years at the company. Li & Fung Ltd's CFO Lam Sung Lai "Edward" has spent 6 years at the company.
Appendix 1: Peers in Distribution/Wholesale
Below you can find Li & Fung Ltd benchmarking vs. other companies in Distribution/Wholesale 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 |
|---|
| Forefront Group Ltd ($885) | | | 504.6% | 3,871.0% | |
| China LNG Group Ltd ($931) | -84.5% | 694.8% | 13.6% | 1,341.3% | |
| Sheng Yuan Holdings Ltd ($851) | | -86.1% | 756.9% | 567.2% | -2.1% |
| China Infrastructure Investment Ltd ($600) | 346.9% | 412.1% | -50.9% | 557.9% | |
| China-Hongkong Photo Products Holdings Ltd ($1123) | | 24.9% | 9.0% | 81.2% | 12.2% |
| |
|---|
| Median (37 companies) | 13.5% | 3.1% | 2.1% | 0.8% | 0.0% |
|---|
| Li & Fung Ltd ($494) | | 1.0% | -5.9% | 1.4% | -2.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Goldin Financial Holdings Ltd ($530) | 67.0% | 75.3% | 71.7% | 74.8% | 73.8% |
| Forefront Group Ltd ($885) | | | | 69.8% | |
| YGM Trading Ltd ($375) | 67.1% | 66.5% | 67.4% | 64.0% | 62.5% |
| Goldlion Holdings Ltd ($533) | 57.3% | 56.4% | 54.1% | 55.7% | |
| Sincere Watch Hong Kong Ltd ($444) | 34.2% | 35.6% | 39.7% | 38.8% | 38.3% |
| |
|---|
| Median (33 companies) | 16.4% | 17.5% | 18.2% | 19.3% | 22.5% |
|---|
| Li & Fung Ltd ($494) | 14.9% | 14.2% | 11.7% | 11.3% | 11.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Goldin Financial Holdings Ltd ($530) | -134.6% | 163.7% | 613.4% | 285.7% | 364.1% |
| China LNG Group Ltd ($931) | 195.2% | 95.1% | 76.4% | 97.9% | |
| Forefront Group Ltd ($885) | | -2,113.8% | -803.1% | 57.7% | |
| China Infrastructure Investment Ltd ($600) | -1,171.2% | -274.9% | 120.0% | 52.0% | |
| GA Holdings Ltd ($8126) | -4.5% | 8.0% | 19.7% | 22.9% | |
| |
|---|
| Median (37 companies) | 2.2% | 2.1% | 1.9% | 4.6% | 2.1% |
|---|
| Li & Fung Ltd ($494) | 5.5% | 5.4% | 4.9% | 4.4% | 3.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| C Y Foundation Group Ltd ($1182) | 9.8% | 2.5% | 5.2% | 82.2% | 9.3% |
| Inspur International Ltd ($596) | 0.9% | 8.4% | 12.2% | 33.6% | |
| SIS International Holdings ($529) | 0.2% | 13.4% | 31.8% | 14.8% | 49.8% |
| HKC International Holdings Ltd ($248) | 0.9% | 5.5% | 0.8% | 11.4% | 0.5% |
| Tan Chong International Ltd ($693) | 7.6% | 6.0% | 7.6% | 7.0% | |
| |
|---|
| Median (36 companies) | 1.5% | 1.4% | 1.8% | 1.7% | 1.6% |
|---|
| Li & Fung Ltd ($494) | 0.6% | 0.9% | 0.3% | 0.4% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China LNG Group Ltd ($931) | 2.2% | 8.4% | 7.4% | 87.0% | |
| Yestar International Holdings Co Ltd ($2393) | 29.4% | 28.8% | 24.1% | 26.2% | 25.4% |
| Powerwell Pacific Holdings Ltd ($8265) | 27.8% | 6.4% | 6.4% | 23.6% | |
| Forefront Group Ltd ($885) | -37.7% | -4.9% | -11.0% | 19.5% | |
| Sincere Watch Hong Kong Ltd ($444) | 46.4% | 51.7% | 27.7% | 14.6% | 5.5% |
| |
|---|
| Median (38 companies) | 2.2% | 2.1% | 0.9% | 3.1% | 1.8% |
|---|
| Li & Fung Ltd ($494) | 16.2% | 13.0% | 11.8% | 12.3% | 13.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sheng Yuan Holdings Ltd ($851) | | | | 19.3x | 15.4x |
| Takson Holdings Ltd ($918) | | | 11.5x | 11.7x | 15.7x |
| Huiyin Household Appliances Holdings Co Ltd ($1280) | 10.1x | | | 10.9x | |
| Pacific Andes International Holdings Ltd ($1174) | 4.9x | 5.1x | 9.1x | 7.8x | |
| SIS International Holdings ($529) | -62.1x | -1.8x | 7.0x | 7.2x | 16.8x |
| |
|---|
| Median (26 companies) | -0.4x | -0.3x | -0.8x | -0.1x | 0.1x |
|---|
| Li & Fung Ltd ($494) | 1.0x | 0.7x | 1.1x | 1.1x | 1.6x |
