Li Ning Co Ltd revenue growth accelerated from 3.8% in 2014 to 17.2% in 2015
17/03/2016 • About Li Ning Co Ltd (
$2331) • By InTwits
Li Ning Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Li Ning Co Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 was 0.0%. On average EBITDA Margin was -1.4% for the sames years0
- Li Ning Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: 311 in 2015, 242 in 2014, 166 in 2013, 123 in 2012, 298 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Li Ning Co Ltd ($2331) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 8,929 | 6,676 | 5,824 | 6,047 | 7,089 | 17.2% |
| Gross Profit | 4,042 | 2,514 | 2,594 | 2,718 | 3,193 | 17.5% |
| SG&A | 3,544 | 3,349 | 3,247 | 3,384 | 3,187 | -5.8% |
| EBITDA | 892 | -1,372 | 24 | -445 | 411 | -192.4% |
| Net Income | 386 | -1,979 | -392 | -781 | 14 | -101.8% |
Balance Sheet
|
|---|
| Cash | 1,196 | 1,241 | 1,281 | 1,031 | 1,813 | 75.7% |
| Short Term Debt | 910 | 1,571 | 267 | 621 | 442 | -28.8% |
| Long Term Debt | 459 | 804 | 968 | 1,052 | 938 | -10.9% |
Cash flow
|
|---|
| Capex | 298 | 123 | 166 | 242 | 311 | 28.4% |
Ratios
|
|---|
| Revenue growth | -5.8% | -25.2% | -12.8% | 3.8% | 17.2% | |
| EBITDA growth | -49.3% | -253.8% | -101.7% | -1,969.8% | -192.4% | |
| Gross Margin | 45.3% | 37.7% | 44.5% | 44.9% | 45.0% | 0.1% |
| EBITDA Margin | 10.0% | -20.6% | 0.4% | -7.4% | 5.8% | 13.1% |
| Net Income Margin | 4.3% | -29.6% | -6.7% | -12.9% | 0.2% | 13.1% |
| SG&A, % of revenue | 39.7% | 50.2% | 55.8% | 56.0% | 45.0% | -11.0% |
| CAPEX, % of revenue | 3.3% | 1.8% | 2.8% | 4.0% | 4.4% | 0.4% |
| ROIC | 13.9% | -33.5% | -3.6% | -14.9% | 3.4% | 18.3% |
| ROE | 11.3% | -77.8% | -18.2% | -33.7% | 0.6% | 34.3% |
| Net Debt/EBITDA | 0.2x | | -1.9x | | -1.1x | -1.1x |
Revenue and profitability
The company's Revenue jumped on 17.2% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.96 pp from 21.9% to 22.8% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue dropped on 11.0 pp from 56.0% to 45.0% in 2015.
Net Income marign jumped on 13.1 pp from -12.9% to 0.20% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Li Ning Co Ltd had CAPEX/Revenue of 4.4%. The company showed CAPEX/Revenue growth of 2.6 pp from 1.8% in 2012 to 4.4% in 2015. It's average CAPEX/Revenue for the last three years was 3.7%.The company invested a big chunk of EBITDA (75.7%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (3.39%) and ROE (0.56%). ROIC surged on 18.3 pp from -14.9% to 3.4% in 2015. ROE surged on 34.3 pp from -33.7% to 0.56% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 3.4x. Net Debt / EBITDA dropped1.1x from to -1.1x in 2015. Debt dropped on 17.5% in 2015 while cash jumped on 75.7% in 2015.
Management team
Li Ning is a the company's CEO. Li Ning has spent 4 years at the company.
Appendix 1: Peers in Retail
Below we provide Li Ning Co 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 (111 companies) | 24.3% | 10.5% | 6.1% | 3.1% | -1.8% |
|---|
| Li Ning Co Ltd ($2331) | | -25.2% | -12.8% | 3.8% | 17.2% |
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 (100 companies) | 39.4% | 37.3% | 36.4% | 35.5% | 45.3% |
|---|
| Li Ning Co Ltd ($2331) | 45.3% | 37.7% | 44.5% | 44.9% | 45.0% |
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% | 39.6% |
| 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% | 43.4% |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | |
| |
|---|
| Median (110 companies) | 13.3% | 10.3% | 7.3% | 8.8% | 8.2% |
|---|
| Li Ning Co Ltd ($2331) | 10.0% | -20.6% | 0.4% | -7.4% | 5.8% |
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% | 24.9% |
| 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% | 17.7% |
| Tsui Wah Holdings Ltd ($1314) | 5.2% | 8.3% | 9.3% | 30.5% | 10.6% |
| |
|---|
| Median (111 companies) | 3.9% | 4.0% | 3.6% | 3.5% | 2.7% |
|---|
| Li Ning Co Ltd ($2331) | 3.3% | 1.8% | 2.8% | 4.0% | 4.4% |
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 (111 companies) | 17.2% | 12.3% | 8.3% | 8.4% | 7.2% |
|---|
| Li Ning Co Ltd ($2331) | 13.9% | -33.5% | -3.6% | -14.9% | 3.4% |
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 | 7.3x |
| |
|---|
| Median (87 companies) | -0.8x | -0.5x | -0.8x | -0.2x | -0.5x |
|---|
