S Culture International Holdings Ltd Net Debt / EBITDA surged on 155.7x from 2.4x to 158.1x in 2015 while Revenue decreased on 5.0%
17/03/2016 • About S Culture International Holdings Ltd (
$1255) • By InTwits
S Culture International Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- S Culture International Holdings Ltd doesn't have a profitable business model yet: 2015 ROIC is -3.0%
- EBITDA Margin is declining: 0.2% in 2015 vs. 4.8% in 2014 vs. 9.8% in 2011
- EBITDA Margin is quite volatile: 0.2% in 2015, 4.8% in 2014, 7.2% in 2013, 9.0% in 2012, 9.8% in 2011
- S Culture International Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: 29.1 in 2015, 10.9 in 2014, 5.4 in 2013, 22.5 in 2012, 16.1 in 2011
- The company has unprofitable business model: ROIC is at -3.0%
- It operates with high leverage: Net Debt/EBITDA is 158.1x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
S Culture International Holdings Ltd ($1255) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 472.4 | 505.3 | 550.1 | 590.5 | 561.0 | -5.0% |
| Gross Profit | 296.5 | 327.0 | 350.3 | 371.7 | 347.5 | -6.5% |
| SG&A | 258.2 | 293.0 | 323.3 | 359.0 | 360.6 | 0.4% |
| EBITDA | 46.2 | 45.3 | 39.5 | 28.1 | 1.1 | -96.0% |
| Net Income | 31.5 | 25.1 | 16.5 | 9.0 | -16.4 | -281.2% |
Balance Sheet
|
|---|
| Cash | 32.4 | 28.0 | 89.9 | 70.8 | 32.6 | -53.9% |
| Short Term Debt | 51.6 | 77.7 | 104.0 | 126.5 | 199.3 | 57.5% |
| Long Term Debt | 16.0 | 15.4 | 14.1 | 11.9 | 10.2 | -14.5% |
Cash flow
|
|---|
| Capex | 14.7 | 12.2 | 11.1 | 15.0 | 14.5 | -3.1% |
Ratios
|
|---|
| Revenue growth | 29.1% | 7.0% | 8.9% | 7.3% | -5.0% | |
| EBITDA growth | 51.0% | -2.0% | -12.8% | -29.0% | -96.0% | |
| Gross Margin | 62.8% | 64.7% | 63.7% | 62.9% | 61.9% | -1.0% |
| EBITDA Margin | 9.8% | 9.0% | 7.2% | 4.8% | 0.2% | -4.6% |
| Net Income Margin | 6.7% | 5.0% | 3.0% | 1.5% | -2.9% | -4.4% |
| SG&A, % of revenue | 54.6% | 58.0% | 58.8% | 60.8% | 64.3% | 3.5% |
| CAPEX, % of revenue | 3.1% | 2.4% | 2.0% | 2.5% | 2.6% | 0.0% |
| ROIC | 22.3% | 16.0% | 9.1% | 3.8% | -3.0% | -6.8% |
| ROE | 28.0% | 18.3% | 8.4% | 3.8% | -7.2% | -10.9% |
| Net Debt/EBITDA | 0.8x | 1.4x | 0.7x | 2.4x | 158.1x | 155.7x |
Revenue and profitability
The company's Revenue decreased on 5.0% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.6 pp from 4.8% to 0.20% in 2015.
Gross Margin decreased slightly on 1.0 pp from 62.9% to 61.9% in 2015. SG&A as a % of Revenue increased on 3.5 pp from 60.8% to 64.3% in 2015.
Net Income marign decreased on 4.4 pp from 1.5% to -2.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.6% in 2015. S Culture International Holdings Ltd showed almost no change in CAPEX/Revenue from 2012 to 2015. It's average CAPEX/Revenue for the last three years was 2.4%.Battling declining revenue S Culture International Holdings Ltd made large investments to CAPEX (1,300% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-3.04%) and ROE (-7.17%). ROIC decreased on 6.8 pp from 3.8% to -3.0% in 2015. ROE dropped on 10.9 pp from 3.8% to -7.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 158.1x and Debt / EBITDA is 187.3x. Net Debt / EBITDA surged on 155.7x from 2.4x to 158.1x in 2015. Debt jumped on 51.3% in 2015 while cash dropped on 53.9% in 2015.
Appendix 1: Peers in Apparel
Below we provide S Culture International Holdings 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) | 20.5% | 5.2% | 0.8% | 5.0% | -0.9% |
|---|
| S Culture International Holdings Ltd ($1255) | | 7.0% | 8.9% | 7.3% | -5.0% |
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% | 61.1% |
| Crocodile Garments ($122) | 65.5% | 64.7% | 60.7% | 60.4% | 62.1% |
| Symphony Holdings Ltd/Hong Kong ($1223) | 15.4% | 38.5% | 42.3% | 59.6% | |
| |
|---|
| Median (46 companies) | 24.0% | 24.4% | 23.0% | 23.4% | 20.1% |
|---|
| S Culture International Holdings Ltd ($1255) | 62.8% | 64.7% | 63.7% | 62.9% | 61.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HOSA International Ltd ($2200) | 46.3% | 44.4% | 42.2% | 37.6% | 26.7% |
| 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% | 30.6% |
| 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% | 27.9% |
| |
|---|
| Median (47 companies) | 10.4% | 10.4% | 9.7% | 6.7% | 6.8% |
|---|
| S Culture International Holdings Ltd ($1255) | 9.8% | 9.0% | 7.2% | 4.8% | 0.2% |
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% | 1.3% |
|---|
| S Culture International Holdings Ltd ($1255) | 3.1% | 2.4% | 2.0% | 2.5% | 2.6% |
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% |
| HOSA International Ltd ($2200) | 44.2% | 34.6% | 32.0% | 28.2% | 16.5% |
| 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% |
| |
|---|
| Median (47 companies) | 11.5% | 8.6% | 6.7% | 3.2% | 6.5% |
|---|
| S Culture International Holdings Ltd ($1255) | 22.3% | 16.0% | 9.1% | 3.8% | -3.0% |
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 | |
| 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 |
| Highlight China IoT International Ltd ($1682) | -0.2x | -0.3x | 0.4x | 2.2x | -1.3x |
| |
|---|
| Median (33 companies) | -0.9x | -0.4x | -0.7x | -0.3x | -0.1x |
|---|
| S Culture International Holdings Ltd ($1255) | 0.8x | 1.4x | 0.7x | 2.4x | 158.1x |
