Trinity Ltd reports 155% Net Income decline and 12.6 pp EBITDA Margin decline from 14.0% to 1.4%
21/03/2016 • About Trinity Ltd (
$891) • By InTwits
Trinity Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Trinity Ltd doesn't have a profitable business model yet: 2015 ROIC is -2.4%
- EBITDA Margin is declining: 1.4% in 2015 vs. 14.0% in 2014 vs. 28.5% in 2011
- EBITDA Margin is quite volatile: 1.4% in 2015, 14.0% in 2014, 18.2% in 2013, 26.7% in 2012, 28.5% in 2011
- Trinity Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's a lot of higher than industry average of 11.4%.
- CAPEX is quite volatile: 77.0 in 2015, 351 in 2014, 220 in 2013, 109 in 2012, 156 in 2011
- The company has unprofitable business model: ROIC is at -2.4%
- It operates with high leverage: Net Debt/EBITDA is 18.2x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Trinity Ltd ($891) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,607 | 2,801 | 2,696 | 2,624 | 1,914 | -27.0% |
| Gross Profit | 2,104 | 2,186 | 2,036 | 1,943 | 1,385 | -28.7% |
| SG&A | 1,414 | 1,547 | 1,626 | 1,675 | 1,540 | -8.0% |
| EBITDA | 743 | 748 | 491 | 368 | 27 | -92.6% |
| Net Income | 513 | 540 | 308 | 161 | -89 | -155.0% |
Balance Sheet
|
|---|
| Cash | 790 | 999 | 1,337 | 523 | 235 | -55.0% |
| Short Term Debt | 380 | 870 | 1,428 | 748 | 566 | -24.3% |
| Long Term Debt | 0 | 0 | 0 | 0 | 160 | |
Cash flow
|
|---|
| Capex | 88 | 112 | 96 | 133 | 60 | -54.8% |
Ratios
|
|---|
| Revenue growth | 29.6% | 7.4% | -3.7% | -2.7% | -27.0% | |
| EBITDA growth | 45.9% | 0.7% | -34.4% | -25.1% | -92.6% | |
| Gross Margin | 80.7% | 78.1% | 75.5% | 74.1% | 72.4% | -1.7% |
| EBITDA Margin | 28.5% | 26.7% | 18.2% | 14.0% | 1.4% | -12.6% |
| Net Income Margin | 19.7% | 19.3% | 11.4% | 6.1% | -4.6% | -10.8% |
| SG&A, % of revenue | 54.2% | 55.3% | 60.3% | 63.8% | 80.5% | 16.6% |
| CAPEX, % of revenue | 3.4% | 4.0% | 3.6% | 5.1% | 3.1% | -1.9% |
| ROIC | 17.7% | 13.4% | 6.5% | 4.3% | -2.4% | -6.7% |
| ROE | 18.6% | 16.1% | 8.9% | 4.7% | -2.7% | -7.4% |
| Net Debt/EBITDA | -0.6x | -0.2x | 0.2x | 0.6x | 18.2x | 17.5x |
Revenue and profitability
The company's Revenue dropped on 27.0% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 12.6 pp from 14.0% to 1.4% in 2015.
Gross Margin decreased slightly on 1.7 pp from 74.1% to 72.4% in 2015. SG&A as a % of Revenue surged on 16.6 pp from 63.8% to 80.5% in 2015.
Net Income marign dropped on 10.8 pp from 6.1% to -4.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Trinity Ltd had CAPEX/Revenue of 3.1%. Trinity Ltd's CAPEX/Revenue decreased slightly on 0.85 pp from 4.0% in 2012 to 3.1% in 2015. For the last three years the average CAPEX/Revenue was 3.9%.Trinity Ltd has spent a lot to CAPEX (222% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-2.39%) and ROE (-2.69%). ROIC decreased on 6.7 pp from 4.3% to -2.4% in 2015. ROE decreased on 7.4 pp from 4.7% to -2.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 18.2x and Debt / EBITDA is 26.8x. Net Debt / EBITDA surged on 17.5x from 0.6x to 18.2x in 2015. Debt decreased on 2.9% in 2015 while cash dropped on 55.0% in 2015.
Appendix 1: Peers in Retail
Below you can find Trinity Ltd benchmarking vs. other companies in Retail 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 |
|---|
| 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) | | 23.1% | 15.9% | 36.0% | -21.0% |
| |
|---|
| Median (112 companies) | 25.2% | 10.7% | 6.3% | 3.3% | -1.0% |
|---|
| Trinity Ltd ($891) | | 7.4% | -3.7% | -2.7% | -27.0% |
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 (101 companies) | 38.8% | 36.7% | 36.4% | 35.3% | 39.9% |
|---|
| Trinity Ltd ($891) | 80.7% | 78.1% | 75.5% | 74.1% | 72.4% |
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 (111 companies) | 13.0% | 9.6% | 7.2% | 8.8% | 7.4% |
|---|
| Trinity Ltd ($891) | 28.5% | 26.7% | 18.2% | 14.0% | 1.4% |
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% | 17.6% |
| 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 (112 companies) | 3.9% | 4.0% | 3.6% | 3.4% | 2.9% |
|---|
| Trinity Ltd ($891) | 3.4% | 4.0% | 3.6% | 5.1% | 3.1% |
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 (112 companies) | 16.6% | 12.2% | 8.4% | 8.4% | 7.8% |
|---|
| Trinity Ltd ($891) | 17.7% | 13.4% | 6.5% | 4.3% | -2.4% |
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 | 3.4x |
| 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 | 2.6x |
| 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 |
|---|
| Trinity Ltd ($891) | -0.6x | -0.2x | 0.2x | 0.6x | 18.2x |
