Merry Garden Holdings Ltd CAPEX surged on 107% in 2015 while Revenue decreased on 8.7%
29/03/2016 • About Merry Garden Holdings Ltd (
$1237) • By InTwits
Merry Garden Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 14.3% in 2015, 18.7% in 2014, 35.6% in 2013, 25.9% in 2012, 29.6% in 2011
- Merry Garden Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 23.8%. At the same time it's a lot of higher than industry average of 5.8%.
- CAPEX is quite volatile: 219 in 2015, 106 in 2014, 136 in 2013, 78.5 in 2012, 69.7 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.0%
- It operates with high leverage: Net Debt/EBITDA is 2.4x 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.
Merry Garden Holdings Ltd ($1237) key annual financial indicators
| mln. | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 307.2 | 421.2 | 475.1 | 701.2 | 640.0 | -8.7% |
| Gross Profit | 111.9 | 148.7 | 151.7 | 178.4 | 122.5 | -31.4% |
| SG&A | | 57.3 | 60.8 | 78.0 | 78.2 | 0.3% |
| EBITDA | 90.8 | 109.1 | 169.0 | 131.1 | 91.6 | -30.2% |
| Net Income | 70.7 | 80.1 | 124.4 | 90.8 | 43.8 | -51.8% |
Balance Sheet
|
|---|
| Cash | 8.2 | 70.0 | 75.1 | 174.1 | 196.9 | 13.1% |
| Short Term Debt | 85.8 | 125.7 | 239.7 | 345.7 | 322.5 | -6.7% |
| Long Term Debt | 0.0 | 0.0 | 25.1 | 67.4 | 91.2 | 35.3% |
Cash flow
|
|---|
| Capex | 69.7 | 78.5 | 136.1 | 105.6 | 218.9 | 107.4% |
Ratios
|
|---|
| Revenue growth | 53.9% | 37.1% | 12.8% | 47.6% | -8.7% | |
| EBITDA growth | 39.8% | 20.1% | 54.9% | -22.4% | -30.2% | |
| Gross Margin | 36.4% | 35.3% | 31.9% | 25.4% | 19.1% | -6.3% |
| EBITDA Margin | 29.6% | 25.9% | 35.6% | 18.7% | 14.3% | -4.4% |
| Net Income Margin | 23.0% | 19.0% | 26.2% | 13.0% | 6.8% | -6.1% |
| SG&A, % of revenue | | 13.6% | 12.8% | 11.1% | 12.2% | 1.1% |
| CAPEX, % of revenue | 22.7% | 18.6% | 28.6% | 15.1% | 34.2% | 19.1% |
| ROIC | 46.0% | 27.8% | 25.2% | 11.5% | 5.0% | -6.5% |
| ROE | 64.0% | 31.5% | 29.6% | 14.3% | 4.5% | -9.7% |
| Net Debt/EBITDA | 0.9x | 0.5x | 1.1x | 1.8x | 2.4x | 0.5x |
Revenue and profitability
The company's Revenue decreased on 8.7% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.95 pp from 12.3% to 13.2% in 2015.
Gross Margin decreased on 6.3 pp from 25.4% to 19.1% in 2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 11.1% to 12.2% in 2015.
Net Income marign decreased on 6.1 pp from 13.0% to 6.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 34.2%. Merry Garden Holdings Ltd showed fast CAPEX/Revenue growth of 15.6 pp from 18.6% in 2012 to 34.2% in 2015. It's average level of CAPEX/Revenue for the last three years was 26.0%.The company has spent a lot to CAPEX (239% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (4.98%) and ROE (4.53%). ROIC decreased on 6.5 pp from 11.5% to 5.0% in 2015. ROE decreased on 9.7 pp from 14.3% to 4.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 4.5x. Net Debt / EBITDA surged on 0.5x from 1.8x to 2.4x in 2015. Debt showed almost no change in 2015 while cash surged on 13.1% in 2015.
Appendix 1: Peers in Retail
Below we provide Merry Garden Holdings 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 Nuclear Industry 23 International Corp Ltd ($611) | | 1.4% | 85.6% | -42.1% | 419.8% |
| Noble House China Holdings Ltd ($8246) | | -5.0% | -20.2% | -24.8% | 117.2% |
| Vongroup Ltd ($318) | | -46.9% | 23.7% | -80.2% | 90.3% |
| Nanjing Sinolife United Co Ltd ($3332) | | 45.6% | 29.5% | 29.6% | 57.3% |
| Shanghai La Chapelle Fashion Co Ltd ($6116) | | 54.9% | 72.8% | 23.0% | 48.3% |
| |
|---|
| Median (95 companies) | 28.7% | 10.5% | 6.1% | 3.1% | 0.2% |
|---|
| Merry Garden Holdings Ltd ($1237) | | 37.1% | 12.8% | 47.6% | -8.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Vongroup Ltd ($318) | | | | 95.1% | 99.1% |
| Modern Beauty Salon Holdings Ltd ($919) | 97.3% | 97.4% | 95.9% | 96.8% | 96.7% |
| Moiselle International Holdings Ltd ($130) | 81.4% | 81.2% | 83.8% | 80.6% | 83.2% |
| Embry Holdings Ltd ($1388) | 82.3% | 81.2% | 80.4% | 82.3% | 81.6% |
| Nanjing Sinolife United Co Ltd ($3332) | 80.6% | 86.5% | 89.3% | 90.9% | 80.6% |
| |
|---|
| Median (84 companies) | 40.0% | 37.7% | 38.0% | 35.6% | 42.0% |
|---|
| Merry Garden Holdings Ltd ($1237) | 36.4% | 35.3% | 31.9% | 25.4% | 19.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nanjing Sinolife United Co Ltd ($3332) | 47.8% | 51.6% | 56.9% | 54.4% | 44.8% |
| Lifestyle International Holdings Ltd ($1212) | 49.6% | 47.5% | 47.0% | 44.7% | 43.4% |
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 6.0% | 5.6% | 58.3% | 41.4% |
| Maoye International Holdings Ltd ($848) | 45.5% | 47.4% | 46.3% | 73.2% | 39.6% |
| Intime Retail Group Co Ltd ($1833) | 36.0% | 36.7% | 55.4% | 36.2% | 35.7% |
| |
|---|
| Median (95 companies) | 13.1% | 9.7% | 7.3% | 8.8% | 7.1% |
|---|
| Merry Garden Holdings Ltd ($1237) | 29.6% | 25.9% | 35.6% | 18.7% | 14.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Culture Landmark Investment Ltd ($674) | 4.6% | 11.6% | 19.4% | 15.7% | 47.2% |
| Springland International Holdings Ltd ($1700) | 20.7% | 31.9% | 17.4% | 26.5% | 36.9% |
| Future Bright Holdings Ltd ($703) | 6.2% | 2.6% | 3.7% | 36.8% | 24.9% |
| Parkson Retail Group Ltd ($3368) | 8.9% | 7.5% | 9.7% | 6.7% | 20.8% |
| Maoye International Holdings Ltd ($848) | 30.9% | 32.8% | 24.1% | 31.5% | 17.7% |
| |
|---|
| Median (95 companies) | 3.9% | 4.0% | 3.6% | 3.5% | 3.1% |
|---|
| Merry Garden Holdings Ltd ($1237) | 22.7% | 18.6% | 28.6% | 15.1% | 34.2% |
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% |
| Noble House China Holdings Ltd ($8246) | 60.3% | 17.7% | -67.7% | -113.8% | 35.6% |
| Fairwood Holdings Ltd ($52) | 27.4% | 28.0% | 29.1% | 28.6% | 32.1% |
| |
|---|
| Median (95 companies) | 16.6% | 12.3% | 8.3% | 8.4% | 5.8% |
|---|
| Merry Garden Holdings Ltd ($1237) | 46.0% | 27.8% | 25.2% | 11.5% | 5.0% |
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 |
| Trinity Ltd ($891) | -0.6x | -0.2x | 0.2x | 0.6x | 18.2x |
| Parkson Retail Group Ltd ($3368) | 0.4x | 0.8x | 2.3x | 3.6x | 9.8x |
| Maoye International Holdings Ltd ($848) | 1.7x | 2.9x | 3.3x | 3.4x | 9.0x |
| Century Ginwa Retail Holdings Ltd ($162) | 6.5x | 2.0x | 2.5x | 4.8x | 7.3x |
| |
|---|
| Median (74 companies) | -0.8x | -0.6x | -0.9x | -0.2x | -0.5x |
|---|
| Merry Garden Holdings Ltd ($1237) | 0.9x | 0.5x | 1.1x | 1.8x | 2.4x |
