Zhongsheng Group Holdings Ltd EBITDA decreased on 8.4% in 2015 and EBITDA Margin decreased slightly on 0.83 pp from 5.5% to 4.7%
31/03/2016 • About Zhongsheng Group Holdings Ltd (
$881) • By InTwits
Zhongsheng Group Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhongsheng Group Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's in pair with industry average of 11.7%.
- CAPEX is quite volatile: 4,051 in 2015, 2,680 in 2014, 6,411 in 2013, 8,128 in 2012, 4,306 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.8%
- It operates with high leverage: Net Debt/EBITDA is 5.3x 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.
Zhongsheng Group Holdings Ltd ($881) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 41,903 | 50,048 | 52,527 | 54,787 | 59,143 | 8.0% |
| Gross Profit | 4,308 | 4,284 | 4,761 | 4,775 | 4,669 | -2.2% |
| SG&A | 1,942 | 2,790 | 3,060 | 3,355 | 3,763 | 12.2% |
| EBITDA | 3,057 | 2,635 | 3,011 | 3,005 | 2,752 | -8.4% |
| Net Income | 1,417 | 750 | 1,010 | 751 | 461 | -38.6% |
Balance Sheet
|
|---|
| Cash | 4,675 | 4,285 | 3,850 | 4,290 | 4,675 | 9.0% |
| Short Term Debt | 10,028 | 14,374 | 16,764 | 16,881 | 14,785 | -12.4% |
| Long Term Debt | 1,263 | 1,947 | 558 | 3,432 | 4,476 | 30.4% |
Cash flow
|
|---|
| Capex | 2,261 | 1,817 | 2,249 | 2,120 | 1,782 | -16.0% |
Ratios
|
|---|
| Revenue growth | 74.3% | 19.4% | 5.0% | 4.3% | 8.0% | |
| EBITDA growth | 76.8% | -13.8% | 14.3% | -0.2% | -8.4% | |
| Gross Margin | 10.3% | 8.6% | 9.1% | 8.7% | 7.9% | -0.8% |
| EBITDA Margin | 7.3% | 5.3% | 5.7% | 5.5% | 4.7% | -0.8% |
| Net Income Margin | 3.4% | 1.5% | 1.9% | 1.4% | 0.8% | -0.6% |
| SG&A, % of revenue | 4.6% | 5.6% | 5.8% | 6.1% | 6.4% | 0.2% |
| CAPEX, % of revenue | 5.4% | 3.6% | 4.3% | 3.9% | 3.0% | -0.9% |
| ROIC | 16.4% | 9.1% | 8.8% | 7.4% | 5.8% | -1.6% |
| ROE | 21.8% | 10.3% | 12.7% | 7.7% | 4.1% | -3.6% |
| Net Debt/EBITDA | 2.2x | 4.6x | 4.5x | 5.3x | 5.3x | -0.0x |
Revenue and profitability
The company's Revenue increased on 8.0% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.83 pp from 5.5% to 4.7% in 2015.
Gross Margin decreased slightly on 0.82 pp from 8.7% to 7.9% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased slightly on 0.59 pp from 1.4% to 0.78% in 2015.
Capital expenditures (CAPEX) and working capital investments
Zhongsheng Group Holdings Ltd's CAPEX/Revenue was 3.0% in 2015. Zhongsheng Group Holdings Ltd showed small CAPEX/Revenue decline of 0.62 pp from 3.6% in 2012 to 3.0% in 2015. Average CAPEX/Revenue for the last three years was 3.7%.Zhongsheng Group Holdings Ltd invested a large share of EBITDA (64.7%) to CAPEX.
Return on investment
The company operates at low ROIC (5.78%) and ROE (4.12%). ROIC decreased slightly on 1.6 pp from 7.4% to 5.8% in 2015. ROE decreased on 3.6 pp from 7.7% to 4.1% in 2015.
Leverage (Debt)
Debt level is 5.3x Net Debt / EBITDA and 7.0x Debt / EBITDA. Net Debt / EBITDA decreased on 0.031x from 5.3x to 5.3x in 2015. Debt decreased on 5.2% in 2015 while cash increased on 9.0% in 2015.
Appendix 1: Peers in Retail
Below we provide Zhongsheng Group 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 (115 companies) | 421.0% | 11.1% | 6.5% | 3.3% | -1.0% |
|---|
| Zhongsheng Group Holdings Ltd ($881) | | 19.4% | 5.0% | 4.3% | 8.0% |
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 (102 companies) | 39.4% | 37.2% | 36.4% | 35.5% | 34.8% |
|---|
| Zhongsheng Group Holdings Ltd ($881) | 10.3% | 8.6% | 9.1% | 8.7% | 7.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Energy Development Holdings Ltd ($228) | -44.2% | -58.1% | -72.3% | -84.0% | 1,070.6% |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | 55.4% |
| 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% |
| |
|---|
| Median (115 companies) | 13.4% | 10.7% | 7.8% | 9.0% | 7.4% |
|---|
| Zhongsheng Group Holdings Ltd ($881) | 7.3% | 5.3% | 5.7% | 5.5% | 4.7% |
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% |
| Merry Garden Holdings Ltd ($1237) | 22.7% | 18.6% | 28.6% | 15.1% | 34.2% |
| China Energy Development Holdings Ltd ($228) | 1.4% | 1.6% | 0.2% | 0.0% | 27.4% |
| Golden Eagle Retail Group Ltd ($3308) | 30.6% | 28.5% | 9.4% | 26.7% | 25.4% |
| |
|---|
| Median (115 companies) | 3.9% | 4.3% | 3.6% | 3.7% | 3.5% |
|---|
| Zhongsheng Group Holdings Ltd ($881) | 5.4% | 3.6% | 4.3% | 3.9% | 3.0% |
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 (115 companies) | 17.2% | 12.4% | 8.5% | 8.5% | 5.8% |
|---|
| Zhongsheng Group Holdings Ltd ($881) | 16.4% | 9.1% | 8.8% | 7.4% | 5.8% |
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 (90 companies) | -0.8x | -0.5x | -0.8x | -0.2x | -0.5x |
|---|
| Zhongsheng Group Holdings Ltd ($881) | 2.2x | 4.6x | 4.5x | 5.3x | 5.3x |
