IT Ltd reports 8.4% EBITDA decline and 1.5 pp EBITDA Margin decline from 11.6% to 10.1%
25/05/2016 • About IT Ltd (
$999) • By InTwits
IT Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- IT Ltd is a growth stock: FY2016 revenue growth was 5.0%, 5 year revenue CAGR was 14.5% at FY2016 ROIC 10.5%
- IT Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 5.7%.
- CAPEX is quite volatile: 11,276 in FY2016, 8,278 in FY2015, 1,005 in FY2014, 871 in FY2013, 2,606 in FY2012
- The company has business model with average profitability: ROIC is at 10.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
IT Ltd ($999) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,742 | 6,543 | 6,747 | 7,181 | 7,541 | 5.0% |
| Gross Profit | 3,540 | 3,850 | 4,044 | 4,464 | 4,566 | 2.3% |
| EBITDA | 784 | 721 | 698 | 835 | 765 | -8.4% |
| Net Income | 471 | 384 | 280 | 312 | 209 | -33.1% |
Balance Sheet
|
|---|
| Cash | 627 | 961 | 2,315 | 2,294 | 1,967 | -14.3% |
| Short Term Debt | 263 | 366 | 496 | 267 | 273 | 2.2% |
| Long Term Debt | 437 | 668 | 1,495 | 1,469 | 1,262 | -14.0% |
Cash flow
|
|---|
| Capex | 387 | 314 | 259 | 275 | 322 | 17.2% |
Ratios
|
|---|
| Revenue growth | 49.7% | 14.0% | 3.1% | 6.4% | 5.0% | |
| EBITDA growth | 34.6% | -8.1% | -3.2% | 19.5% | -8.4% | |
| Gross Margin | 61.7% | 58.8% | 59.9% | 62.2% | 60.6% | -1.6% |
| EBITDA Margin | 13.7% | 11.0% | 10.3% | 11.6% | 10.1% | -1.5% |
| Net Income Margin | 8.2% | 5.9% | 4.1% | 4.4% | 2.8% | -1.6% |
| CAPEX, % of revenue | 6.7% | 4.8% | 3.8% | 3.8% | 4.3% | 0.4% |
| ROIC | 20.3% | 14.2% | 10.1% | 11.3% | 10.5% | -0.8% |
| ROE | 22.9% | 15.9% | 10.5% | 11.1% | 7.3% | -3.8% |
| Net Debt/EBITDA | 0.1x | 0.1x | -0.5x | -0.7x | -0.6x | 0.1x |
Revenue and profitability
The company's Revenue increased on 5.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.7 pp from 19.2% to 23.9% in FY2016.
Gross Margin decreased slightly on 1.6 pp from 62.2% to 60.6% in FY2016.
Net Income marign decreased slightly on 1.6 pp from 4.4% to 2.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 4.3% in FY2016. The company's CAPEX/Revenue decreased slightly on 0.53 pp from 4.8% in FY2013 to 4.3% in FY2016. Average CAPEX/Revenue for the last three years was 4.0%.
Return on investment
The company operates at low ROIC (10.46%) and ROE (7.29%). ROIC decreased slightly on 0.85 pp from 11.3% to 10.5% in FY2016. ROE decreased on 3.8 pp from 11.1% to 7.3% in FY2016.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.1x from -0.7x to -0.6x in FY2016. Debt dropped on 11.5% while cash dropped on 14.3%.
Appendix 1: Peers in Retail
Below we provide IT 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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) | 10.2% | 6.1% | 3.3% | -1.0% | 4.2% |
|---|
| IT Ltd ($999) | | 14.0% | 3.1% | 6.4% | 5.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vongroup Ltd ($318) | | | 95.1% | 99.1% | |
| Modern Beauty Salon Holdings Ltd ($919) | 97.4% | 95.9% | 96.8% | 96.7% | |
| Moiselle International Holdings Ltd ($130) | 81.2% | 83.8% | 80.6% | 83.2% | |
| Embry Holdings Ltd ($1388) | 81.2% | 80.4% | 82.3% | 81.6% | |
| Nanjing Sinolife United Co Ltd ($3332) | 86.5% | 89.3% | 90.9% | 80.6% | |
| |
|---|
| Median (102 companies) | 36.7% | 36.3% | 35.3% | 33.6% | 45.5% |
|---|
| IT Ltd ($999) | 61.7% | 58.8% | 59.9% | 62.2% | 60.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Energy Development Holdings Ltd ($228) | -58.1% | -72.3% | -84.0% | 1,070.6% | |
| Golden Eagle Retail Group Ltd ($3308) | 48.5% | 47.3% | 42.8% | 55.4% | |
| Nanjing Sinolife United Co Ltd ($3332) | 51.6% | 56.9% | 54.4% | 44.8% | |
| Lifestyle International Holdings Ltd ($1212) | 47.5% | 47.0% | 44.7% | 43.4% | |
| China Dongxiang Group Co Ltd ($3818) | 6.0% | 5.6% | 58.3% | 41.4% | |
| |
|---|
| Median (115 companies) | 10.3% | 7.3% | 8.9% | 7.1% | 9.2% |
|---|
| IT Ltd ($999) | 13.7% | 11.0% | 10.3% | 11.6% | 10.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Culture Landmark Investment Ltd ($674) | 11.6% | 19.4% | 15.7% | 47.2% | |
| Springland International Holdings Ltd ($1700) | 31.9% | 17.4% | 26.5% | 36.9% | |
| Merry Garden Holdings Ltd ($1237) | 18.6% | 28.6% | 15.1% | 34.2% | |
| China Energy Development Holdings Ltd ($228) | 1.6% | 0.2% | 0.0% | 27.4% | |
| Golden Eagle Retail Group Ltd ($3308) | 28.5% | 9.4% | 26.7% | 25.4% | |
| |
|---|
| Median (115 companies) | 4.1% | 3.6% | 3.7% | 3.1% | 1.9% |
|---|
| IT Ltd ($999) | 6.7% | 4.8% | 3.8% | 3.8% | 4.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 50.7% | -4.6% | 81.3% | 71.8% | |
| Starbucks Corp ($4337) | 36.4% | -6.0% | 52.8% | 51.4% | |
| Sa Sa International Holdings Ltd ($178) | 53.5% | 52.7% | 49.0% | 39.8% | |
| Noble House China Holdings Ltd ($8246) | 17.7% | -67.7% | -113.8% | 35.6% | |
| Fairwood Holdings Ltd ($52) | 28.0% | 29.1% | 28.6% | 32.1% | |
| |
|---|
| Median (115 companies) | 12.2% | 8.5% | 8.4% | 5.8% | 14.8% |
|---|
| IT Ltd ($999) | 20.3% | 14.2% | 10.1% | 11.3% | 10.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sparkle Roll Group Ltd ($970) | 0.6x | 4.0x | 9.3x | 23.5x | |
| Trinity Ltd ($891) | -0.2x | 0.2x | 0.6x | 18.2x | |
| Parkson Retail Group Ltd ($3368) | 0.8x | 2.3x | 3.6x | 9.8x | |
| Maoye International Holdings Ltd ($848) | 2.9x | 3.3x | 3.4x | 9.0x | |
| Century Ginwa Retail Holdings Ltd ($162) | 2.0x | 2.5x | 4.8x | 7.3x | |
| |
|---|
| Median (89 companies) | -0.5x | -0.7x | -0.2x | -0.5x | -0.8x |
|---|
| IT Ltd ($999) | 0.1x | 0.1x | -0.5x | -0.7x | -0.6x |
