Sincere Co Ltd/The revenue returned to growth in FY2016: increased 3.8% vs. 16.6% decline a year earliner
27/05/2016 • About Sincere Co Ltd/The (
$244) • By InTwits
Sincere Co Ltd/The reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sincere Co Ltd/The doesn't have a profitable business model yet: FY2016 ROIC is -28.9%
- The company operates at negative EBITDA Margin: -40.6%
- Sincere Co Ltd/The motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -15.2% for the sames years0
- Sincere Co Ltd/The has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's in pair with industry average of 5.7%.
- CAPEX is quite volatile: 6.8 in FY2016, 5.1 in FY2015, 53.3 in FY2014, 18.7 in FY2013, 15.3 in FY2012
- The company has unprofitable business model: ROIC is at -28.9%
- It operates with high leverage: Net Debt/EBITDA is -0.0x 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.
Sincere Co Ltd/The ($244) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 526.5 | 498.1 | 444.1 | 370.3 | 384.3 | 3.8% |
| Gross Profit | 331.0 | 326.6 | 278.7 | 224.1 | 232.2 | 3.6% |
| SG&A | 106.0 | 124.8 | 134.3 | 126.0 | 381.1 | 202.4% |
| EBITDA | 17.9 | 32.5 | -102.6 | -128.5 | -156.2 | |
| Net Income | -8.5 | 64.3 | -85.1 | -122.6 | -181.8 | |
Balance Sheet
|
|---|
| Cash | 52.6 | 227.6 | 233.9 | 82.0 | 44.2 | -46.1% |
| Short Term Debt | 43.0 | 52.0 | 239.8 | 370.2 | 94.5 | -74.5% |
| Long Term Debt | 19.3 | 16.2 | 22.0 | 12.0 | 8.0 | -33.6% |
Cash flow
|
|---|
| Capex | 15.3 | 18.7 | 53.3 | 5.1 | 6.8 | 32.4% |
Ratios
|
|---|
| Revenue growth | 14.8% | -5.4% | -10.8% | -16.6% | 3.8% | |
| EBITDA growth | -53.5% | 81.6% | -415.6% | 25.2% | 21.6% | |
| Gross Margin | 62.9% | 65.6% | 62.8% | 60.5% | 60.4% | -0.1% |
| EBITDA Margin | 3.4% | 6.5% | -23.1% | -34.7% | -40.6% | -5.9% |
| Net Income Margin | -1.6% | 12.9% | -19.2% | -33.1% | -47.3% | -14.2% |
| SG&A, % of revenue | 20.1% | 25.1% | 30.2% | 34.0% | 99.2% | 65.1% |
| CAPEX, % of revenue | 2.9% | 3.7% | 12.0% | 1.4% | 1.8% | 0.4% |
| ROIC | 0.9% | 2.7% | -14.9% | -17.6% | -28.9% | -11.3% |
| ROE | -1.3% | 9.9% | -14.6% | -25.5% | -55.7% | -30.2% |
| Net Debt/EBITDA | 0.5x | -4.9x | | | | 0.0x |
Revenue and profitability
Sincere Co Ltd/The's Revenue increased on 3.8%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 5.9 pp from -34.7% to -40.6% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue surged on 65.1 pp from 34.0% to 99.2% in FY2016.
Net Income marign dropped on 14.2 pp from -33.1% to -47.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Sincere Co Ltd/The had CAPEX/Revenue of 1.8%. Sincere Co Ltd/The's CAPEX/Revenue decreased slightly on 2.0 pp from 3.7% in FY2013 to 1.8% in FY2016. It's average level of CAPEX/Revenue for the last three years was 5.0%.
Return on investment
The company operates at negative ROIC (-28.92%) and ROE (-55.71%). ROIC dropped on 11.3 pp from -17.6% to -28.9% in FY2016. ROE dropped on 30.2 pp from -25.5% to -55.7% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.0x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt dropped on 73.2% while cash dropped on 46.1%.
Appendix 1: Peers in Retail
Below you can find Sincere Co Ltd/The 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 | 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) | 10.0% | 6.5% | 3.3% | -1.0% | 4.6% |
|---|
| Sincere Co Ltd/The ($244) | | -5.4% | -10.8% | -16.6% | 3.8% |
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% | 47.0% |
|---|
| Sincere Co Ltd/The ($244) | 62.9% | 65.6% | 62.8% | 60.5% | 60.4% |
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) | 10.8% | 7.8% | 9.1% | 7.4% | 9.7% |
|---|
| Sincere Co Ltd/The ($244) | 3.4% | 6.5% | -23.1% | -34.7% | -40.6% |
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) | 4.5% | 3.6% | 3.7% | 3.5% | 2.7% |
|---|
| Sincere Co Ltd/The ($244) | 2.9% | 3.7% | 12.0% | 1.4% | 1.8% |
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) | 12.3% | 8.8% | 8.5% | 5.8% | 14.5% |
|---|
| Sincere Co Ltd/The ($244) | 0.9% | 2.7% | -14.9% | -17.6% | -28.9% |
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 (90 companies) | -0.5x | -0.6x | -0.2x | -0.5x | -0.7x |
|---|
