Chow Tai Fook Jewellery Group Ltd reports 46.1% Net Income decline and 12.0% Revenue decline
07/06/2016 • About Chow Tai Fook Jewellery Group Ltd (
$1929) • By InTwits
Chow Tai Fook Jewellery Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 9.1% in FY2016 vs. 11.9% in FY2015 vs. 15.6% in FY2012
- Chow Tai Fook Jewellery Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 917 in FY2016, 2,003 in FY2015, 1,189 in FY2014, 917 in FY2013, 867 in FY2012
- The company has business model with low profitability: ROIC is at 8.0%
- It operates with high leverage: Net Debt/EBITDA is 0.3x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Chow Tai Fook Jewellery Group Ltd ($1929) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 56,571 | 57,434 | 77,407 | 64,277 | 56,592 | -12.0% |
| Gross Profit | 16,448 | 16,283 | 21,152 | 19,072 | 15,641 | -18.0% |
| SG&A | 8,035 | 9,181 | 12,207 | 12,344 | 11,623 | -5.8% |
| EBITDA | 8,818 | 7,788 | 9,782 | 7,680 | 5,150 | -32.9% |
| Net Income | 6,341 | 5,505 | 7,272 | 5,456 | 2,941 | -46.1% |
Balance Sheet
|
|---|
| Cash | 9,988 | 8,305 | 9,467 | 8,477 | 13,001 | 53.4% |
| Short Term Debt | 11,381 | 5,836 | 17,086 | 15,089 | 13,833 | -8.3% |
| Long Term Debt | 3,426 | 0 | 0 | 0 | 600 | |
Cash flow
|
|---|
| Capex | 867 | 917 | 1,189 | 2,003 | 917 | -54.2% |
Ratios
|
|---|
| Revenue growth | 61.4% | 1.5% | 34.8% | -17.0% | -12.0% | |
| EBITDA growth | 81.1% | -11.7% | 25.6% | -21.5% | -32.9% | |
| Gross Margin | 29.1% | 28.4% | 27.3% | 29.7% | 27.6% | -2.0% |
| EBITDA Margin | 15.6% | 13.6% | 12.6% | 11.9% | 9.1% | -2.8% |
| Net Income Margin | 11.2% | 9.6% | 9.4% | 8.5% | 5.2% | -3.3% |
| SG&A, % of revenue | 14.2% | 16.0% | 15.8% | 19.2% | 20.5% | 1.3% |
| CAPEX, % of revenue | 1.5% | 1.6% | 1.5% | 3.1% | 1.6% | -1.5% |
| ROIC | 26.4% | 17.1% | 18.8% | 12.3% | 8.0% | -4.3% |
| ROE | 31.5% | 17.8% | 20.7% | 14.2% | 7.9% | -6.3% |
| Net Debt/EBITDA | 0.5x | -0.3x | 0.8x | 0.9x | 0.3x | -0.6x |
Revenue and profitability
Chow Tai Fook Jewellery Group Ltd's Revenue dropped on 12.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 11.9% to 9.1% in FY2016.
Gross Margin decreased on 2.0 pp from 29.7% to 27.6% in FY2016. SG&A as a % of Revenue increased slightly on 1.3 pp from 19.2% to 20.5% in FY2016.
Net Income marign decreased on 3.3 pp from 8.5% to 5.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Chow Tai Fook Jewellery Group Ltd had CAPEX/Revenue of 1.6%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at low ROIC (8.01%) and ROE (7.91%). ROIC decreased on 4.3 pp from 12.3% to 8.0% in FY2016. ROE decreased on 6.3 pp from 14.2% to 7.9% in FY2016.
Leverage (Debt)
Debt level is 0.3x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 0.9x to 0.3x in FY2016. Debt decreased on 4.3% while cash jumped on 53.4%.
Appendix 1: Peers in Retail
Below you can find Chow Tai Fook Jewellery Group 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 | 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) | 9.8% | 6.5% | 3.1% | -1.0% | 4.0% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | | 1.5% | 34.8% | -17.0% | -12.0% |
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) | 37.7% | 36.4% | 35.6% | 34.8% | 49.0% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 29.1% | 28.4% | 27.3% | 29.7% | 27.6% |
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% | 8.0% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 15.6% | 13.6% | 12.6% | 11.9% | 9.1% |
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) | 4.5% | 3.7% | 3.8% | 3.5% | 1.8% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 1.5% | 1.6% | 1.5% | 3.1% | 1.6% |
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% | 12.4% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 26.4% | 17.1% | 18.8% | 12.3% | 8.0% |
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 | -0.7x |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 0.5x | -0.3x | 0.8x | 0.9x | 0.3x |
