Luk Fook Holdings International Ltd Net Income dropped on 40.6% in 2016 and Revenue dropped on 11.9%
23/06/2016 • About Luk Fook Holdings International Ltd (
$590) • By InTwits
Luk Fook Holdings International Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Luk Fook Holdings International Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 113 in FY2016, 181 in FY2015, 258 in FY2014, 307 in FY2013, 153 in FY2012
- The company has business model with average profitability: ROIC is at 12.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Luk Fook Holdings International Ltd ($590) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 11,907 | 13,412 | 19,215 | 15,923 | 14,031 | -11.9% |
| Gross Profit | 2,759 | 2,830 | 4,214 | 3,832 | 3,254 | -15.1% |
| SG&A | 1,212 | 1,448 | 2,074 | 2,084 | 2,131 | 2.2% |
| EBITDA | 1,659 | 1,594 | 2,434 | 2,123 | 1,345 | -36.6% |
| Net Income | 1,334 | 1,243 | 1,865 | 1,615 | 959 | -40.6% |
Balance Sheet
|
|---|
| Cash | 1,538 | 1,187 | 1,646 | 1,375 | 2,362 | 71.7% |
| Short Term Debt | 0 | 0 | 568 | 1,713 | 711 | -58.5% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 153 | 307 | 258 | 181 | 113 | -37.7% |
Ratios
|
|---|
| Revenue growth | 47.2% | 12.6% | 43.3% | -17.1% | -11.9% | |
| EBITDA growth | 54.5% | -3.9% | 52.7% | -12.8% | -36.6% | |
| Gross Margin | 23.2% | 21.1% | 21.9% | 24.1% | 23.2% | -0.9% |
| EBITDA Margin | 13.9% | 11.9% | 12.7% | 13.3% | 9.6% | -3.7% |
| Net Income Margin | 11.2% | 9.3% | 9.7% | 10.1% | 6.8% | -3.3% |
| SG&A, % of revenue | 10.2% | 10.8% | 10.8% | 13.1% | 15.2% | 2.1% |
| CAPEX, % of revenue | 1.3% | 2.3% | 1.3% | 1.1% | 0.8% | -0.3% |
| ROIC | 34.1% | 24.3% | 30.6% | 20.6% | 12.0% | -8.6% |
| ROE | 29.6% | 20.7% | 26.5% | 20.0% | 11.1% | -8.8% |
| Net Debt/EBITDA | -0.9x | -0.7x | -0.4x | 0.2x | -1.2x | -1.4x |
Revenue and profitability
Luk Fook Holdings International Ltd's Revenue dropped on 11.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.7 pp from 13.3% to 9.6% in FY2016.
Gross Margin decreased slightly on 0.87 pp from 24.1% to 23.2% in FY2016. SG&A as a % of Revenue increased on 2.1 pp from 13.1% to 15.2% in FY2016.
Net Income marign decreased on 3.3 pp from 10.1% to 6.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Luk Fook Holdings International Ltd had CAPEX/Revenue of 0.80%. Luk Fook Holdings International Ltd's CAPEX/Revenue decreased slightly on 1.5 pp from 2.3% in FY2013 to 0.80% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at low ROIC (11.97%) and ROE (11.14%). ROIC decreased on 8.6 pp from 20.6% to 12.0% in FY2016. ROE decreased on 8.8 pp from 20.0% to 11.1% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.2x and Debt / EBITDA is 0.5x. Net Debt / EBITDA dropped on 1.4x from 0.2x to -1.2x in FY2016. Debt dropped on 58.5% while cash jumped on 71.7%.
Management team
Wong Wai Sheung is a Luk Fook Holdings International Ltd's CEO. Wong Wai Sheung has spent 13 years at the company. Luk Fook Holdings International Ltd's CFO Chan So Kuen "Kathy" has spent 6 years at the company.
Appendix 1: Peers in Retail
Below we provide Luk Fook Holdings International 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 (117 companies) | 7.6% | 6.1% | 2.9% | -1.0% | -5.8% |
|---|
| Luk Fook Holdings International Ltd ($590) | | 12.6% | 43.3% | -17.1% | -11.9% |
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 (103 companies) | 37.2% | 36.4% | 35.5% | 33.9% | 42.6% |
|---|
| Luk Fook Holdings International Ltd ($590) | 23.2% | 21.1% | 21.9% | 24.1% | 23.2% |
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 (117 companies) | 10.3% | 7.3% | 8.9% | 7.1% | 4.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | 13.9% | 11.9% | 12.7% | 13.3% | 9.6% |
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 (117 companies) | 4.1% | 3.6% | 3.8% | 3.5% | 1.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | 1.3% | 2.3% | 1.3% | 1.1% | 0.8% |
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% | |
| JC Group Holdings Ltd ($8326) | | 215.6% | 92.8% | 66.3% | 81.7% |
| 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% | 19.0% |
| Noble House China Holdings Ltd ($8246) | 17.7% | -67.7% | -113.8% | 35.6% | |
| |
|---|
| Median (117 companies) | 12.2% | 8.8% | 8.5% | 5.8% | 5.2% |
|---|
| Luk Fook Holdings International Ltd ($590) | 34.1% | 24.3% | 30.6% | 20.6% | 12.0% |
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 | 8.5x |
| 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 (91 companies) | -0.5x | -0.5x | -0.2x | -0.5x | -0.6x |
|---|
| Luk Fook Holdings International Ltd ($590) | -0.9x | -0.7x | -0.4x | 0.2x | -1.2x |
