Oriental Watch Holdings reports 16.9% EBITDA decline in 2016 and almost no change in EBITDA Margin of 0.87%
23/06/2016 • About Oriental Watch Holdings (
$398) • By InTwits
Oriental Watch Holdings reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Oriental Watch Holdings is a company in decline: FY2016 revenue growth was -2.5%, 5 years revenue CAGR was -5.0%
- EBITDA Margin is quite volatile: 0.9% in FY2016, 1.0% in FY2015, 2.1% in FY2014, 4.7% in FY2013, 6.6% in FY2012
- Oriental Watch Holdings 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 6.2%.
- CAPEX is quite volatile: 13.9 in FY2016, 11.1 in FY2015, 40.5 in FY2014, 62.8 in FY2013, 135 in FY2012
- The company has unprofitable business model: ROIC is at -0.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Oriental Watch Holdings ($398) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,936 | 3,733 | 3,477 | 3,109 | 3,032 | -2.5% |
| Gross Profit | 828 | 700 | 612 | 519 | 486 | -6.4% |
| SG&A | | 600 | 595 | 552 | 532 | -3.7% |
| EBITDA | 259 | 174 | 74 | 32 | 26 | -16.9% |
| Net Income | 164 | 163 | 21 | 5 | -16 | -444.5% |
Balance Sheet
|
|---|
| Cash | 207 | 373 | 425 | 344 | 404 | 17.4% |
| Short Term Debt | 476 | 393 | 289 | 228 | 156 | -31.6% |
| Long Term Debt | 30 | 293 | 203 | 109 | 60 | -44.6% |
Cash flow
|
|---|
| Capex | 135 | 63 | 41 | 11 | 14 | 25.4% |
Ratios
|
|---|
| Revenue growth | 0.5% | -5.2% | -6.9% | -10.6% | -2.5% | |
| EBITDA growth | -14.1% | -32.9% | -57.3% | -57.1% | -16.9% | |
| Gross Margin | 21.0% | 18.8% | 17.6% | 16.7% | 16.0% | -0.7% |
| EBITDA Margin | 6.6% | 4.7% | 2.1% | 1.0% | 0.9% | -0.2% |
| Net Income Margin | 4.2% | 4.4% | 0.6% | 0.1% | -0.5% | -0.7% |
| SG&A, % of revenue | | 16.1% | 17.1% | 17.8% | 17.5% | -0.2% |
| CAPEX, % of revenue | 3.4% | 1.7% | 1.2% | 0.4% | 0.5% | 0.1% |
| ROIC | 9.3% | 4.8% | 1.0% | -0.2% | -0.2% | -0.0% |
| ROE | 8.3% | 7.5% | 0.9% | 0.2% | -0.7% | -0.9% |
| Net Debt/EBITDA | 1.2x | 1.8x | 0.9x | -0.2x | -7.1x | -6.9x |
Revenue and profitability
Oriental Watch Holdings's Revenue decreased on 2.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 88.4 pp from -34.6% to 53.8% in FY2016.
Gross Margin decreased slightly on 0.68 pp from 16.7% to 16.0% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased slightly on 0.66 pp from 0.14% to -0.51% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 0.46%. The company's CAPEX/Revenue decreased slightly on 1.2 pp from 1.7% in FY2013 to 0.46% in FY2016. It's average CAPEX/Revenue for the last three years was 0.66%.Oriental Watch Holdings invested a big chunk of EBITDA (52.5%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-0.24%) and ROE (-0.71%). ROIC showed almost no change in FY2016. ROE decreased slightly on 0.91 pp from 0.20% to -0.71% in FY2016.
Leverage (Debt)
Debt level is -7.1x Net Debt / EBITDA and 8.2x Debt / EBITDA. Net Debt / EBITDA dropped on 6.9x from -0.2x to -7.1x in FY2016. Debt dropped on 35.8% while cash surged on 17.4%.
Appendix 1: Peers in Retail
Below we provide Oriental Watch Holdings 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% | 6.5% | 3.1% | -1.0% | -8.6% |
|---|
| Oriental Watch Holdings ($398) | | -5.2% | -6.9% | -10.6% | -2.5% |
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% |
|---|
| Oriental Watch Holdings ($398) | 21.0% | 18.8% | 17.6% | 16.7% | 16.0% |
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) | 10.8% | 7.8% | 9.1% | 7.4% | 6.8% |
|---|
| Oriental Watch Holdings ($398) | 6.6% | 4.7% | 2.1% | 1.0% | 0.9% |
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% |
|---|
| Oriental Watch Holdings ($398) | 3.4% | 1.7% | 1.2% | 0.4% | 0.5% |
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) | 12.3% | 8.9% | 8.7% | 5.8% | 8.0% |
|---|
| Oriental Watch Holdings ($398) | 9.3% | 4.8% | 1.0% | -0.2% | -0.2% |
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 | -0.6x | -0.2x | -0.5x | -0.6x |
|---|
| Oriental Watch Holdings ($398) | 1.2x | 1.8x | 0.9x | -0.2x | -7.1x |
