Sparkle Roll Group Ltd Net Debt / EBITDA dropped on 15.0x from 23.5x to 8.5x in 2016 and Revenue decreased on 8.8%
23/06/2016 • About Sparkle Roll Group Ltd (
$970) • By InTwits
Sparkle Roll Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sparkle Roll Group Ltd is a company in decline: FY2016 revenue growth was -8.8%, 5 years revenue CAGR was -6.3%
- EBITDA Margin is quite volatile: 1.6% in FY2016, 1.8% in FY2015, 1.1% in FY2014, 2.6% in FY2013, 4.7% in FY2012
- Sparkle Roll Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 38.3%.
- CAPEX is quite volatile: 3.8 in FY2016, 33.2 in FY2015, 80.7 in FY2014, 76.5 in FY2013, 38.8 in FY2012
- The company has potentially unprofitable business model: ROIC is at 0.6%
- It operates with high leverage: Net Debt/EBITDA is 8.5x 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.
Sparkle Roll Group Ltd ($970) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,427 | 3,016 | 3,162 | 2,606 | 2,377 | -8.8% |
| Gross Profit | 452 | 285 | 162 | 188 | 189 | 0.4% |
| SG&A | | 313 | 339 | 359 | 295 | -17.8% |
| EBITDA | 207 | 78 | 36 | 46 | 39 | -14.9% |
| Net Income | 214 | 66 | 19 | -456 | -32 | |
Balance Sheet
|
|---|
| Cash | 130 | 274 | 340 | 63 | 157 | 147.8% |
| Short Term Debt | 208 | 548 | 679 | 1,145 | 489 | -57.3% |
| Long Term Debt | 56 | 40 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 39 | 77 | 81 | 33 | 4 | -88.6% |
Ratios
|
|---|
| Revenue growth | 34.7% | -31.9% | 4.9% | -17.6% | -8.8% | |
| EBITDA growth | -3.2% | -62.3% | -53.5% | 26.7% | -14.9% | |
| Gross Margin | 10.2% | 9.4% | 5.1% | 7.2% | 8.0% | 0.7% |
| EBITDA Margin | 4.7% | 2.6% | 1.1% | 1.8% | 1.6% | -0.1% |
| Net Income Margin | 4.8% | 2.2% | 0.6% | -17.5% | -1.4% | 16.1% |
| SG&A, % of revenue | | 10.4% | 10.7% | 13.8% | 12.4% | -1.4% |
| CAPEX, % of revenue | 0.9% | 2.5% | 2.6% | 1.3% | 0.2% | -1.1% |
| ROIC | 11.8% | 2.0% | -0.3% | -0.1% | 0.6% | 0.7% |
| ROE | 15.8% | 4.3% | 1.2% | -33.9% | -3.0% | 30.9% |
| Net Debt/EBITDA | 0.6x | 4.0x | 9.3x | 23.5x | 8.5x | -15.0x |
Revenue and profitability
The company's Revenue decreased on 8.8%. 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 increased slightly on 0.72 pp from 7.2% to 8.0% in FY2016. SG&A as a % of Revenue decreased slightly on 1.4 pp from 13.8% to 12.4% in FY2016.
Net Income marign jumped on 16.1 pp from -17.5% to -1.4% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.16% in FY2016. The company showed decline in CAPEX/Revenue of 2.4 pp from 2.5% in FY2013 to 0.16% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at low but positive ROIC (0.65%) and negative ROE (-2.98%). ROIC increased slightly on 0.71 pp from -0.057% to 0.65% in FY2016. ROE surged on 30.9 pp from -33.9% to -3.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 8.5x and Debt / EBITDA is 12.5x. Net Debt / EBITDA dropped on 15.0x from 23.5x to 8.5x in FY2016. Debt dropped on 57.3% while cash surged on 148%.
Appendix 1: Peers in Retail
Below we provide Sparkle Roll Group 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% | 6.5% | 2.9% | -1.0% | -5.8% |
|---|
| Sparkle Roll Group Ltd ($970) | | -31.9% | 4.9% | -17.6% | -8.8% |
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 (103 companies) | 37.2% | 36.4% | 35.5% | 33.9% | 42.6% |
|---|
| Sparkle Roll Group Ltd ($970) | 10.2% | 9.4% | 5.1% | 7.2% | 8.0% |
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% |
|---|
| Sparkle Roll Group Ltd ($970) | 4.7% | 2.6% | 1.1% | 1.8% | 1.6% |
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% |
|---|
| Sparkle Roll Group Ltd ($970) | 0.9% | 2.5% | 2.6% | 1.3% | 0.2% |
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% |
|---|
| Sparkle Roll Group Ltd ($970) | 11.8% | 2.0% | -0.3% | -0.1% | 0.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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 | |
| China Rundong Auto Group Ltd ($1365) | 13.0x | 7.3x | 6.3x | 6.6x | |
| |
|---|
| Median (91 companies) | -0.5x | -0.6x | -0.2x | -0.5x | -0.8x |
|---|
| Sparkle Roll Group Ltd ($970) | 0.6x | 4.0x | 9.3x | 23.5x | 8.5x |
