Zhong Fa Zhan Holdings Ltd revenue decline accelerated to 68.9% in FY2016 vs. 15.5% a year earliner
24/06/2016 • About Zhong Fa Zhan Holdings Ltd (
$475) • By InTwits
Zhong Fa Zhan Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zhong Fa Zhan Holdings Ltd is a company in decline: FY2016 revenue growth was -68.9%, 5 years revenue CAGR was -17.3%
- The company operates at negative EBITDA Margin: -202.4%
- Zhong Fa Zhan Holdings Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -35.6% for the sames years0
- Zhong Fa Zhan Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 23.1%.
- CAPEX is quite volatile: 0.043 in FY2016, 0.90 in FY2015, 3.2 in FY2014, 0.10 in FY2013, 2.6 in FY2012
- The company has unprofitable business model: ROIC is at -76.8%
- It operates with high leverage: Net Debt/EBITDA is 0.5x 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.
Zhong Fa Zhan Holdings Ltd ($475) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 74.358 | 75.770 | 67.591 | 57.092 | 17.765 | -68.9% |
| Gross Profit | 11.964 | 6.881 | 7.385 | 7.222 | 0.464 | -93.6% |
| SG&A | | 39.148 | 28.359 | 29.968 | 29.442 | -1.8% |
| EBITDA | 2.954 | -30.783 | -19.298 | -21.061 | -35.965 | |
| Net Income | 10.119 | -31.123 | -19.992 | -22.154 | -36.806 | |
Balance Sheet
|
|---|
| Cash | 10.538 | 7.552 | 13.372 | 14.758 | 64.039 | 333.9% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 2.555 | 0.100 | 3.168 | 0.904 | 0.043 | -95.2% |
Ratios
|
|---|
| Revenue growth | 61.6% | 1.9% | -10.8% | -15.5% | -68.9% | |
| EBITDA growth | -71.8% | -1,142.1% | -37.3% | 9.1% | 70.8% | |
| Gross Margin | 16.1% | 9.1% | 10.9% | 12.6% | 2.6% | -10.0% |
| EBITDA Margin | 4.0% | -40.6% | -28.6% | -36.9% | -202.4% | -165.6% |
| Net Income Margin | 13.6% | -41.1% | -29.6% | -38.8% | -207.2% | -168.4% |
| SG&A, % of revenue | | 51.7% | 42.0% | 52.5% | 165.7% | 113.2% |
| CAPEX, % of revenue | 3.4% | 0.1% | 4.7% | 1.6% | 0.2% | -1.3% |
| ROIC | -1.4% | -70.8% | -75.5% | -104.7% | -76.8% | 27.8% |
| ROE | 6.2% | -70.3% | -74.1% | -103.6% | -76.1% | 27.5% |
| Net Debt/EBITDA | -3.6x | | | | | 0.0x |
Revenue and profitability
Zhong Fa Zhan Holdings Ltd's Revenue dropped on 68.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 166 pp from -36.9% to -202% in FY2016.
Gross Margin dropped on 10.0 pp from 12.6% to 2.6% in FY2016. SG&A as a % of Revenue jumped on 113 pp from 52.5% to 166% in FY2016.
Net Income marign dropped on 168 pp from -38.8% to -207% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Zhong Fa Zhan Holdings Ltd's CAPEX/Revenue was 0.24% in FY2016. Zhong Fa Zhan Holdings Ltd showed almost no change in CAPEX/Revenue from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 2.2%.
Return on investment
The company operates at negative ROIC (-76.85%) and ROE (-76.08%). ROIC jumped on 27.8 pp from -105% to -76.8% in FY2016. ROE surged on 27.5 pp from -104% to -76.1% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 334%.
Appendix 1: Peers in Retail
Below you can find Zhong Fa Zhan Holdings 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 (117 companies) | 7.5% | 6.5% | 3.1% | -1.0% | -7.2% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | | 1.9% | -10.8% | -15.5% | -68.9% |
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% | 41.1% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 16.1% | 9.1% | 10.9% | 12.6% | 2.6% |
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 (117 companies) | 10.8% | 7.8% | 9.1% | 7.4% | 5.8% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 4.0% | -40.6% | -28.6% | -36.9% | -202.4% |
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% | 3.7% | 3.5% | 1.7% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | 3.4% | 0.1% | 4.7% | 1.6% | 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% | 6.6% |
|---|
| Zhong Fa Zhan Holdings Ltd ($475) | -1.4% | -70.8% | -75.5% | -104.7% | -76.8% |
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 (92 companies) | -0.5x | -0.6x | -0.2x | -0.5x | -0.8x |
|---|
