Veeko International Holdings Ltd reports 42.5% Net Income decline in 2016 and 2.8 pp EBITDA Margin decline from 8.3% to 5.5%
27/06/2016 • About Veeko International Holdings Ltd (
$1173) • By InTwits
Veeko International Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Veeko International Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's in pair with industry average of 6.7%.
- CAPEX is quite volatile: 58.0 in FY2016, 103 in FY2015, 373 in FY2014, 180 in FY2013, 112 in FY2012
- The company has business model with low profitability: ROIC is at 9.3%
- It operates with high leverage: Net Debt/EBITDA is 0.7x 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.
Veeko International Holdings Ltd ($1173) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,280 | 1,409 | 1,619 | 1,997 | 2,226 | 11.5% |
| Gross Profit | 658 | 675 | 751 | 884 | 926 | 4.7% |
| SG&A | 601 | 635 | 692 | 762 | 851 | 11.6% |
| EBITDA | 94 | 76 | 100 | 166 | 123 | -26.0% |
| Net Income | 61 | 54 | 46 | 102 | 59 | -42.5% |
Balance Sheet
|
|---|
| Cash | 106 | 83 | 91 | 77 | 74 | -3.5% |
| Short Term Debt | 58 | 75 | 87 | 82 | 161 | 95.3% |
| Long Term Debt | 4 | 1 | 15 | 5 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 46 | 38 | 36 | 40 | 71 | 76.6% |
Ratios
|
|---|
| Revenue growth | 15.1% | 10.1% | 15.0% | 23.3% | 11.5% | |
| EBITDA growth | 5.4% | -18.6% | 30.5% | 66.9% | -26.0% | |
| Gross Margin | 51.4% | 47.9% | 46.4% | 44.3% | 41.6% | -2.7% |
| EBITDA Margin | 7.3% | 5.4% | 6.2% | 8.3% | 5.5% | -2.8% |
| Net Income Margin | 4.8% | 3.9% | 2.8% | 5.1% | 2.6% | -2.5% |
| SG&A, % of revenue | 47.0% | 45.1% | 42.7% | 38.2% | 38.2% | 0.0% |
| CAPEX, % of revenue | 3.6% | 2.7% | 2.2% | 2.0% | 3.2% | 1.2% |
| ROIC | 9.7% | 6.2% | 8.4% | 15.7% | 9.3% | -6.4% |
| ROE | 10.5% | 8.9% | 7.2% | 14.6% | 7.9% | -6.8% |
| Net Debt/EBITDA | -0.5x | -0.1x | 0.1x | 0.1x | 0.7x | 0.6x |
Revenue and profitability
The company's Revenue jumped on 11.5%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 8.3% to 5.5% in FY2016.
Gross Margin decreased on 2.7 pp from 44.3% to 41.6% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased on 2.5 pp from 5.1% to 2.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Veeko International Holdings Ltd's CAPEX/Revenue was 3.2% in FY2016. CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 2.5%.The company invested a big chunk of EBITDA (57.9%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (9.28%) and ROE (7.87%). ROIC decreased on 6.4 pp from 15.7% to 9.3% in FY2016. ROE decreased on 6.8 pp from 14.6% to 7.9% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 1.3x. Net Debt / EBITDA surged on 0.6x from 0.1x to 0.7x in FY2016. Debt surged on 83.8% while cash decreased on 3.5%.
Appendix 1: Peers in Retail
Below you can find Veeko International 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) | 7.4% | 6.1% | 2.9% | -1.0% | -8.7% |
|---|
| Veeko International Holdings Ltd ($1173) | | 10.1% | 15.0% | 23.3% | 11.5% |
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) | 36.2% | 35.8% | 35.0% | 33.3% | 39.5% |
|---|
| Veeko International Holdings Ltd ($1173) | 51.4% | 47.9% | 46.4% | 44.3% | 41.6% |
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% | 7.1% | 3.3% |
|---|
| Veeko International Holdings Ltd ($1173) | 7.3% | 5.4% | 6.2% | 8.3% | 5.5% |
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% | 3.9% |
| 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% |
|---|
| Veeko International Holdings Ltd ($1173) | 3.6% | 2.7% | 2.2% | 2.0% | 3.2% |
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% | 3.0% |
|---|
| Veeko International Holdings Ltd ($1173) | 9.7% | 6.2% | 8.4% | 15.7% | 9.3% |
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 | -0.8x |
|---|
| Veeko International Holdings Ltd ($1173) | -0.5x | -0.1x | 0.1x | 0.1x | 0.7x |
