Sincere Watch Hong Kong Ltd Net Income dropped on 457% and EBITDA Margin dropped on 41.8 pp from 10.3% to -31.5%
28/06/2016 • About Sincere Watch Hong Kong Ltd (
$444) • By InTwits
Sincere Watch Hong Kong Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sincere Watch Hong Kong Ltd is a company in decline: FY2016 revenue growth was -48.6%, 5 years revenue CAGR was -18.1%
- EBITDA Margin is declining: -31.5% in FY2016 vs. 10.3% in FY2015 vs. 18.2% in FY2012
- EBITDA Margin is quite volatile: -31.5% in FY2016, 10.3% in FY2015, 15.4% in FY2014, 20.2% in FY2013, 18.2% in FY2012
- Sincere Watch Hong Kong Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 20.9%.
- CAPEX is quite volatile: 8.9 in FY2016, 10.5 in FY2015, 28.5 in FY2014, 27.0 in FY2013, 21.3 in FY2012
- The company has unprofitable business model: ROIC is at -12.1%
- It operates with high leverage: Net Debt/EBITDA is 4.3x while industry average is 1.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sincere Watch Hong Kong Ltd ($444) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,115 | 749 | 648 | 590 | 303 | -48.6% |
| Gross Profit | 397 | 298 | 251 | 226 | 71 | -68.5% |
| SG&A | | 120 | 127 | 87 | 89 | 2.8% |
| EBITDA | 203 | 152 | 100 | 61 | -96 | -257.5% |
| Net Income | 139 | 119 | 52 | 40 | -143 | -456.7% |
Balance Sheet
|
|---|
| Cash | 414 | 333 | 316 | 460 | 522 | 13.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 21 | 27 | 28 | 11 | 9 | -15.4% |
Ratios
|
|---|
| Revenue growth | 35.7% | -32.8% | -13.5% | -9.0% | -48.6% | |
| EBITDA growth | 50.2% | -25.2% | -34.0% | -39.4% | -257.5% | |
| Gross Margin | 35.6% | 39.7% | 38.8% | 38.3% | 23.4% | -14.8% |
| EBITDA Margin | 18.2% | 20.2% | 15.4% | 10.3% | -31.5% | -41.8% |
| Net Income Margin | 12.5% | 15.9% | 8.0% | 6.8% | -47.3% | -54.1% |
| SG&A, % of revenue | | 16.0% | 19.5% | 14.7% | 29.3% | 14.7% |
| CAPEX, % of revenue | 1.9% | 3.6% | 4.4% | 1.8% | 2.9% | 1.1% |
| ROIC | 51.7% | 27.7% | 14.6% | 5.5% | -12.1% | -17.6% |
| ROE | 36.7% | 24.0% | 9.2% | 5.8% | -15.1% | -20.9% |
| Net Debt/EBITDA | -2.0x | -2.2x | -3.2x | -7.6x | | 7.6x |
Revenue and profitability
Sincere Watch Hong Kong Ltd's Revenue dropped on 48.6%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 41.8 pp from 10.3% to -31.5% in FY2016.
Gross Margin dropped on 14.8 pp from 38.3% to 23.4% in FY2016. SG&A as a % of Revenue surged on 14.7 pp from 14.7% to 29.3% in FY2016.
Net Income marign dropped on 54.1 pp from 6.8% to -47.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Sincere Watch Hong Kong Ltd had CAPEX/Revenue of 2.9%. Sincere Watch Hong Kong Ltd showed small CAPEX/Revenue decline of 0.67 pp from 3.6% in FY2013 to 2.9% in FY2016. Average CAPEX/Revenue for the last three years was 3.0%.
Return on investment
The company operates at negative ROIC (-12.08%) and ROE (-15.09%). ROIC dropped on 17.6 pp from 5.5% to -12.1% in FY2016. ROE dropped on 20.9 pp from 5.8% to -15.1% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 13.5%.
Appendix 1: Peers in Distribution/Wholesale
Below we provide Sincere Watch Hong Kong Ltd benchmarking against other companies in Distribution/Wholesale 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 |
|---|
| C Y Foundation Group Ltd ($1182) | | -65.6% | 5.9% | 214.6% | -14.6% |
| China Fortune Holdings Ltd ($110) | -64.7% | -68.2% | -71.0% | 174.2% | |
| Hailiang International Holdings Ltd ($2336) | 9.7% | -30.8% | -69.1% | 99.7% | |
| Forefront Group Ltd ($885) | | 504.6% | 3,871.0% | 72.0% | |
| Yestar International Holdings Co Ltd ($2393) | -2.2% | 22.8% | 30.5% | 60.3% | |
| |
|---|
| Median (35 companies) | 1.7% | 2.1% | 1.4% | -0.5% | -11.5% |
|---|
| Sincere Watch Hong Kong Ltd ($444) | | -32.8% | -13.5% | -9.0% | -48.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Yunnan Tin Minerals Group Co Ltd ($263) | 79.6% | 66.3% | | 98.7% | |
| Goldin Financial Holdings Ltd ($530) | 75.3% | 71.7% | 74.8% | 73.8% | |
| YGM Trading Ltd ($375) | 66.5% | 67.4% | 64.0% | 62.5% | |
| Goldlion Holdings Ltd ($533) | 56.4% | 54.1% | 55.7% | 60.0% | |
| E.Bon Holdings Ltd ($599) | 40.3% | 37.4% | 35.8% | 39.6% | 42.4% |
| |
|---|
| Median (33 companies) | 17.3% | 17.1% | 18.0% | 20.8% | 23.5% |
|---|
| Sincere Watch Hong Kong Ltd ($444) | 35.6% | 39.7% | 38.8% | 38.3% | 23.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China LNG Group Ltd ($931) | 95.1% | 76.4% | 97.9% | 1,277.8% | |
| Goldin Financial Holdings Ltd ($530) | 163.7% | 613.4% | 285.7% | 364.1% | |
| China Infrastructure Investment Ltd ($600) | -274.9% | 120.0% | 52.0% | 134.5% | |
| China Yunnan Tin Minerals Group Co Ltd ($263) | -1,064.4% | -252.1% | | 62.8% | |
| Goldlion Holdings Ltd ($533) | 25.8% | 23.4% | 22.5% | 22.8% | |
| |
|---|
| Median (36 companies) | 2.1% | 1.9% | 4.5% | 4.3% | 0.6% |
|---|
| Sincere Watch Hong Kong Ltd ($444) | 18.2% | 20.2% | 15.4% | 10.3% | -31.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| SIS International Holdings ($529) | 13.4% | 31.8% | 14.8% | 49.8% | |
| Inspur International Ltd ($596) | 8.4% | 12.2% | 33.6% | 25.6% | |
| China LNG Group Ltd ($931) | 11.1% | 0.3% | 0.6% | 15.6% | |
| YGM Trading Ltd ($375) | 1.8% | 2.1% | 3.5% | 14.5% | |
| Victory Group Ltd ($1139) | 0.7% | 0.1% | 6.1% | 12.6% | |
| |
|---|
| Median (35 companies) | 1.3% | 1.7% | 1.6% | 1.2% | 5.6% |
|---|
| Sincere Watch Hong Kong Ltd ($444) | 1.9% | 3.6% | 4.4% | 1.8% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China LNG Group Ltd ($931) | 8.4% | 7.4% | 87.0% | 56.2% | |
| Powerwell Pacific Holdings Ltd ($8265) | 6.4% | 6.4% | 23.6% | 27.1% | |
| Yestar International Holdings Co Ltd ($2393) | 28.8% | 24.1% | 26.2% | 25.4% | |
| E.Bon Holdings Ltd ($599) | 7.0% | 7.2% | 3.3% | 16.9% | 17.4% |
| Goldin Financial Holdings Ltd ($530) | 5.9% | 20.6% | 10.4% | 16.0% | |
| |
|---|
| Median (37 companies) | 2.1% | 0.9% | 3.1% | 2.6% | -2.1% |
|---|
| Sincere Watch Hong Kong Ltd ($444) | 51.7% | 27.7% | 14.6% | 5.5% | -12.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| SIS International Holdings ($529) | -1.8x | 7.0x | 7.2x | 16.8x | |
| Leeport Holdings Ltd ($387) | | | | 16.1x | |
| Takson Holdings Ltd ($918) | | 11.5x | 11.7x | 15.7x | |
| Sheng Yuan Holdings Ltd ($851) | | | 19.3x | 15.4x | |
| Forefront Group Ltd ($885) | | | -0.0x | 15.3x | |
| |
|---|
| Median (26 companies) | -0.1x | -0.5x | 0.3x | 0.0x | -2.7x |
|---|
| Sincere Watch Hong Kong Ltd ($444) | -2.0x | -2.2x | -3.2x | -7.6x | |
