Tsui Wah Holdings Ltd reports 54.5% Net Income decline in 2016 and 1.3 pp EBITDA Margin decline from 13.4% to 12.1%
28/06/2016 • About Tsui Wah Holdings Ltd (
$1314) • By InTwits
Tsui Wah Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 12.1% in FY2016 vs. 13.4% in FY2015 vs. 19.2% in FY2012
- Tsui Wah Holdings Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.4%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 159 in FY2016, 191 in FY2015, 449 in FY2014, 100 in FY2013, 63.3 in FY2012
- The company has business model with low profitability: ROIC is at 8.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tsui Wah Holdings Ltd ($1314) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 763 | 1,084 | 1,474 | 1,801 | 1,868 | 3.7% |
| Gross Profit | 526 | 752 | 1,021 | 1,253 | 1,331 | 6.2% |
| SG&A | 3 | 6 | 6 | 9 | 14 | 59.0% |
| EBITDA | 147 | 175 | 213 | 242 | 226 | -6.7% |
| Net Income | 104 | 130 | 156 | 157 | 72 | -54.5% |
Balance Sheet
|
|---|
| Cash | 92 | 917 | 635 | 621 | 547 | -11.8% |
| Short Term Debt | 0 | 0 | 87 | 82 | 77 | -6.4% |
| Long Term Debt | 0 | 1 | 1 | 0 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 63 | 100 | 449 | 191 | 159 | -16.9% |
Ratios
|
|---|
| Revenue growth | 27.5% | 42.2% | 35.9% | 22.2% | 3.7% | |
| EBITDA growth | 41.5% | 19.3% | 21.6% | 13.8% | -6.7% | |
| Gross Margin | 69.0% | 69.4% | 69.3% | 69.6% | 71.3% | 1.7% |
| EBITDA Margin | 19.2% | 16.1% | 14.4% | 13.4% | 12.1% | -1.3% |
| Net Income Margin | 13.6% | 12.0% | 10.6% | 8.7% | 3.8% | -4.9% |
| SG&A, % of revenue | 0.4% | 0.5% | 0.4% | 0.5% | 0.8% | 0.3% |
| CAPEX, % of revenue | 8.3% | 9.3% | 30.5% | 10.6% | 8.5% | -2.1% |
| ROIC | 50.1% | 20.2% | 12.8% | 11.4% | 8.6% | -2.8% |
| ROE | 47.3% | 20.0% | 14.3% | 13.2% | 6.0% | -7.3% |
| Net Debt/EBITDA | -0.6x | -5.2x | -2.6x | -2.2x | -2.1x | 0.1x |
Revenue and profitability
Tsui Wah Holdings Ltd's Revenue increased on 3.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.52 pp from 6.3% to 6.8% in FY2016.
Gross Margin increased slightly on 1.7 pp from 69.6% to 71.3% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased on 4.9 pp from 8.7% to 3.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 8.5% in FY2016. The company's CAPEX/Revenue decreased slightly on 0.75 pp from 9.3% in FY2013 to 8.5% in FY2016. For the last three years the average CAPEX/Revenue was 16.5%.Tsui Wah Holdings Ltd invested a large share of EBITDA (70.4%) to CAPEX.
Return on investment
The company operates at low ROIC (8.60%) and ROE (5.97%). ROIC decreased on 2.8 pp from 11.4% to 8.6% in FY2016. ROE decreased on 7.3 pp from 13.2% to 6.0% in FY2016.
Leverage (Debt)
Debt level is -2.1x Net Debt / EBITDA and 0.3x Debt / EBITDA. Net Debt / EBITDA surged on 0.1x from -2.2x to -2.1x in FY2016. Debt decreased on 6.7% while cash dropped on 11.8%.
Appendix 1: Peers in Retail
Below you can find Tsui Wah 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% | 6.1% | 2.9% | -1.0% | -8.8% |
|---|
| Tsui Wah Holdings Ltd ($1314) | | 42.2% | 35.9% | 22.2% | 3.7% |
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% | 77.6% |
| 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% | 40.6% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 69.0% | 69.4% | 69.3% | 69.6% | 71.3% |
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) | 10.3% | 7.3% | 8.9% | 7.1% | 1.8% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 19.2% | 16.1% | 14.4% | 13.4% | 12.1% |
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) | 4.0% | 3.6% | 3.7% | 3.1% | 1.8% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 8.3% | 9.3% | 30.5% | 10.6% | 8.5% |
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) | 12.2% | 8.8% | 8.5% | 5.8% | 0.8% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 50.1% | 20.2% | 12.8% | 11.4% | 8.6% |
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 | -0.5x | -0.2x | -0.5x | -0.7x |
|---|
| Tsui Wah Holdings Ltd ($1314) | -0.6x | -5.2x | -2.6x | -2.2x | -2.1x |
