Fairwood Holdings Ltd reports 39.5% Net Income growth in 2016 and 8.2% Revenue growth
29/06/2016 • About Fairwood Holdings Ltd (
$52) • By InTwits
Fairwood Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 13.4% in FY2016 vs. 12.4% in FY2015 vs. 11.8% in FY2012
- Fairwood Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's in pair with industry average of 5.5%.
- CAPEX is quite volatile: 464 in FY2016, 306 in FY2015, 140 in FY2014, 257 in FY2013, 309 in FY2012
- The company has highly profitable business model: ROIC is at 36.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fairwood Holdings Ltd ($52) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,829 | 1,929 | 2,038 | 2,245 | 2,428 | 8.2% |
| Gross Profit | 245 | 264 | 276 | 334 | 387 | 15.8% |
| SG&A | 113 | 123 | 120 | 140 | 145 | 3.8% |
| EBITDA | 217 | 237 | 240 | 278 | 326 | 17.2% |
| Net Income | 130 | 139 | 108 | 144 | 201 | 39.5% |
Balance Sheet
|
|---|
| Cash | 265 | 291 | 326 | 419 | 549 | 30.9% |
| Short Term Debt | 5 | 5 | 10 | 4 | 3 | -30.4% |
| Long Term Debt | 26 | 21 | 11 | 7 | 4 | -46.0% |
Cash flow
|
|---|
| Capex | 74 | 99 | 75 | 88 | 109 | 24.5% |
Ratios
|
|---|
| Revenue growth | 9.8% | 5.5% | 5.6% | 10.2% | 8.2% | |
| EBITDA growth | 8.8% | 9.6% | 1.2% | 15.8% | 17.2% | |
| Gross Margin | 13.4% | 13.7% | 13.6% | 14.9% | 15.9% | 1.1% |
| EBITDA Margin | 11.8% | 12.3% | 11.8% | 12.4% | 13.4% | 1.0% |
| Net Income Margin | 7.1% | 7.2% | 5.3% | 6.4% | 8.3% | 1.9% |
| SG&A, % of revenue | 6.2% | 6.4% | 5.9% | 6.2% | 6.0% | -0.2% |
| CAPEX, % of revenue | 4.0% | 5.1% | 3.7% | 3.9% | 4.5% | 0.6% |
| ROIC | 28.0% | 29.1% | 28.6% | 32.1% | 36.4% | 4.3% |
| ROE | 26.9% | 27.3% | 20.4% | 25.4% | 31.5% | 6.1% |
| Net Debt/EBITDA | -1.1x | -1.1x | -1.3x | -1.5x | -1.7x | -0.2x |
Revenue and profitability
Fairwood Holdings Ltd's Revenue increased on 8.2%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.0 pp from 12.4% to 13.4% in FY2016.
Gross Margin increased slightly on 1.1 pp from 14.9% to 15.9% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 1.9 pp from 6.4% to 8.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Fairwood Holdings Ltd had CAPEX/Revenue of 4.5%. Fairwood Holdings Ltd showed small CAPEX/Revenue decline of 0.62 pp from 5.1% in FY2013 to 4.5% in FY2016. Average CAPEX/Revenue for the last three years was 4.0%.
Return on investment
The company operates at high and attractive ROIC (36.36%) and ROE (31.46%). ROIC increased on 4.3 pp from 32.1% to 36.4% in FY2016. ROE increased on 6.1 pp from 25.4% to 31.5% in FY2016.
Leverage (Debt)
Debt level is -1.7x Net Debt / EBITDA and 0.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from -1.5x to -1.7x in FY2016. Debt dropped on 39.8% while cash surged on 30.9%.
Appendix 1: Peers in Retail
Below we provide Fairwood Holdings 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) | 7.4% | 6.5% | 2.9% | -1.0% | -8.7% |
|---|
| Fairwood Holdings Ltd ($52) | | 5.5% | 5.6% | 10.2% | 8.2% |
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% | 96.8% |
| 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) | 37.2% | 36.4% | 35.5% | 33.9% | 42.6% |
|---|
| Fairwood Holdings Ltd ($52) | 13.4% | 13.7% | 13.6% | 14.9% | 15.9% |
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% | 5.1% |
|---|
| Fairwood Holdings Ltd ($52) | 11.8% | 12.3% | 11.8% | 12.4% | 13.4% |
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% | 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% | 3.1% | 1.8% |
|---|
| Fairwood Holdings Ltd ($52) | 4.0% | 5.1% | 3.7% | 3.9% | 4.5% |
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% | 13.3% |
| 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% | 4.1% |
|---|
| Fairwood Holdings Ltd ($52) | 28.0% | 29.1% | 28.6% | 32.1% | 36.4% |
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 | -0.8x |
|---|
| Fairwood Holdings Ltd ($52) | -1.1x | -1.1x | -1.3x | -1.5x | -1.7x |
