New World Department Store China Ltd reports 37.9% CAPEX decline and 9.2% Revenue decline
20/09/2016 • About New World Department Store China Ltd (
$825) • By InTwits
New World Department Store China Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 15.7% in FY2016, 14.0% in FY2015, 24.5% in FY2014, 29.2% in FY2013, 31.5% in FY2012
- New World Department Store China Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.3%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 202 in FY2016, 325 in FY2015, 462 in FY2014, 1,583 in FY2013, 421 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
New World Department Store China Ltd ($825) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,490 | 4,012 | 4,136 | 4,029 | 3,660 | -9.2% |
| EBITDA | 1,099 | 1,171 | 1,014 | 565 | 573 | 1.3% |
| Net Income | 608 | 642 | 521 | 70 | 46 | -34.6% |
Balance Sheet
|
|---|
| Cash | 3,243 | 2,474 | 897 | 2,089 | 1,163 | -44.3% |
| Short Term Debt | 9 | 50 | 0 | 129 | 610 | 372.7% |
| Long Term Debt | 999 | 609 | 697 | 1,578 | 386 | -75.5% |
Cash flow
|
|---|
| Capex | 421 | 1,583 | 462 | 325 | 202 | -37.9% |
Ratios
|
|---|
| Revenue growth | 27.6% | 14.9% | 3.1% | -2.6% | -9.2% | |
| EBITDA growth | -18.6% | 6.6% | -13.4% | -44.2% | 1.3% | |
| EBITDA Margin | 31.5% | 29.2% | 24.5% | 14.0% | 15.7% | 1.6% |
| Net Income Margin | 17.4% | 16.0% | 12.6% | 1.7% | 1.2% | -0.5% |
| CAPEX, % of revenue | 12.1% | 39.4% | 11.2% | 8.1% | 5.5% | -2.5% |
| ROIC | 12.3% | 11.2% | 8.8% | 2.6% | 3.3% | 0.6% |
| ROE | 10.5% | 10.2% | 8.0% | 1.1% | 0.7% | -0.3% |
| Net Debt/EBITDA | -2.0x | -1.6x | -0.2x | -0.7x | -0.3x | 0.4x |
Revenue and profitability
New World Department Store China Ltd's Revenue decreased on 9.2%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.6 pp from 14.0% to 15.7% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.5% in FY2016. CAPEX/Revenue dropped on 33.9 pp from 39.4% in FY2013 to 5.5% in FY2016. For the last three years the average CAPEX/Revenue was 8.3%.
Return on investment
The company operates at low ROIC (3.29%) and ROE (0.75%). ROIC increased slightly on 0.64 pp from 2.6% to 3.3% in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Debt level is -0.3x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from -0.7x to -0.3x in FY2016. Debt dropped on 41.7% while cash dropped on 44.3%.
Appendix 1: Peers in Retail
Below we provide New World Department Store China 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) | | 23.7% | -80.2% | 90.3% | -7.2% |
| 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% | -8.2% |
|---|
| New World Department Store China Ltd ($825) | | 14.9% | 3.1% | -2.6% | -9.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vongroup Ltd ($318) | | | 95.1% | 99.1% | 99.0% |
| 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 (104 companies) | 36.7% | 36.3% | 35.3% | 33.6% | 44.4% |
|---|
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% | 3.3% |
|---|
| New World Department Store China Ltd ($825) | 31.5% | 29.2% | 24.5% | 14.0% | 15.7% |
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% |
|---|
| New World Department Store China Ltd ($825) | 12.1% | 39.4% | 11.2% | 8.1% | 5.5% |
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% | 0.7% |
|---|
| New World Department Store China Ltd ($825) | 12.3% | 11.2% | 8.8% | 2.6% | 3.3% |
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 | -0.5x | -0.2x | -0.5x | -0.7x |
|---|
| New World Department Store China Ltd ($825) | -2.0x | -1.6x | -0.2x | -0.7x | -0.3x |
