Fast Retailing Co Ltd Net Income dropped on 56.3% in 2016 while Revenue increased on 6.2%
13/10/2016 • About Fast Retailing Co Ltd (
$6288) • By InTwits
Fast Retailing Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fast Retailing Co Ltd is a growth stock: FY2016 revenue growth was 6.2%, 5 year revenue CAGR was 16.8% at FY2016 ROIC 14.8%
- Fast Retailing Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's in pair with industry average of 12.1%.
- The company has highly profitable business model: ROIC is at 14.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fast Retailing Co Ltd ($6288) key annual financial indicators
| mln. JPY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 928,669 | 1,142,971 | 1,382,935 | 1,681,781 | 1,786,473 | 6.2% |
| Gross Profit | 475,467 | 565,145 | 699,774 | 848,538 | 864,998 | 1.9% |
| SG&A | 324,779 | 402,570 | 518,387 | 634,105 | 666,159 | 5.1% |
| EBITDA | 150,687 | 157,708 | 157,286 | 196,414 | 164,089 | -16.5% |
| Net Income | 71,654 | 104,595 | 74,546 | 110,027 | 48,052 | -56.3% |
Balance Sheet
|
|---|
| Cash | 132,238 | 296,708 | 314,049 | 355,212 | 385,431 | 8.5% |
| Short Term Debt | 8,641 | 3,417 | 3,894 | 4,188 | 4,821 | 15.1% |
| Long Term Debt | 14,544 | 30,077 | 27,604 | 25,513 | 274,090 | 974.3% |
Cash flow
|
|---|
| Capex | 23,980 | 27,668 | 41,414 | 44,663 | 34,158 | -23.5% |
Ratios
|
|---|
| Revenue growth | 13.2% | 23.1% | 21.0% | 21.6% | 6.2% | |
| EBITDA growth | 6.3% | 4.7% | -0.3% | 24.9% | -16.5% | |
| Gross Margin | 51.2% | 49.4% | 50.6% | 50.5% | 48.4% | -2.0% |
| EBITDA Margin | 16.2% | 13.8% | 11.4% | 11.7% | 9.2% | -2.5% |
| Net Income Margin | 7.7% | 9.2% | 5.4% | 6.5% | 2.7% | -3.9% |
| SG&A, % of revenue | 35.0% | 35.2% | 37.5% | 37.7% | 37.3% | -0.4% |
| CAPEX, % of revenue | 2.6% | 2.4% | 3.0% | 2.7% | 1.9% | -0.7% |
| ROIC | 31.6% | 23.7% | 17.9% | 19.8% | 14.8% | -5.0% |
| ROE | 20.4% | 21.8% | 12.5% | 16.1% | 7.3% | -8.8% |
| Net Debt/EBITDA | -0.7x | -1.7x | -1.8x | -1.7x | -0.6x | 1.0x |
Fast Retailing Co Ltd ($6288) key quoterly financial indicators
| mln. JPY | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 520,303 | 491,350 | 422,963 | 351,857 | | | | |
| EBITDA | 85,130 | 32,867 | 55,612 | -9,520 | | | | |
| Net Income | 48,024 | -981 | 23,967 | -22,958 | | | | |
Balance Sheet
|
|---|
| Cash | 387,537 | 504,002 | 453,927 | 385,431 | | | | |
| Long Term Debt | 25,693 | 272,556 | 273,480 | 274,090 | | | | |
Ratios
|
|---|
| Gross Margin | 51.2% | 42.9% | 51.4% | 48.5% | | | | |
| EBITDA Margin | 16.4% | 6.7% | 13.1% | -2.7% | | | | |
| Net Income Margin | 9.2% | -0.2% | 5.7% | -6.5% | | | | |
Revenue and profitability
The company's Revenue increased on 6.2%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.67 pp from 16.3% to 17.0% in 2016.
Gross Margin decreased on 2.0 pp from 50.5% to 48.4% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased on 3.9 pp from 6.5% to 2.7% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 1.9%. CAPEX/Revenue decreased slightly on 0.51 pp from 2.4% in FY2013 to 1.9% in FY2016. It's average level of CAPEX/Revenue for the last three years was 2.5%.
Return on investment
The company operates at good ROIC (14.76%) while ROE is low (7.25%). ROIC decreased on 5.0 pp from 19.8% to 14.8% in FY2016. ROE decreased on 8.8 pp from 16.1% to 7.3% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is 1.7x. Net Debt / EBITDA surged on 1.0x from -1.7x to -0.6x in FY2016. Debt surged on 839% while cash increased on 8.5%.
Management team
Fast Retailing Co Ltd's CEO Tadashi Yanai has spent 13 years at the company.
Appendix 1: Peers in Retail
Below you can find Fast Retailing Co 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) | | 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) | 7.5% | 6.3% | 3.1% | -1.0% | -8.4% |
|---|
| Fast Retailing Co Ltd ($6288) | | | | 21.6% | 6.2% |
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 (103 companies) | 36.7% | 36.3% | 35.0% | 33.3% | 44.4% |
|---|
| Fast Retailing Co Ltd ($6288) | | | 50.6% | 50.5% | 48.4% |
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) | 10.7% | 7.6% | 8.9% | 7.1% | 4.7% |
|---|
| Fast Retailing Co Ltd ($6288) | | | 11.4% | 11.7% | 9.2% |
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% | 1.8% |
|---|
| Fast Retailing Co Ltd ($6288) | | | 3.0% | 2.7% | 1.9% |
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) | 12.3% | 8.8% | 8.5% | 5.8% | 0.8% |
|---|
| Fast Retailing Co Ltd ($6288) | | | 17.9% | 19.8% | 14.8% |
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 |
|---|
| Fast Retailing Co Ltd ($6288) | | | -1.8x | -1.7x | -0.6x |
