Li Ning Co Ltd Net Income surged on 4,395% in 2016 and Revenue jumped on 13.1%
23/03/2017 • About Li Ning Co Ltd (
$2331) • By InTwits
Li Ning Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Li Ning Co Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -2.0%0
- Li Ning Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 4.7%.
- CAPEX is quite volatile: 470 in FY2016, 311 in FY2015, 242 in FY2014, 166 in FY2013, 123 in FY2012
- The company has business model with low profitability: ROIC is at 7.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Li Ning Co Ltd ($2331) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 6,676 | 5,824 | 6,047 | 7,089 | 8,015 | 13.1% |
| Gross Profit | 2,514 | 2,594 | 2,718 | 3,193 | 3,705 | 16.1% |
| SG&A | 3,349 | 3,247 | 3,384 | 3,187 | 3,455 | 8.4% |
| EBITDA | -1,372 | 24 | -445 | 411 | 703 | 71.2% |
| Net Income | -1,979 | -392 | -781 | 14 | 643 | 4,395.5% |
Balance Sheet
|
|---|
| Cash | 1,241 | 1,281 | 1,031 | 1,813 | 1,954 | 7.8% |
| Short Term Debt | 1,571 | 267 | 621 | 442 | 810 | 83.0% |
| Long Term Debt | 804 | 968 | 1,052 | 938 | 44 | -95.3% |
Cash flow
|
|---|
| Capex | 123 | 166 | 242 | 311 | 470 | 51.1% |
Ratios
|
|---|
| Revenue growth | -25.2% | -12.8% | 3.8% | 17.2% | 13.1% | |
| EBITDA growth | -253.8% | -101.7% | -1,969.8% | -192.4% | 71.2% | |
| Gross Margin | 37.7% | 44.5% | 44.9% | 45.0% | 46.2% | 1.2% |
| EBITDA Margin | -20.6% | 0.4% | -7.4% | 5.8% | 8.8% | 3.0% |
| Net Income Margin | -29.6% | -6.7% | -12.9% | 0.2% | 8.0% | 7.8% |
| SG&A, % of revenue | 50.2% | 55.8% | 56.0% | 45.0% | 43.1% | -1.9% |
| CAPEX, % of revenue | 1.8% | 2.8% | 4.0% | 4.4% | 5.9% | 1.5% |
| ROIC | -33.5% | -3.6% | -14.9% | 3.4% | 7.6% | 4.2% |
| ROE | -77.8% | -18.2% | -33.7% | 0.6% | 17.9% | 17.4% |
| Net Debt/EBITDA | | -1.9x | | -1.1x | -1.6x | -0.5x |
Revenue and profitability
The company's Revenue jumped on 13.1%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.7 pp from 19.2% to 23.9% in FY2016.
Gross Margin increased slightly on 1.2 pp from 45.0% to 46.2% in FY2016. SG&A as a % of Revenue decreased slightly on 1.9 pp from 45.0% to 43.1% in FY2016.
Net Income marign increased on 7.8 pp from 0.20% to 8.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.9% in FY2016. The company's CAPEX/Revenue increased on 3.0 pp from 2.8% in FY2013 to 5.9% in FY2016. Average CAPEX/Revenue for the last three years was 4.8%.The company invested a big chunk of EBITDA (66.9%) to CAPEX to secure its growth.
Return on investment
The company operates at good ROE (17.93%) while ROIC is low (7.62%). ROIC increased on 4.2 pp from 3.4% to 7.6% in FY2016. ROE jumped on 17.4 pp from 0.56% to 17.9% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.6x and Debt / EBITDA is 1.2x. Net Debt / EBITDA dropped on 0.5x from -1.1x to -1.6x in FY2016. Debt dropped on 38.1% while cash increased on 7.8%.
Management team
Li Ning is a the company's CEO. Li Ning has spent 4 years at the company.
Appendix 1: Peers in Retail
Below we provide Li Ning Co 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) | | 85.6% | -42.1% | 419.8% | 21.8% |
| Noble House China Holdings Ltd ($8246) | | -20.2% | -24.8% | 117.2% | 129.1% |
| 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) | | 72.8% | 23.0% | 48.3% | 12.5% |
| |
|---|
| Median (117 companies) | 9.9% | 6.5% | 2.9% | -1.0% | -3.0% |
|---|
| Li Ning Co Ltd ($2331) | | -12.8% | 3.8% | 17.2% | 13.1% |
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) | 36.2% | 35.8% | 35.0% | 33.3% | 43.2% |
|---|
| Li Ning Co Ltd ($2331) | 37.7% | 44.5% | 44.9% | 45.0% | 46.2% |
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% | 46.3% |
| China Dongxiang Group Co Ltd ($3818) | 6.0% | 5.6% | 58.3% | 41.4% | 61.6% |
| |
|---|
| Median (117 companies) | 10.8% | 7.8% | 9.1% | 7.4% | 6.8% |
|---|
| Li Ning Co Ltd ($2331) | -20.6% | 0.4% | -7.4% | 5.8% | 8.8% |
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% | 3.7% | 3.1% | 2.0% |
|---|
| Li Ning Co Ltd ($2331) | 1.8% | 2.8% | 4.0% | 4.4% | 5.9% |
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% | 46.2% |
| 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% | 68.8% |
| |
|---|
| Median (117 companies) | 12.3% | 8.9% | 8.7% | 5.8% | 6.4% |
|---|
| Li Ning Co Ltd ($2331) | -33.5% | -3.6% | -14.9% | 3.4% | 7.6% |
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 | 11.1x |
| 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 | -0.3x |
|---|
| Li Ning Co Ltd ($2331) | | -1.9x | | -1.1x | -1.6x |
