Fast Retailing Co Ltd reports 148% Net Income growth in 2017 and 2.3 pp EBITDA Margin growth from 9.2% to 11.5%
12/10/2017 • About Fast Retailing Co Ltd (
$6288) • By InTwits
Fast Retailing Co Ltd reported FY2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fast Retailing Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 12.1%.
- The company has highly profitable business model: ROIC is at 18.3%
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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 1,142,971 | 1,382,935 | 1,681,781 | 1,786,473 | 1,861,917 | 4.2% |
| Gross Profit | 565,145 | 699,774 | 848,538 | 864,998 | 909,249 | 5.1% |
| SG&A | 402,570 | 518,387 | 634,105 | 666,159 | 685,527 | 2.9% |
| EBITDA | 157,708 | 157,286 | 196,414 | 164,089 | 213,340 | 30.0% |
| Net Income | 104,595 | 74,546 | 110,027 | 48,052 | 119,280 | 148.2% |
Balance Sheet
|
|---|
| Cash | 296,708 | 314,049 | 355,212 | 385,431 | 683,802 | 77.4% |
| Short Term Debt | 3,417 | 3,894 | 4,188 | 4,821 | 5,596 | 16.1% |
| Long Term Debt | 30,077 | 27,604 | 25,513 | 274,090 | 273,467 | -0.2% |
Cash flow
|
|---|
| Capex | 27,668 | 41,414 | 44,663 | 34,158 | 33,600 | -1.6% |
Ratios
|
|---|
| Revenue growth | 23.1% | 21.0% | 21.6% | 6.2% | 4.2% | |
| EBITDA growth | 4.7% | -0.3% | 24.9% | -16.5% | 30.0% | |
| Gross Margin | 49.4% | 50.6% | 50.5% | 48.4% | 48.8% | 0.4% |
| EBITDA Margin | 13.8% | 11.4% | 11.7% | 9.2% | 11.5% | 2.3% |
| Net Income Margin | 9.2% | 5.4% | 6.5% | 2.7% | 6.4% | 3.7% |
| SG&A, % of revenue | 35.2% | 37.5% | 37.7% | 37.3% | 36.8% | -0.5% |
| CAPEX, % of revenue | 2.4% | 3.0% | 2.7% | 1.9% | 1.8% | -0.1% |
| ROIC | 23.7% | 17.9% | 19.8% | 14.8% | 18.3% | 3.5% |
| ROE | 21.8% | 12.5% | 16.1% | 7.3% | 18.3% | 11.0% |
| Net Debt/EBITDA | -1.7x | -1.8x | -1.7x | -0.6x | -1.9x | -1.2x |
Fast Retailing Co Ltd ($6288) key quoterly financial indicators
| mln. JPY | FY17Q1 | FY17Q2 | FY17Q3 | FY17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 528,847 | 488,661 | 460,450 | 383,959 | 1.6% | -0.5% | 8.9% | 9.1% |
| EBITDA | 94,800 | 51,276 | 59,540 | 7,725 | 11.4% | 56.0% | 7.1% | |
| Net Income | 69,695 | 27,538 | 22,880 | -833 | 45.1% | | -4.5% | |
Balance Sheet
|
|---|
| Cash | 465,691 | 569,861 | 567,446 | 683,802 | 20.2% | 13.1% | 25.0% | 77.4% |
| Long Term Debt | 275,957 | 274,484 | 274,754 | 273,467 | 974.1% | 0.7% | 0.5% | -0.2% |
Ratios
|
|---|
| Gross Margin | 51.2% | 45.7% | 50.2% | 47.9% | 0.0% | 2.9% | -1.2% | -0.6% |
| EBITDA Margin | 17.9% | 10.5% | 12.9% | 2.0% | 1.6% | 3.8% | -0.2% | 4.7% |
| Net Income Margin | 13.2% | 5.6% | 5.0% | -0.2% | 3.9% | 5.8% | -0.7% | 6.3% |
Revenue and profitability
Fast Retailing Co Ltd's Revenue increased on 4.2%. Revenue growth showed acceleration in FY17Q4 - it increased 9.1% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.3 pp from 9.2% to 11.5% in FY2017.
Gross Margin showed almost no change in FY2017. SG&A as a % of Revenue showed almost no change in FY2017.
Net Income marign increased on 3.7 pp from 2.7% to 6.4% in FY2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.8% in FY2017. The company showed small CAPEX/Revenue decline of 1.2 pp from 3.0% in FY2014 to 1.8% in FY2017. Average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at good ROIC (18.29%) and ROE (18.26%). ROIC increased on 3.5 pp from 14.8% to 18.3% in FY2017. ROE jumped on 11.0 pp from 7.3% to 18.3% in FY2017.
Leverage (Debt)
Debt level is -1.9x Net Debt / EBITDA and 1.3x Debt / EBITDA. Net Debt / EBITDA dropped on 1.2x from -0.6x to -1.9x in FY2017. Debt showed almost no change in FY2017 while cash surged on 77.4%.
Appendix 1: Peers in Retail
Below we provide Fast Retailing 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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Theme International Holdings Ltd ($990) | -2.8% | -11.2% | -29.0% | 2,774.0% | |
| Viva China Holdings Ltd ($8032) | 83.5% | -11.0% | 32.3% | 274.7% | |
| Noble House China Holdings Ltd ($8246) | -20.2% | -24.8% | 117.2% | 129.1% | |
| Maoye International Holdings Ltd ($848) | 7.4% | -6.7% | -7.5% | 77.9% | |
| JC Group Holdings Ltd ($8326) | -5.5% | -3.0% | 6.7% | 58.1% | |
| |
|---|
| Median (84 companies) | 6.3% | 3.1% | -1.0% | -4.1% | 1.9% |
|---|
| Fast Retailing Co Ltd ($6288) | | | 21.6% | 6.2% | 4.2% |
Top companies by Gross margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Vongroup Ltd ($318) | | 95.1% | 99.1% | 99.0% | |
| Modern Beauty Salon Holdings Ltd ($919) | 95.9% | 96.8% | 96.7% | 96.8% | |
| Moiselle International Holdings Ltd ($130) | 83.8% | 80.6% | 83.2% | 77.6% | |
| Tsui Wah Holdings Ltd ($1314) | 69.4% | 69.3% | 69.6% | 71.3% | |
| Trinity Ltd ($891) | 75.5% | 74.1% | 72.4% | 68.3% | |
| |
|---|
| Median (55 companies) | 36.3% | 35.0% | 33.3% | 42.6% | 24.1% |
|---|
| Fast Retailing Co Ltd ($6288) | | 50.6% | 50.5% | 48.4% | 48.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 58.3% | 41.4% | 61.6% | |
| Lifestyle International Holdings Ltd ($1212) | 47.0% | 44.7% | 43.4% | 46.3% | |
| Noble House China Holdings Ltd ($8246) | -23.3% | -37.4% | 20.4% | 37.6% | |
| Intime Retail Group Co Ltd ($1833) | 55.4% | 36.2% | 35.7% | 36.1% | |
| ANTA Sports Products Ltd ($2020) | 23.3% | 24.4% | 25.9% | 25.7% | |
| |
|---|
| Median (62 companies) | 7.6% | 8.9% | 7.1% | 6.7% | 7.2% |
|---|
| Fast Retailing Co Ltd ($6288) | | 11.4% | 11.7% | 9.2% | 11.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Artini China Co Ltd ($789) | 0.7% | 3.4% | 2.7% | 51.3% | |
| Coach Inc ($6388) | 4.8% | 4.6% | 4.8% | 8.8% | |
| Tsui Wah Holdings Ltd ($1314) | 9.3% | 30.5% | 10.6% | 8.5% | |
| Starbucks Corp ($4337) | 7.7% | 7.1% | 6.8% | 6.8% | |
| Li Ning Co Ltd ($2331) | 2.8% | 4.0% | 4.4% | 5.9% | |
| |
|---|
| Median (46 companies) | 3.6% | 3.8% | 3.5% | 2.2% | 2.5% |
|---|
| Fast Retailing Co Ltd ($6288) | | 3.0% | 2.7% | 1.9% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| JC Group Holdings Ltd ($8326) | 215.6% | 92.8% | 66.3% | 81.7% | |
| Noble House China Holdings Ltd ($8246) | -67.7% | -113.8% | 35.6% | 68.8% | |
| Starbucks Corp ($4337) | -6.0% | 52.8% | 51.4% | 46.2% | |
| Fairwood Holdings Ltd ($52) | 29.1% | 28.6% | 32.1% | 36.4% | |
| ANTA Sports Products Ltd ($2020) | 19.2% | 22.8% | 27.0% | 30.0% | |
| |
|---|
| Median (84 companies) | 8.8% | 8.5% | 5.8% | 6.3% | 17.7% |
|---|
| Fast Retailing Co Ltd ($6288) | | 17.9% | 19.8% | 14.8% | 18.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Combest Holdings Ltd ($8190) | -1.1x | -2.2x | | 37.8x | |
| KTL International Holdings Group Ltd ($442) | 4.0x | 2.6x | 3.1x | 13.7x | |
| Stelux Holdings International Ltd ($84) | 1.0x | 1.0x | 1.5x | 12.5x | |
| Parkson Retail Group Ltd ($3368) | 2.3x | 3.6x | 9.8x | 11.1x | |
| Sparkle Roll Group Ltd ($970) | 4.0x | 9.3x | 23.5x | 8.5x | |
| |
|---|
| Median (44 companies) | -0.6x | -0.2x | -0.5x | -0.4x | -1.4x |
|---|
| Fast Retailing Co Ltd ($6288) | | -1.8x | -1.7x | -0.6x | -1.9x |
