Lotte Shopping Co Ltd Net Debt / EBITDA surged on 1.5x from 5.2x to 6.7x in 2015 while EBITDA dropped on 11.9%
04 Feb 2016 • About Lotte Shopping Co Ltd (
$LOTS) • By InTwits
Lotte Shopping Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 6.3% in 2015 vs. 7.4% in 2014 vs. 10.7% in 2011
- Lotte Shopping Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.2%. At the same time it's a lot of higher than industry average of 2.1%.
- CAPEX is quite volatile: 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012, 5,330,968 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.6%
- It operates with high leverage: Net Debt/EBITDA is 6.7x while industry average is -4.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lotte Shopping Co Ltd ($LOTS) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 22,253,088 | 25,043,680 | 28,211,702 | 28,099,567 | 29,127,655 | 3.7% |
| Gross Profit | 7,001,694 | 7,628,188 | 8,664,682 | 8,762,896 | 8,910,511 | 1.7% |
| SG&A | 4,687,851 | 5,522,185 | 6,425,692 | 6,747,774 | 7,107,426 | 5.3% |
| EBITDA | 2,379,054 | 2,191,735 | 2,306,150 | 2,087,753 | 1,839,904 | -11.9% |
| Net Income | 931,815 | 1,080,260 | 788,446 | 526,650 | -383,067 | -172.7% |
Balance Sheet
|
|---|
| Cash | 1,958,204 | 933,997 | 1,309,484 | 1,928,136 | 1,751,268 | -9.2% |
| Short Term Debt | 3,447,291 | 4,111,136 | 4,774,543 | 4,569,650 | 4,278,421 | -6.4% |
| Long Term Debt | 6,738,765 | 8,014,280 | 7,901,064 | 8,182,399 | 9,849,308 | 20.4% |
Cash flow
|
|---|
| Capex | 1,592,148 | 1,778,530 | 1,833,675 | 1,863,149 | 1,094,939 | -41.2% |
Ratios
|
|---|
| Revenue growth | 17.0% | 12.5% | 12.6% | -0.4% | 3.7% | |
| EBITDA growth | 13.0% | -7.9% | 5.2% | -9.5% | -11.9% | |
| Gross Margin | 31.5% | 30.5% | 30.7% | 31.2% | 30.6% | -0.6% |
| EBITDA Margin | 10.7% | 8.8% | 8.2% | 7.4% | 6.3% | -1.1% |
| Net Income Margin | 4.2% | 4.3% | 2.8% | 1.9% | -1.3% | -3.2% |
| SG&A, % of revenue | 21.1% | 22.1% | 22.8% | 24.0% | 24.4% | 0.4% |
| CAPEX, % of revenue | 7.2% | 7.1% | 6.5% | 6.6% | 3.8% | -2.9% |
| ROIC | 7.3% | 5.3% | 4.9% | 3.8% | 2.6% | -1.1% |
| ROE | 6.9% | 7.5% | 5.1% | 3.1% | -2.4% | -5.5% |
| Net Debt/EBITDA | 3.5x | 5.1x | 4.9x | 5.2x | 6.7x | 1.5x |
Revenue and profitability
Lotte Shopping Co Ltd's Revenue increased on 3.7% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 7.4% to 6.3% in 2015.
Gross Margin decreased slightly on 0.59 pp from 31.2% to 30.6% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 3.2 pp from 1.9% to -1.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 3.8%. Lotte Shopping Co Ltd's CAPEX/Revenue decreased on 3.3 pp from 7.1% in 2012 to 3.8% in 2015. It's average level of CAPEX/Revenue for the last three years was 5.6%.The company maintained rich investment policy and has spent a big chunk of EBITDA (59.5%) to CAPEX.
Return on investment
The company operates at low but positive ROIC (2.65%) and negative ROE (-2.40%). ROIC decreased slightly on 1.1 pp from 3.8% to 2.6% in 2015. ROE decreased on 5.5 pp from 3.1% to -2.4% in 2015.
Leverage (Debt)
Debt level is 6.7x Net Debt / EBITDA and 7.7x Debt / EBITDA. Net Debt / EBITDA surged on 1.5x from 5.2x to 6.7x in 2015. Debt surged on 10.8% in 2015 while cash decreased on 9.2% in 2015.
Appendix 1: Peers in General Retailers
Below we provide Lotte Shopping Co Ltd benchmarking against other companies in General Retailers 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Just Eat ($JE.) | | | | | 57.7% |
| Signet Jewelers Ltd ($SIG) | | 9.1% | 6.2% | 5.7% | 36.3% |
| AO World ($AO.) | | 27.6% | 31.3% | 40.0% | 23.8% |
| Caffyns ($78GL) | | | -3.1% | 17.1% | 8.9% |
| Entu (Uk) Ltd ($ENTU) | | 36.5% | 4.1% | -3.4% | 7.3% |
| |
|---|
| Median (8 companies) | -9.7% | 6.1% | 6.2% | 11.4% | 8.1% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | | 12.5% | 12.6% | -0.4% | 3.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Just Eat ($JE.) | | | | 89.7% | 90.2% |
| Aa ($AA.) | 62.0% | 60.4% | 63.9% | 64.7% | 64.8% |
| Stanley Gibbons Group ($SGI) | 38.7% | 43.7% | 43.2% | | 51.5% |
| French Connection Group ($FCCN) | 51.7% | 48.1% | 47.9% | 47.6% | 46.7% |
| Signet Jewelers Ltd ($SIG) | 36.2% | 38.3% | 38.6% | 37.5% | 36.2% |
| |
|---|
| Median (9 companies) | 36.1% | 32.5% | 36.4% | 37.5% | 36.2% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 31.5% | 30.5% | 30.7% | 31.2% | 30.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Aa ($AA.) | 43.2% | 35.5% | 37.0% | 42.2% | 37.9% |
| Just Eat ($JE.) | | | | 16.3% | 21.0% |
| Signet Jewelers Ltd ($SIG) | 13.7% | 16.0% | 16.6% | 16.2% | 12.7% |
| Entu (Uk) Ltd ($ENTU) | 5.2% | 7.4% | 6.7% | 10.3% | 8.6% |
| Stanley Gibbons Group ($SGI) | 15.4% | 17.3% | 13.9% | | 8.6% |
| |
|---|
| Median (9 companies) | 5.2% | 7.4% | 3.7% | 2.3% | 8.6% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 10.7% | 8.8% | 8.2% | 7.4% | 6.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Signet Jewelers Ltd ($SIG) | 1.7% | 2.6% | 3.4% | 3.6% | 3.8% |
| Aa ($AA.) | 3.0% | 2.7% | 0.7% | 1.0% | 3.8% |
| Stanley Gibbons Group ($SGI) | 1.0% | 1.0% | 1.1% | | 2.4% |
| Just Eat ($JE.) | | | | 3.4% | 2.3% |
| Caffyns ($78GL) | | 1.6% | 2.2% | 3.9% | 1.4% |
| |
|---|
| Median (9 companies) | 0.9% | 1.2% | 0.7% | 1.0% | 1.4% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 7.2% | 7.1% | 6.5% | 6.6% | 3.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Entu (Uk) Ltd ($ENTU) | | 144.6% | 68.6% | 134.8% | 461.3% |
| Caffyns ($78GL) | | 60.8% | 15.4% | 11.1% | 37.3% |
| Aa ($AA.) | | 138.0% | 134.4% | 61.1% | 34.9% |
| Signet Jewelers Ltd ($SIG) | 17.2% | 21.6% | 21.5% | 20.4% | 15.5% |
| Just Eat ($JE.) | | | | 16.4% | 9.1% |
| |
|---|
| Median (9 companies) | 13.8% | 21.4% | 18.4% | 10.5% | 9.1% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 7.3% | 5.3% | 4.9% | 3.8% | 2.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Aa ($AA.) | 0.3x | 0.6x | -0.0x | 7.7x | 7.9x |
| Stanley Gibbons Group ($SGI) | -0.5x | -1.1x | -3.0x | | 2.3x |
| Signet Jewelers Ltd ($SIG) | -0.6x | -0.8x | -0.5x | -0.3x | 1.7x |
| Caffyns ($78GL) | | 0.5x | 2.0x | 3.0x | 0.7x |
| Entu (Uk) Ltd ($ENTU) | -0.1x | -0.8x | 0.3x | -0.6x | -0.2x |
| |
|---|
| Median (8 companies) | -0.5x | -0.8x | -0.5x | -0.5x | 0.3x |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 3.5x | 5.1x | 4.9x | 5.2x | 6.7x |
