O'Key Group Sa reports 48.1% CAPEX decline while 6.9% Revenue growth
23 Mar 2016 • About O'Key Group Sa (
$OKEY) • By InTwits
O'Key Group Sa reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- O'Key Group Sa is a growth stock: 2015 revenue growth was 6.9%, 5 year revenue CAGR was 14.5% at 2015 ROIC 10.4%
- EBITDA Margin is relatively stable: 6.1% in 2015 vs. 7.3% in 2014 vs. 7.9% in 2011
- O'Key Group Sa has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.2%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: 42,550 in 2015, 20,549 in 2014, 17,795 in 2013, 13,370 in 2012, 12,905 in 2011
- The company has business model with average profitability: ROIC is at 10.4%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is 0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
O'Key Group Sa ($OKEY) key annual financial indicators
| mln. RUB | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 93,134 | 117,333 | 139,460 | 151,983 | 162,510 | 6.9% |
| Gross Profit | 21,281 | 27,627 | 33,336 | 37,205 | 38,367 | 3.1% |
| SG&A | | | 26,073 | 30,940 | 34,022 | 10.0% |
| EBITDA | 7,384 | 9,466 | 10,192 | 11,089 | 9,903 | -10.7% |
| Net Income | 3,240 | 4,679 | 4,976 | 5,226 | 1,918 | -63.3% |
Balance Sheet
|
|---|
| Cash | 2,942 | 4,536 | 3,007 | 5,810 | 9,768 | 68.1% |
| Short Term Debt | 5,303 | 3,826 | 2,313 | 12,426 | 12,000 | -3.4% |
| Long Term Debt | 6,768 | 9,864 | 14,442 | 19,655 | 23,558 | 19.9% |
Cash flow
|
|---|
| Capex | 8,624 | 8,351 | 12,076 | 16,095 | 8,349 | -48.1% |
Ratios
|
|---|
| Revenue growth | 12.7% | 26.0% | 18.9% | 9.0% | 6.9% | |
| EBITDA growth | 5.9% | 28.2% | 7.7% | 8.8% | -10.7% | |
| Gross Margin | 22.8% | 23.5% | 23.9% | 24.5% | 23.6% | -0.9% |
| EBITDA Margin | 7.9% | 8.1% | 7.3% | 7.3% | 6.1% | -1.2% |
| Net Income Margin | 3.5% | 4.0% | 3.6% | 3.4% | 1.2% | -2.3% |
| SG&A, % of revenue | | | 18.7% | 20.4% | 20.9% | 0.6% |
| CAPEX, % of revenue | 9.3% | 7.1% | 8.7% | 10.6% | 5.1% | -5.5% |
| ROIC | 21.7% | 25.0% | 21.8% | 17.1% | 10.4% | -6.6% |
| ROE | 24.9% | 28.9% | 25.2% | 22.9% | 7.9% | -15.0% |
| Net Debt/EBITDA | 1.2x | 1.0x | 1.3x | 2.4x | 2.6x | 0.2x |
Revenue and profitability
The company's Revenue increased on 6.9% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 7.3% to 6.1% in 2015.
Gross Margin decreased slightly on 0.87 pp from 24.5% to 23.6% in 2015. SG&A as a % of Revenue increased slightly on 0.58 pp from 20.4% to 20.9% in 2015.
Net Income marign decreased on 2.3 pp from 3.4% to 1.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 5.1%. O'Key Group Sa showed small CAPEX/Revenue decline of 2.0 pp from 7.1% in 2012 to 5.1% in 2015. It's average level of CAPEX/Revenue for the last three years was 8.1%.O'Key Group Sa invested a large share of EBITDA (84.3%) to CAPEX.
Return on investment
The company operates at low ROIC (10.44%) and ROE (7.88%). ROIC decreased on 6.6 pp from 17.1% to 10.4% in 2015. ROE dropped on 15.0 pp from 22.9% to 7.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.6x and Debt / EBITDA is 3.6x. Net Debt / EBITDA surged on 0.2x from 2.4x to 2.6x in 2015. Debt surged on 10.8% in 2015 while cash surged on 68.1% in 2015.
Valuation
O'Key Group Sa's trades at EV/EBITDA 2.6x and P/E 0.0x while industy averages are 10.5x and 26.1x. O'Key Group Sa's EV/(EBITDA-CAPEX) is 16.6x with the industry average at 4.7x.
Appendix 1: Peers in Food & Drug Retailers
Below we provide O'Key Group Sa benchmarking against other companies in Food & Drug 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 |
|---|
| Lenta Ltd ($LNTA) | | 22.4% | 31.3% | 34.5% | 30.3% |
| X5 Retail Group N.V ($89VS) | | 8.0% | 9.0% | 18.5% | 27.6% |
| Magnit PJSC ($MGNT) | | 33.5% | 29.4% | 32.3% | 24.4% |
| Crawshaw Group ($CRAW) | | -0.9% | -0.6% | 11.9% | 17.1% |
| Total Produce ($TOT) | | 6.4% | 8.5% | 1.1% | 7.8% |
| |
|---|
| Median (8 companies) | | 7.6% | 7.1% | 9.1% | 12.5% |
|---|
| O'Key Group Sa ($OKEY) | | 26.0% | 18.9% | 9.0% | 6.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Snacktime ($SNAK) | 55.0% | 56.6% | 51.8% | 55.1% | 53.9% |
| Crawshaw Group ($CRAW) | 43.6% | 43.3% | 43.7% | 43.8% | 44.4% |
| Dairy Farm International Hldgs ($DFIB) | 29.4% | 28.9% | 29.8% | 29.9% | 29.5% |
| Magnit PJSC ($MGNT) | 24.3% | 26.5% | 28.5% | 28.9% | 28.5% |
| X5 Retail Group N.V ($89VS) | 23.8% | 23.6% | 24.4% | 24.5% | 24.5% |
| |
|---|
| Median (8 companies) | 24.1% | 25.1% | 26.4% | 26.7% | 26.5% |
|---|
| O'Key Group Sa ($OKEY) | 22.8% | 23.5% | 23.9% | 24.5% | 23.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jardine Matheson Hldgs ($J36) | 24.4% | 13.1% | 11.6% | 11.8% | 12.8% |
| Lenta Ltd ($LNTA) | 9.3% | 10.7% | 11.2% | 11.0% | 11.1% |
| Magnit PJSC ($MGNT) | 7.8% | 10.3% | 11.0% | 11.3% | 10.9% |
| X5 Retail Group N.V ($89VS) | 7.3% | 6.9% | 7.1% | 7.7% | 7.2% |
| Crawshaw Group ($CRAW) | 5.4% | 3.7% | 3.4% | 6.5% | 6.4% |
| |
|---|
| Median (8 companies) | 7.7% | 6.7% | 7.0% | 7.1% | 6.8% |
|---|
| O'Key Group Sa ($OKEY) | 7.9% | 8.1% | 7.3% | 7.3% | 6.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lenta Ltd ($LNTA) | 4.4% | 13.4% | 16.2% | 17.9% | 12.3% |
| X5 Retail Group N.V ($89VS) | 5.1% | 4.6% | 3.8% | 4.5% | 6.4% |
| Crawshaw Group ($CRAW) | 3.6% | 1.1% | 1.0% | 1.2% | 6.3% |
| Magnit PJSC ($MGNT) | 14.5% | 10.5% | 8.6% | 7.3% | 5.7% |
| Jardine Matheson Hldgs ($J36) | 3.6% | 4.9% | 4.4% | 3.5% | 3.6% |
| |
|---|
| Median (8 companies) | 3.6% | 4.7% | 4.1% | 3.4% | 4.6% |
|---|
| O'Key Group Sa ($OKEY) | 9.3% | 7.1% | 8.7% | 10.6% | 5.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Magnit PJSC ($MGNT) | 17.9% | 23.1% | 26.0% | 33.2% | 32.6% |
| Dairy Farm International Hldgs ($DFIB) | 39.6% | 32.8% | 34.6% | 31.1% | 21.6% |
| Lenta Ltd ($LNTA) | 44.1% | 42.9% | 34.0% | 24.5% | 20.3% |
| X5 Retail Group N.V ($89VS) | 11.9% | 3.1% | 13.0% | 14.9% | 15.7% |
| Total Produce ($TOT) | 8.8% | 9.0% | 11.9% | 10.3% | 9.5% |
| |
|---|
| Median (8 companies) | 14.9% | 8.5% | 12.4% | 12.6% | 12.6% |
|---|
| O'Key Group Sa ($OKEY) | 21.7% | 25.0% | 21.8% | 17.1% | 10.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| X5 Retail Group N.V ($89VS) | 3.1x | 3.3x | 2.7x | 2.2x | 2.3x |
| Lenta Ltd ($LNTA) | 2.4x | 2.2x | 2.5x | 2.8x | 1.9x |
| Jardine Matheson Hldgs ($J36) | 0.6x | 1.4x | 1.3x | 1.3x | 1.3x |
| Magnit PJSC ($MGNT) | 1.3x | 1.1x | 1.1x | 0.9x | 0.9x |
| Dairy Farm International Hldgs ($DFIB) | -0.7x | -0.8x | -0.9x | -0.7x | 0.7x |
| |
|---|
| Median (7 companies) | 1.0x | 1.3x | 1.2x | 1.1x | 0.9x |
|---|
| O'Key Group Sa ($OKEY) | 1.2x | 1.0x | 1.3x | 2.4x | 2.6x |
