Lotte Shopping Co Ltd reports 4.0% EBITDA growth and 1.4% Revenue growth
09 Feb 2017 • About Lotte Shopping Co Ltd (
$LOTS) • By InTwits
Lotte Shopping Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lotte Shopping Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.6%. At the same time it's a lot of higher than industry average of 2.9%.
- CAPEX is quite volatile: 2,324,112 in 2016, 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012
- The company has potentially unprofitable business model: ROIC is at 2.9%
- It operates with high leverage: Net Debt/EBITDA is 6.4x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lotte Shopping Co Ltd ($LOTS) key annual financial indicators
| mln. KRW | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 25,043,680 | 28,211,702 | 28,099,567 | 29,127,655 | 29,526,413 | 1.4% |
| Gross Profit | 7,628,188 | 8,664,682 | 8,762,896 | 8,910,511 | 9,330,132 | 4.7% |
| SG&A | 5,522,185 | 6,425,692 | 6,747,774 | 7,107,426 | 7,505,896 | 5.6% |
| EBITDA | 2,191,735 | 2,306,150 | 2,087,753 | 1,839,904 | 1,913,525 | 4.0% |
| Net Income | 1,080,260 | 788,446 | 526,650 | -383,067 | 168,195 | -143.9% |
Balance Sheet
|
|---|
| Cash | 933,997 | 1,309,484 | 1,928,136 | 1,751,268 | 2,269,177 | 29.6% |
| Short Term Debt | 4,111,136 | 4,774,543 | 4,569,650 | 4,278,421 | 5,084,334 | 18.8% |
| Long Term Debt | 8,014,280 | 7,901,064 | 8,182,399 | 9,849,308 | 9,444,162 | -4.1% |
Cash flow
|
|---|
| Capex | 1,778,530 | 1,833,675 | 1,863,149 | 1,094,939 | 1,206,957 | 10.2% |
Ratios
|
|---|
| Revenue growth | 12.5% | 12.6% | -0.4% | 3.7% | 1.4% | |
| EBITDA growth | -7.9% | 5.2% | -9.5% | -11.9% | 4.0% | |
| Gross Margin | 30.5% | 30.7% | 31.2% | 30.6% | 31.6% | 1.0% |
| EBITDA Margin | 8.8% | 8.2% | 7.4% | 6.3% | 6.5% | 0.2% |
| Net Income Margin | 4.3% | 2.8% | 1.9% | -1.3% | 0.6% | 1.9% |
| SG&A, % of revenue | 22.1% | 22.8% | 24.0% | 24.4% | 25.4% | 1.0% |
| CAPEX, % of revenue | 7.1% | 6.5% | 6.6% | 3.8% | 4.1% | 0.3% |
| ROIC | 5.3% | 4.9% | 3.8% | 2.6% | 2.9% | 0.2% |
| ROE | 7.5% | 5.1% | 3.1% | -2.4% | 1.0% | 3.4% |
| Net Debt/EBITDA | 5.1x | 4.9x | 5.2x | 6.7x | 6.4x | -0.3x |
Revenue and profitability
The company's Revenue increased slightly on 1.4% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 9.7% to 11.4% in 2016.
Gross Margin increased slightly on 1.0 pp from 30.6% to 31.6% in 2016. SG&A as a % of Revenue increased slightly on 1.0 pp from 24.4% to 25.4% in 2016.
Net Income marign increased slightly on 1.9 pp from -1.3% to 0.57% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 4.1%. The company's CAPEX/Revenue decreased on 2.4 pp from 6.5% in 2013 to 4.1% in 2016. It's average level of CAPEX/Revenue for the last three years was 4.8%.Lotte Shopping Co Ltd maintained rich investment policy and has spent a big chunk of EBITDA (63.1%) to CAPEX.
Return on investment
The company operates at low ROIC (2.85%) and ROE (0.95%). ROIC showed almost no change in 2016. ROE increased on 3.4 pp from -2.4% to 0.95% in 2016.
Leverage (Debt)
Debt level is 6.4x Net Debt / EBITDA and 7.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 6.7x to 6.4x in 2016. Debt increased on 2.8% in 2016 while cash surged on 29.6% in 2016.
Appendix 1: Peers in General Retailers
Below you can find Lotte Shopping Co Ltd benchmarking vs. other companies in General Retailers 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 |
|---|
| Just Eat ($JE.) | | | | 57.7% | 51.7% |
| AO World ($AO.) | | 31.3% | 40.0% | 23.8% | 25.7% |
| Signet Jewelers Ltd ($SIG) | | 6.2% | 5.7% | 36.3% | 14.2% |
| Caffyns ($78GL) | | -3.1% | 17.1% | 8.9% | 10.5% |
| Mysale Group ($MYSL) | | 62.1% | 23.4% | 5.1% | 7.0% |
| |
|---|
| Median (8 companies) | 4.4% | 6.2% | 11.4% | 7.3% | 8.8% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | | 12.6% | -0.4% | 3.7% | 1.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Just Eat ($JE.) | | | 89.7% | 90.2% | 90.6% |
| Aa ($AA.) | 60.4% | 63.9% | 64.7% | 64.8% | 64.3% |
| French Connection Group ($FCCN) | 48.1% | 47.9% | 47.6% | 46.7% | 46.3% |
| Stanley Gibbons Group ($SGI) | 43.7% | 43.2% | | 51.5% | 40.3% |
| Signet Jewelers Ltd ($SIG) | 38.3% | 38.6% | 37.5% | 36.2% | 37.3% |
| |
|---|
| Median (8 companies) | 32.5% | 36.4% | 37.5% | 41.4% | 38.8% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 30.5% | 30.7% | 31.2% | 30.6% | 31.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 35.5% | 37.0% | 42.2% | 37.9% | 36.8% |
| Just Eat ($JE.) | | | 16.3% | 21.0% | 25.8% |
| Signet Jewelers Ltd ($SIG) | 16.0% | 16.6% | 16.2% | 12.7% | 13.4% |
| Caffyns ($78GL) | 10.8% | 3.0% | 2.0% | 6.5% | 2.2% |
| Mysale Group ($MYSL) | 2.4% | 3.5% | 2.3% | -4.7% | 1.8% |
| |
|---|
| Median (8 companies) | 7.4% | 3.7% | 2.3% | 8.6% | 2.0% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 8.8% | 8.2% | 7.4% | 6.3% | 6.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 2.7% | 0.7% | 1.0% | 3.8% | 7.7% |
| Signet Jewelers Ltd ($SIG) | 2.6% | 3.4% | 3.6% | 3.8% | 3.5% |
| Just Eat ($JE.) | | | 3.4% | 2.3% | 2.5% |
| Caffyns ($78GL) | 1.6% | 2.2% | 3.9% | 1.4% | 1.6% |
| Stanley Gibbons Group ($SGI) | 1.0% | 1.1% | | 2.4% | 1.5% |
| |
|---|
| Median (8 companies) | 1.2% | 0.7% | 1.0% | 1.9% | 1.6% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 7.1% | 6.5% | 6.6% | 3.8% | 4.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 138.0% | 134.4% | 61.1% | 34.9% | 32.8% |
| Signet Jewelers Ltd ($SIG) | 21.6% | 21.5% | 20.4% | 15.5% | 15.2% |
| Caffyns ($78GL) | 60.8% | 15.4% | 11.1% | 37.3% | 10.4% |
| Just Eat ($JE.) | | | 16.4% | 9.1% | 9.8% |
| Mysale Group ($MYSL) | | | 10.0% | -19.0% | 0.3% |
| |
|---|
| Median (8 companies) | 21.4% | 18.4% | 10.5% | 12.3% | 5.1% |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 5.3% | 4.9% | 3.8% | 2.6% | 2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 0.6x | -0.0x | 7.7x | 7.9x | 7.8x |
| Stanley Gibbons Group ($SGI) | -1.1x | -3.0x | | 2.3x | |
| Signet Jewelers Ltd ($SIG) | -0.8x | -0.5x | -0.3x | 1.7x | 1.4x |
| Caffyns ($78GL) | 0.5x | 2.0x | 3.0x | 0.7x | 2.2x |
| Entu (Uk) Ltd ($ENTU) | -0.8x | 0.3x | -0.6x | -0.2x | |
| |
|---|
| Median (9 companies) | -0.8x | -0.5x | -0.5x | -0.2x | 1.4x |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 5.1x | 4.9x | 5.2x | 6.7x | 6.4x |
