Sa Sa Int’l (00178.HK)
&
Bonjour Hold (00653.HK)
Financial Analysis Report
2012-2014
Irene SONG Yinjin 14252309
Hong Kong Baptist University
JOUR 2006 Finance for Business Journalists
Instructor: Mr. Clemence Poon
2015/11/29
Content
Summary ............................................................. 1
Common-Size Income Statement ......................... 3
Income Statement-YTY Comparison .................... 5
Common-Size Balance Sheet ................................ 7
Balance Sheet-YTY Comparison ......................... 10
Ratio Analysis .................................................... 13
Appendix ........................................................... 17
Irene SONG Yingjin
Summary
Sa Sa International Holdings (Chinese: 莎莎國際) (SEHK: 178) is a Hong Kong-­
based chain store company selling cosmetics, personal care, skin care and baby care products. For the year ended 31 December 2014, Sasa’s turnover amounted to HK$8,756 million, representing an increase of 14.2% over the HK$7,670 million recorded last year. The Group’s profit for the year 2014 was HK$4,073 million, a decrease of 14.5% over the HK$3,558 million recorded last fiscal year. Basic earnings per share were HK33.0 cents, as compared to HK29.3 cents in the previous fiscal year. The overall gross profit margin of the Group for the full fiscal year increased to 46.52% from 46.39% last year. The principal activity of Bonjour Holdings (Chinese:卓悅控股) (SEHK:653) is principally engaged in the retail and wholesale of beauty and health-­care products and the operation of beauty and health salons in Hong Kong, Macau and the PRC. For the year ended 31 December 2014, Bonjour’s turnover amounted to HK$3,144 million, representing an increase of 3.5% over the HK$3,039 million recorded last year. The Group’s profit for the year 2014 was HK$226 million, a decrease of 17.2% over the HK$273 million recorded last fiscal year. Basic earnings per share were HK6.6 cents, as compared to HK8.3 cents in the previous fiscal year. The overall gross profit margin of the Group for the full fiscal year increased to 47.68% from 47.35% last year. Sasa has a great name and good brand so it attracts big cosmetic names and customers trust it for the brands it sells, especially tourists from mainland China. Also it has advantages in going overseas market. Compared with Bonjour, Sasa is a larger enterprise and performs better than Bonjour generally, statistically speaking. But Bonjour also is a company with good development, and its gross profit margins were even a little bit higher than Sasa’s. And for stock investors, Bonjour’s price was much cheaper and the return of investment was considerable. In recent years, the overall retail market in Hong Kong was challenging. The retail industry sailed through ups and downs throughout the year as a result of the instabilities of the external environment and the change of Mainland tourists’ consumption pattern. According to the statistics in 2014 released by the Census and Statistics Department, the total retail sales value edged down 0.2% to HK$493.3 billion compare to 2013. Hong Kong’s annual retail sales figures fell for the first time since the SARS outbreak in 2003.Given the current social unrest expelling the PRC tourist inflow to Hong Kong and the change in tourist mix with less spending pattern, Sasa and Bonjour are inevitably facing a challenging environment. As the two cosmetics retail giants in Hong Kong even Asia, their financial performance can be used as a benchmark of this industry. 1
Irene SONG Yingjin
This report consists the Common-­Size Income Statement, Income Statement-­ YTY comparison, Common-­Size Balance Sheets, Balance Sheets-­YTY Comparison and Ratio Analysis of Sasa and Bonjour in 2014,2013 and 2012, and comments followed. 2
Irene SONG Yingjin
Common-Size Income Statement
HK $M
Sales
COGS
Gross Profit
Other income
Distribution costs
Administrative expenses
Other operating
expenses
Total operating
expenses
Other gains-‐net
Operating Profit
Finance income-‐net
Finance costs
Profit Before Tax
Taxation
Profit After Tax
2014
2013
Sasa
8756
(4683)
4073
103
(2728)
(341)
N/A
Bonjour
3144
(1645)
1499
54
(103)
(1172)
(3)
Sasa
7670
(4112)
3558
58
(2361)
(272)
N/A
Bonjour
3039
(1600)
1439
54
(99)
(1063)
(2)
Sasa
6405
(3508)
2897
40
(1901)
(208)
N/A
Bonjour
2808
(1483)
1325
56
(100)
(1006)
(5)
(3069)
(1278)
(2633)
(1164)
(2108)
(1111)
7
1114
12
(0.3)
1126
(191)
935
N/A
275
N/A
(2)
273
(47)
226
4
987
8
(0)
995
(169)
826
N/A
329
N/A
(1)
328
(55)
273
0.2
828
7
(0)
835
(145)
690
N/A
270
N/A
(1)
269
(47)
222
2014
Sales
COGS
Gross Profit
Other income
Distribution costs
Administrative expenses
Other operating
expenses
Total operating
expenses
Other gains-‐net
Operating Profit
Finance income-‐net
Finance costs
Profit Before Tax
Taxation
Profit After Tax
2012
2013
2012
Sasa
100%
53.5%
46.5%
1.2%
31.2%
3.9%
N/A
Bonjour
100%
52.3%
47.7%
1.7%
3.3%
37.3%
0.1%
Sasa
100%
53.6%
46.4%
0.8%
30.8%
3.5%
N/A
Bonjour
100%
52.6%
47.4%
1.8%
3.3%
35.0%
0.1%
Sasa
100%
54.8%
45.2%
0.6%
29.7%
3.2%
N/A
Bonjour
100%
52.8%
47.2%
2.0%
3.6%
35.8%
0.2%
35.1%
40.6%
34.3%
38.3%
32.9%
39.6%
0.1%
12.7%
0.1%
0.0%
12.9%
2.2%
10.7%
N/A
8.7%
N/A
0.1%
8.7%
1.5%
7.2%
0.1%
12.9%
0.1%
0.0%
13.0%
2.2%
10.8%
N/A
10.8%
N/A
0.0%
10.8%
1.8%
9.0%
0.0%
12.9%
0.1%
0.0%
13.0%
2.3%
10.8%
N/A
9.6%
N/A
0.0%
9.6%
1.7%
7.9%
3
Irene SONG Yingjin
Comments
[1]. In 2014, 2013 and 2012, Sa Sa’s revenue was about three times as much as that of Bonjour, so the business scale of Sasa was larger. Main reasons are as follows: Firstly, Sasa established 280 retail stores in Hong Kong, Macau, Mainland China, Singapore, Malaysia and Taiwan, but Bonjour only had 47 stores in Hong Kong, Macau and Mainland China. Secondly, the performance of Sasa’s e-­commerce was strong as turnover for sasa.com amounted to HK$394.0 million in 2014, a rise of 2.6% over the previous fiscal year. And turnover from Bonjour’s e-­commerce amounted to HK$44.8 million, a decrease of 13.8% over the previous fiscal year. Thirdly, Sasa continued to implement the its diversification strategy in the product categories as well as to broaden its appeal to segments such as the young people segment and home DIY sector, so Sasa had a more various types of brands for different kinds of customers to choose. [2]. Bonjour’s cost of goods sold accounted for about 1% or 2% lower than that of Sasa in total sales, which made the proportion of Bonjour’s gross profit higher. Because medium and low level products constituted a larger part of Bonjour’s structure of products. Bonjour introduced a series of Korean skincare and cosmetic products as Korean products have been increasingly popular and its overall average selling price is in general lower than that of European and Japanese brands. [3]. The proportions of total operating expenses of Sasa and Bonjour are around 34% and 39% relatively, so Bonjour paid more for operating expenses. Mainly due to Bonjour spent more on promotion. In order to raise the visibility of exclusive brands, Bonjour has invited well-­known artists to participate in its brand ambassadors from Hong Kong and Korea, including Miss Ada Choi, Miss Cecilia Wang, Miss Tracy Ip, Miss Queenie Chu and Miss Sherman Chung for the retail sectors spokeswomen. [4]. Due to much higher operating overheads, Bonjour’s operating profit and profit after tax were lower than that of Sasa even though the former had higher gross profit, so Sasa got a better result of its ordinary activities than Bonjour. 4
Irene SONG Yingjin
Income Statement-YTY Comparison
Sasa
HK $M
Sales
COGS
Gross Profit
Other income
Distribution costs
Administrative
expenses
Total operating
expenses
Other gains-‐net
Operating Profit
Finance income-‐net
Profit Before Tax
Taxation
Profit After Tax
2014
8756
4683
4073
103
2728
341
2013
7670
4112
3558
58
2361
272
△%
14.2%
13.9%
14.5%
77.6%
15.5%
25.4%
2013
7670
4112
3558
58
2361
272
2012
6405
3508
2897
40
1901
208
△%
19.8%
17.2%
22.8%
45.0%
24.2%
30.8%
3069
2633
16.6%
2633
2108
24.9%
7
1114
12
1126
191
935
4
987
8
995
169
826
75.0%
12.9%
50.0%
13.2%
13.0%
13.2%
4
987
8
995
169
826
0.2
828
7
835
145
690
1900.0%
19.2%
14.3%
19.2%
16.6%
19.7%
Comments [1]. In 2014, retail and wholesale turnover of the Group recorded an increase of 14.2% year-­to-­year yet, the growth of sales slowed down compared to 2013 when the increase is 19.8% from 2012. Similarly, the expansion rate of gross profit also fell from 22.8% to 14.5%. In 2014, the overall retail market in Hong Kong was challenging. The retail industry sailed through ups and downs throughout the year as a result of the instabilities of the external economic environment and the change of Mainland tourists’ consumption pattern. In addition, in the second half of 2014, the unstable political environment and social movement “Occupy Protest” which began in late September also struck a blow to Hong Kong retail market. The sales and gross profit growth, as a result, were impacted. [2]. The change rate of other income increased significantly from 45.0% to 77.6%, because the Group increased the sub-­lease income in 2014 as stated in Notes to Consolidated Financial Statements 2 of Sasa Annual Report 2013/14. [3]. The expansion of operating expenses and its segments all slowed down, which indicates the volume of business was going down and the Group also tried to limit the supporting costs of the sales in the challenging retail market situation. [4]. The growth rate of operating profit declined from 19.2% to 12.9% and the profit after tax dropped from 19.7% to 13.2%, which means the Group’s ordinary activity is going down. 5
Irene SONG Yingjin
Bonjour
HK $M
Sales
COGS
Gross Profit
Other income
Distribution costs
Administrative
expenses
Other operating
expenses
Total operating
expenses
Operating profit
Finance cost
Profit before tax
Taxation
Profit After Tax
2014
3144
1645
1499
54
103
1172
2013
3039
1600
1439
54
99
1063
△%
3.5%
2.8%
4.2%
0.0%
4.0%
10.3%
2013
3039
1600
1439
54
99
1063
2012
2808
1483
1325
56
100
1006
△%
8.2%
7.9%
8.6%
-‐3.6%
-‐1.0%
5.7%
3
2
50.0%
2
5
-‐60.0%
1278
1164
9.8%
1164
1111
4.8%
275
2
273
47
226
329
1
328
55
273
-‐16.4%
100.0%
-‐16.8%
-‐14.5%
-‐17.2%
329
1
328
55
273
270
1
269
47
222
21.9%
0.0%
21.9%
17.0%
23.0%
Comments
[1]. During the three years, sales and gross profit of the Group showed a continuous growth, but the rate of growth slowed down in 2014 compared with 2013. Both sales and gross profit margin of retail business slowdown were mainly due to lesser consumer spending in the second half of the year. This weakening reflected the change of consumers’ appetite and the change of the tourist consumption pattern. [2]. The growth rate of operating expenses increased from 4.8% to 9.8%, mainly due to more expenses on brand promotion to appeal customers. [3]. For the group, the finance costs are mainly from interest expense on bank borrowings and finance leases charges as stated in Notes to the Financial Statements 9 of Bonjour 2014 Annual Report. And in 2014, the interest expense on bank borrowings doubled in the not wholly repayable part as the Group borrowed more from bank. [4]. The profit before tax and the profit after tax both decreased and showed a negative growth, which indicated the Group performed quite poorly and weak resistance in difficult market environment. 6
Irene SONG Yingjin
Common-Size Balance Sheet
HK $M
Property, plant and equipment
Rental deposits, prepayments
and other assets
Deferred tax assets
Total non-‐current assets
Inventories
Trade receivables
Other receivables, deposits and
prepayments
Time deposits
cash and cash equivalents
Assets classified as held for sale
Total current assets
Total Assets
Trade payables
Other payables and accruals
Income tax payable
Borrowings and loans
Liabilities directly associated with assets classified
as held for sale
Total current liabilities
Retirement benefit obligations
Bank borrowings
Deferred tax liabilities
Other payables
Total non-‐current Liabilities
Total Liabilities
Share Capital
Reserves
Total Equity
Total Liabilities and Equity
2014
2013
2012
Sasa
405
215
Bonjour
749
87
Sasa
343
215
Bonjour
79
83
Sasa
333
133
Bonjour
93
113
4
624
1373
52
198
3
839
261
43
92
5
563
1235
93
154
4
166
271
66
125
5
471
1191
70
136
2
207
248
61
81
571
419
209
543
19
368
36
563
19
299
2613
3237
392
302
84
80
N/A
19
189
106
710
1549
170
89
14
193
240
2234
2797
411
317
63
N/A
N/A
849
1015
201
334
31
45
N/A
1996
2467
451
289
68
N/A
N/A
708
915
160
345
35
39
N/A
858
6
N/A
0.3
49
55
913
284
2041
2325
3238
706
4
232
N/A
29
265
971
34
543
577
1548
791
3
N/A
2
25
30
821
283
1692
1975
2796
611
3
N/A
1
2
6
617
30
369
399
1016
808
3
N/A
4
21
28
836
281
1349
1630
2466
579
6
N/A
N/A
6
12
591
30
295
325
916
7
Irene SONG Yingjin
2014
Property, plant and
equipment
Rental deposits, prepayments
and other assets
Deferred tax assets
Total non-‐current assets
Inventories
Trade receivables
Other receivables, deposits
and prepayments
Time deposits
cash and cash equivalents
Total current assets
Total Assets
Trade payables
Other payables and accruals
Income tax payable
Borrowings and loans
Total current liabilities
Retirement benefit
obligations
Bank borrowings
Deferred tax liabilities
Other payables
Total non-‐current Liabilities
Total Liabilities
Share Capital
Reserves
Total Equity
Total Liabilities and Equity
2013
2012
Sasa
12.5%
Bonjour
48.4%
Sasa
12.3%
Bonjour
7.8%
Sasa
13.5%
Bonjour
10.2%
6.6%
5.6%
7.7%
8.2%
5.4%
12.3%
0.1%
19.3%
42.4%
1.6%
6.1%
0.2%
54.2%
16.8%
2.8%
5.9%
0.2%
20.1%
44.2%
3.3%
5.5%
0.4%
16.4%
26.7%
6.5%
12.3%
0.2%
19.1%
48.3%
2.8%
5.5%
0.2%
22.6%
27.1%
6.7%
8.9%
17.6%
12.9%
80.7%
100.0%
12.1%
9.3%
2.6%
2.5%
26.5%
0.2%
1.2%
12.2%
45.8%
100%
11.0%
5.7%
0.9%
12.5%
45.6%
0.3%
7.5%
19.4%
79.9%
100%
14.7%
11.3%
2.3%
N/A
28.3%
0.1%
1.9%
36.3%
83.6%
100%
19.8%
32.9%
3.1%
4.4%
60.1%
0.3%
1.5%
22.8%
80.9%
100%
18.3%
11.7%
2.8%
N/A
32.8%
0.1%
2.1%
32.7%
77.4%
100%
17.5%
37.7%
3.8%
4.3%
63.2%
0.7%
N/A
0.0%
1.5%
1.7%
28.2%
8.8%
63.0%
71.8%
100.0%
15.0%
N/A
1.9%
17.1%
62.7%
2.2%
35.1%
37.3%
100%
N/A
0.1%
0.9%
1.1%
29.4%
10.1%
60.5%
70.6%
100%
N/A
0.1%
0.2%
0.6%
60.7%
3.0%
36.3%
39.3%
100%
N/A
0.2%
0.9%
1.1%
33.9%
11.4%
54.7%
66.1%
100%
N/A
N/A
0.7%
1.3%
64.5%
3.3%
32.2%
35.5%
100%
8
Irene SONG Yingjin
Comments
[1]. In 2014, the percentage of Bonjour’s non-­current assets was as much as 54.2%, because at 31 December 2014 the carrying amount of land and buildings pledged as security for the Group’s bank borrowings amounted to HK$693,851,000, adding its medium-­term leases in Hong Kong (stated in Notes to the Financial Statements 17 of Bonjour 2014 Annual Report). Besides, in other fiscal years, the current assets of Sasa and Bonjour commanded a bigger slice at about 80% in total assets. This indicates the two companies had enough liquidity. [2]. In the three years, the amount of Sasa’s total current assets and non-­
current assets was much more than that of Bonjour, which means Sasa is a larger-­scale enterprise as it processes more assets. [3]. The percentages of Bonjour’s current liabilities in total liabilities and equity were quite high at about 61% in 2012 and 2013, mainly due to the large amount of other payables and accruals. [4]. The two companies performed quite differently in borrowings and loans. For Sasa, the only borrowings it got at 31 March 2014, which was short term bank borrowings of a subsidiary of the Company are secured by a corporate guarantee given by the Company as stated in Notes to Consolidated Financial Statements 23 of Sa Sa Annual Report 2013/14. But Bonjour got bank borrowings on demand or within one year repayable every year, and in 2014, the percentage of bank borrowings making up total liabilities and equities was as much as 12.5%, which means Bonjour was under a relatively high leverage risk. Besides, Bonjour also got a large amount of long-­term bank borrowings at 15.0%, this indicates its bad management situation. [5]. During the three years, the proportions of total liabilities to total equity were about 3:7 for Sasa, but these were around 6:4 for Bonjour. These mean that Sasa relied more on shareholders’ equity, but Bonjour depended more on debt. 9
Irene SONG Yingjin
Balance Sheet-YTY Comparison
Sasa
HK $M
Property ,plant and equipment
Rental deposits, prepayments and
other assets
Deferred tax assets
Total non-‐current assets
Inventories
Trade receivables
Other receivables, deposits and
prepayments
Time deposits
cash and cash equivalents
Total current assets
Total Assets
Trade payables
Other payables and accruals
Income tax payable
Borrowings and loans
Total current liabilities
Retirement benefit obligations
Deferred tax liabilities
Other payables
Total non-‐current Liabilities
Total Liabilities
Share Capital
Reserves
Total Equity
Total Liabilities and Equity
2014
405
215
2013
343
215
△%
18.1%
0.0%
2013
343
215
2012
333
133
△%
3.0%
61.7%
4
624
1373
52
198
5
563
1235
93
154
-‐20.0%
10.8%
11.2%
-‐44.1%
28.6%
5
563
1235
93
154
5
471
1191
70
136
0.0%
19.5%
3.7%
32.9%
13.2%
571
419
2613
3237
392
302
84
80
858
6
0.3
49
55
913
284
2041
2325
3238
209
543
2234
2797
411
317
63
N/A
791
3
2
25
30
821
283
1692
1975
2796
173.2%
-‐22.8%
17.0%
15.7%
-‐4.6%
-‐4.7%
33.3%
N/A
8.5%
100.0%
-‐85.0%
96.0%
83.3%
11.2%
0.4%
20.6%
17.7%
15.8%
209
543
2234
2797
411
317
63
N/A
791
3
2
25
30
821
283
1692
1975
2796
36
563
1996
2467
451
289
68
N/A
808
3
4
21
28
836
281
1349
1630
2466
480.6%
-‐3.6%
11.9%
13.4%
-‐8.9%
9.7%
-‐7.4%
N/A
-‐2.1%
0.0%
-‐50.0%
19.0%
7.1%
-‐1.8%
0.7%
25.4%
21.2%
13.4%
Comments
[1]. Time deposits increased greatly in the three years, especially from 2012 to 2013, it grew at 480.6%. As a main reason, it resulted a growing expansion of the amount of current assets. Although the rising rate of non-­current assets declined in 2014 compared to 2013, the growth of total assets still increased. [2]. The growth rate of total liabilities rose from -­1.8% to 11.2%, and the non-­
current liabilities got significant changes from 7.1% to 83.3%, mainly due to the company got more other payables and accruals. 10
Irene SONG Yingjin
Bonjour
HK $M
Property, plant and
equipment
Rental deposits, prepayments
and other assets
Deferred tax assets
Total non-‐current assets
Inventories
Trade receivables
Other receivables, deposits
and prepayments
Time deposits
cash and cash equivalents
Assets classified as held for
sale
Total current assets
Total Assets
Trade payables
Other payables and accruals
Income tax payable
Borrowings and loans
Liabilities directly associated with assets
classified as held for sale
Total current liabilities
Retirement benefit
obligations
Bank borrowings
Deferred tax liabilities
Other payables
Total non-‐current Liabilities
Total Liabilities
Share Capital
Reserves
Total Equity
Total Liabilities and Equity
2014
749
2013
79
△%
848.1%
2013
79
2012
93
△%
-‐15.1%
87
83
4.8%
83
113
-‐26.5%
3
839
261
43
92
4
166
271
66
125
-‐25.0%
405.4%
-‐3.7%
-‐34.8%
-‐26.4%
4
166
271
66
125
2
207
248
61
81
100.0%
-‐19.8%
9.3%
8.2%
54.3%
19
189
106
19
368
N/A
0.0%
-‐48.6%
N/A
19
368
N/A
19
299
N/A
0.0%
23.1%
N/A
710
1549
170
89
14
193
240
849
1015
201
334
31
45
N/A
-‐16.4%
52.6%
-‐15.4%
-‐73.4%
-‐54.8%
328.9%
N/A
849
1015
201
334
31
45
N/A
708
915
160
345
35
39
N/A
19.9%
10.9%
25.6%
-‐3.2%
-‐11.4%
15.4%
N/A
706
4
611
3
15.5%
33.3%
611
3
579
6
5.5%
-‐50.0%
232
N/A
29
265
971
34
543
577
1548
N/A
1
2
6
617
30
369
399
1016
N/A
N/A
1350.0%
4316.7%
57.4%
13.3%
47.2%
44.6%
52.4%
N/A
1
2
6
617
30
369
399
1016
N/A
N/A
6
12
591
30
295
325
916
N/A
N/A
-‐66.7%
-‐50.0%
4.4%
0.0%
25.1%
22.8%
10.9%
11
Irene SONG Yingjin
Comments
[1]. The expansion rate of non-­current assets increased amazingly from -­
19.8% to 405.4%, because the change rate of property, plant and equipment soared from -­15.1% to 848.1%. The current assets increased at 19.9% from 2012 to 2013, but decreased at 16.4% in 2014. That is the amount of non-­current assets rose quite a lot, but the number of current assets dropped slightly. Offsetting each other, the increasing rate of total assets rose from 10.9% to 52.6%. [2]. The change rate of current liabilities climbed from 5.5% to 15.5%, and the increase of borrowings and loans was the greatest, as it lifted 328.9% from 2013 to 2014. And the change rate of non-­current liabilities went up from -­
50.0% to 4316.7%, as the significant rise in bank borrowings and other payables. So the rising rate of total liabilities also went up from 4.4% to 57.4% greatly. To sum up, from 2012 to 2014, the company was increasingly depending on liabilities, which showed a bad situation of operation and financing, so the Group had the increasing level of risks. [3]. The growth rate of equity increased from 22.8% to 44.6%, and the reserves increased from 25.1% to 47.2%, mainly because of great increases of share premium and retained profit stated in Notes to the Financial Statements 31 of Bonjour 2014 Annual Report. 12
Irene SONG Yingjin
Ratio Analysis
2014
Category
Leverage ratios
Operating
efficiency ratios
Liquidity ratios
Profitability
ratios
Valuation ratios
2013
2012
Ratio
Equity multiplier
Debt-‐to-‐equity
ratio
Cash flow
coverage ratio
Days in inventory
Sasa
1.4
0.4
Bonjour
2.5
1.3
Sasa
1.4
0.4
Bonjour
2.5
1.5
Sasa
1.5
0.5
Bonjour
2.8
1.8
1.1
0.3
1
0.5
0.8
0.5
102
59
108
59
104
57
Inventory
Turnover(times)
Days in receivable
Receivable
Turnover(times)
Days in payable
Payable turnover
(times)
Cash conversion
cycle(days)
Current ratio
Quick ratio
Cash ratio
Gross profit
margin
Net profit margin
Basic earnings per
share(HK cents)
Diluted earnings
per share(HK
cents)
Return on assets
Return on equity
Dividend payout
Dividend yield
Price-‐to-‐earnings
ratio
Price-‐to-‐book
ratio
3.6
6.2
3.4
6.2
3.5
6.4
3.02
120.77
6.33
57.69
3.88
94.11
7.63
47.86
3.36
108.56
7.73
47.19
31.29
11.66
41.16
8.87
38.26
9.54
41.18
8.86
36.68
9.95
39.13
9.33
73.73
24.17
73.62
25.45
70.69
25.60
3
54.89%
48.84%
46.52%
1.3
32.86%
26.77%
47.68%
2.8
80.40%
68.65%
46.39%
1.4
71.03%
60.23%
47.35%
2.5
78.34%
69.68%
45.23%
1.2
62.18%
51.64%
47.19%
10.68%
33.0
7.19%
6.6
10.77%
29.3
8.98%
9.1
10.77%
24.6
7.91%
7.4
32.9
6.4
29.3
8.7
24.4
7.1
30.99%
43.49%
71.21%
3.99%
17.9
13.39%
46.31%
62.12%
3.73%
16.7
31.38%
45.81%
71.67%
2.76%
26.0
28.29%
75.41%
79.12%
6.43%
12.3
31.78%
46.25%
71.14%
3.76%
18.9
25.46%
72.31%
81.08%
7.06%
11.5
8.6
2.0
11.9
15.2
8.3
9.6
13
Irene SONG Yingjin
Comments
Leverage [1]. As Bonjour’s equity multiplier and debt-­to-­equity ratio both are higher than Sasa’s, Bonjour relied more on debt to finance its assets, so it had a higher financial risk. [2]. Sasa’s cash flow coverage ratios were higher, which means Sasa had more amount of debts covered by cash flow generated from operating activities, so Sasa was under lower leverage risk. Operating efficiency [1]. Sasa held the inventory for a longer time, which was almost doubled as long as Bonjour’s days in inventory. So Sasa performed less efficiently in selling inventories due to it had more retail stores and larger volume. The slower a company can sell its inventories, the slower a company can begin to settle the account receivables and solve its own debts. And the inventory turnover of Sasa was much less than that of Bonjour because the proportion of inventories to total assets of Sasa was higher. [2]. Bonjour’s days in receivables were almost Sasa’s twice, contrarily, Sasa’s receivable turnover was Bonjour’s two times. This indicated that Sasa had a better account management than Bonjour. [3]. Bonjour took more days to pay its creditor than Sasa, and Sasa’s payable turnover was a bit of higher than Bonjour’s. So for suppliers, Bonjour had longer payment days. Liquidity [1]. Sasa had a really high liquidity, as its short-­term assets had covered its immediate liabilities at about 2.8:1 in the three years. As for Bonjour, it still had enough short-­term assets to cover its current liabilities, but it was not so liquid as Sasa. That could be risky for Bonjour, if there is an urgent crisis situation. [2]. Sasa had higher quick ratios, which means it had more current assets that were more easily and quickly converted into cash compared with current liabilities. For both of the two companies, the quick ratios decreased significantly in 2014, which indicates potential liquidity risk. [3]. Sasa’s cash ratios were higher than those of Bonjour in the three years, which indicates that Sasa had a higher and more reliable liquidity in a crisis situation. So for creditors, lending money to Sasa was more reliable. But from 2012 to 2014, the cash ratios of the two companies had a decreasing trend, which means the two companies tried to improve their asset utilization to hold less amounts of cash and they need to decrease the cash held to put into other uses to resist the economic downturn. But they should take care to make sure that companies had enough liquidity. 14
Irene SONG Yingjin
Profitability [1]. The gross profit margins of Bonjour were a bit higher than these of Sasa, mainly because Bonjour sold diversified products and for the same products, Bonjour’s prices were always lower than Sasa’s. As Sasa and Bonjour are two of the most influential cosmetic retailers, their figures indicated the gross profit of the whole cosmetics retailing industry is around 46%. [2]. Sasa’s net profit margins were higher than Bonjour’s, which means Sasa had higher operating efficiency and profitability from 2012 to 2014. [3]. As for Basic EPS and Diluted EPS, Sasa’s EPS was almost as five times much as than of bonjour, which means Sasa generated much more profit by per dollar of assets. [4]. Return on assets of Sasa remained at around 31% for three years and was higher than that of Bonjour, which means Sasa generated more profit by per dollar assets. But the return on assets of Bonjour decreased greatly in 2014 mainly because its total assets increased greatly at 52.6% from 2013 to 2014 as stated in Balance Sheet-­ YTY comparison. [5]. Return on equity of Bonjour was higher than that of Sasa, which means Bonjour generated more profit by per dollar of shareholder’s equity. And Sasa’s return on equity kept at 45% in the three years, but Bonjour’s ratio had fallen from 72.31% and 75.41% to 46.31% due to its total equity increased hugely at 44.6% from 2013 to 2014 compared with the growth rate was 22.8% from 2012 to 2013 as stated in Balance Sheet-­ YTY comparison. Valuation [1]. In 2013 and 2012, Bonjour’s dividend payout ratios were higher than Sasa’s, but in 2014, Bonjour’s dividend payout was around 10 percent lower than Sasa’s. This means the percentage of earnings the Bonjour pays out as dividends to shareholders decreased. In the past, investors who sought for higher current income may prefer to buy Bonjour’s stocks, but Sasa’s stocks seems more attractive for them now. [2]. In 2013 and 2012, Bonjour’s dividend yield was much higher than that of Sasa, which indicates Bonjour pays out more in dividends each year relative to its share price. However, in 2014, Sasa’s dividend yield was approximately equal to Bonjour’s, this means the two stocks had similar return on investment in the absence of any capital gains. With the overall consideration of Basic EPS, Diluted EPS, dividend payout and dividend yield, Sasa seemed to be a better choice than Bonjour for investors. 15
Irene SONG Yingjin
[3]. From fiscal 2012 to 2014, Sasa’s price-­to-­earnings ratios were higher than Bonjour’s, which means an investor pays more for Sasa’s per dollar earnings. And Sasa’ P/E ratio decreased significantly in 2014. Because the share price dropped at 22.6% and Basic EPS increased at 12.63. This indicated a faster investment recovery time, less investment risks and higher investment value of stock. Sasa
share prices
Basic EPS
2014
5.89
33
2013
7.61
29.3
△%
-‐22.60%
12.63%
2013
7.61
29.3
2012
4.66
24.6
△%
63.30%
19.11%
Bonjour
share prices
Basic EPS
2014
1.1
6.6
2013
1.12
9.1
△%
-‐1.79%
-‐27.47%
2013
1.12
9.1
2012
0.85
7.4
△%
31.76%
22.97%
[4]. In 2013 and 2012, Bonjour had higher price-­to-­book ratios than Sasa, which means investors paid more for per dollar of Bonjour’s net asset, so Bonjour’s stock had higher investment risks. However, in 2014, Bonjour’s P/B ratio slumped from 15.2 to 2.0, as its share price dropped at 1.79% but net asset value soared at 45.23%. Sasa
share prices
net asset value
2014
5.89
2324
2013
7.61
1976
△%
-‐22.60%
17.61%
2013
7.61
1976
2012
4.66
1631
△%
63.30%
21.15%
Bonjour
share prices
net asset value
2014
1.1
578
2013
1.12
398
△%
-‐1.79%
45.23%
2013
1.12
398
2012
0.85
324
△%
31.76%
22.84%
16
Irene SONG Yingjin
Appendix
*Average share
prices(HK dollars)
Dividend per
share(HK cents)
Net cash generated
from operating
activities
(HK millions)
2014
Sasa
Bonjour
5.89
1.1
2013
Sasa Bonjour
7.61
1.12
2012
Sasa Bonjour
4.66
0.85
23.5
4.1
21
7.2
17.5
6
1021
252
846
292
640
282
*The share prices are calculated from the average numbers of every trading day’s closing prices of the whole year. -­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­ End -­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­ 17