Eye on Zhejiang Expressway Co as a growth stock
25/03/2015 • About Zhejiang Expressway Co (
$576) • By InTwits
Pay attention to Zhejiang Expressway Co as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Zhejiang Expressway Co showed fast growth in the last financial year. The company's revenue surged on 20.5% in FY2014. In addition to revenue Zhejiang Expressway Co also keeps delivering EBITDA growth. It was 26.3% in FY2014
In the last 3 years the company showed fast revenue growth of 11.7% from 2011 to 2014 annualy. EBITDA surged on 12.2% from 2011 to 2014 annualy.
Zhejiang Expressway Co ($576) financials for the last 5 years
| mln. CNY | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 6,769 | 6,781 | 6,927 | 7,851 | 9,460 |
|---|
| Revenue growth, % | | 0.2% | 2.2% | 13.3% | 20.5% |
|---|
| Gross margin, % | 44.4% | 39.9% | 34.0% | 36.9% | 37.7% |
|---|
| SG&A, % | 1.23% | 1.24% | 1.25% | 1.08% | 1.12% |
|---|
| EBITDA | 3,999 | 3,583 | 3,435 | 4,009 | 5,064 |
|---|
| EBITDA growth, % | | -10.4% | -4.1% | 16.7% | 26.3% |
|---|
| EBITDA margin, % | 59.1% | 52.8% | 49.6% | 51.1% | 53.5% |
|---|
| Net Income | 1,872 | 1,805 | 1,649 | 1,907 | 2,265 |
|---|
| Net Income margin, % | 27.6% | 26.6% | 23.8% | 24.3% | 23.9% |
|---|
| |
| CAPEX | 302 | 449 | 365 | 252 | 1,270 |
|---|
| CAPEX/Revenue, % | 4.46% | 6.62% | 5.27% | 3.21% | 13.4% |
|---|
| Debt | 1,822 | 1,463 | 2,340 | 2,150 | 13,973 |
|---|
| Cash | 5,682 | 3,120 | 3,392 | 1,807 | 3,357 |
|---|
| Net Debt/EBITDA | -1.0x | -0.5x | -0.3x | 0.1x | 2.1x |
|---|
| |
| ROIC, % | 15.9% | 13.3% | 11.2% | 13.3% | 13.2% |
|---|
| ROE, % | 12.9% | 12.1% | 10.6% | 11.9% | 13.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. EBITDA margin increased slightly on 2.40 pp from 51.1% to 53.5% in 2014. In the last 3 years EBITDA margin increased slightly on 0.700 pp from 52.8% in 2011 to 53.5% in 2014.
Zhejiang Expressway Co shows attractive ROIC at 13.2% for the last 12 months which assumes stable development model. During the last three years it showed almost no change - it was 13.3% in FY2011. It's average ROIC for the last three years was 12.6%.
Net Income margin decreased slightly on 0.400 pp from 24.3% to 23.9% in 2014. In the last 3 years Zhejiang Expressway Co's Net Income margin dropped on 2.70 pp from 26.6% in 2011 to 23.9% in 2014.
Zhejiang Expressway Co operates at ROE of 13.7%. For the last three years the average ROE was 12.1%.
Capital expenditures (CAPEX)
To this fast growth Zhejiang Expressway Co had to invest in CAPEX.The company's CAPEX/Revenue was 13.4% in FY2014. CAPEX/Revenue surged on 6.81 pp from 6.62% in 2011 to 13.4% in 2014. Average CAPEX/Revenue for the last three years was 7.30%.
Leverage (Debt)
Having such a fast growth profile Zhejiang Expressway Co keeps medium debt level at 2.1x Net Debt/EBITDA. In the longer period leverage surged on 2.56x from -0.46x in 2011 to 2.10x in 2014.
