Chow Tai Fook Jewellery Group Ltd is an attractive growth stock
24/06/2014 • About Chow Tai Fook Jewellery Group Ltd (
$1929) • By InTwits
Pay attention to Chow Tai Fook Jewellery Group Ltd as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Chow Tai Fook Jewellery Group Ltd showed growth in the last financial year. The company's revenue surged on 34.8% in FY2014. The growth also happened in EBITDA of 25.6% for the same period.
If we look for the longer period Chow Tai Fook Jewellery Group Ltd showed fast revenue growth of 30.2% from FY2011 to FY2014 annualy. EBITDA surged on 26.2% from FY2011 to FY2014 annualy.
Chow Tai Fook Jewellery Group Ltd ($1929) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 22,934 | 35,043 | 56,571 | 57,434 | 77,407 |
|---|
| Revenue growth, % | | 52.8% | 61.4% | 1.5% | 34.8% |
|---|
| Gross margin, % | 28.6% | 28.3% | 29.1% | 28.4% | 27.3% |
|---|
| SG&A, % | 16.7% | 15.2% | 14.2% | 16.0% | 15.8% |
|---|
| EBITDA | 2,920 | 4,869 | 8,818 | 7,788 | 9,782 |
|---|
| EBITDA growth, % | | 66.8% | 81.1% | -11.7% | 25.6% |
|---|
| EBITDA margin, % | 12.7% | 13.9% | 15.6% | 13.6% | 12.6% |
|---|
| Net Income | 2,139 | 3,538 | 6,341 | 5,505 | 7,272 |
|---|
| Net Income margin, % | 9.33% | 10.1% | 11.2% | 9.59% | 9.39% |
|---|
| |
| CAPEX | 272 | 769 | 867 | 917 | 1,189 |
|---|
| CAPEX/Revenue, % | 1.19% | 2.19% | 1.53% | 1.60% | 1.54% |
|---|
| Debt | 2,350 | 6,813 | 14,807 | 5,836 | 17,086 |
|---|
| Cash | 2,107 | 5,605 | 9,988 | 8,305 | 9,467 |
|---|
| Net Debt/EBITDA | 0.1x | 0.2x | 0.5x | -0.3x | 0.8x |
|---|
| |
| ROIC, % | 27.7% | 31.1% | 26.4% | 17.1% | 18.8% |
|---|
| ROE, % | 29.5% | 36.4% | 31.5% | 17.8% | 20.7% |
|---|
Profitability and return on investment
Despite revenue growth EBITDA margin declined slightly from 13.6% in FY2013 to 12.6% in FY2014. If we look for the longer period EBITDA margin decreased on 1.30 pp from 13.9% in FY2011 to 12.6% in FY2014.
We call Chow Tai Fook Jewellery Group Ltd an attractive growth stock as together with the growth it delivers high ROIC at 18.8%. During the last three years it dropped - it was 31.1% in FY2011. It's average level of ROIC for the last three years was 20.8%.
Net Income margin decreased slightly on 0.200 pp from 9.60% to 9.40% in FY2014. In the last 3 years the company showed decline of 0.700 pp from 10.1% in FY2011 to 9.40% in FY2014.
Chow Tai Fook Jewellery Group Ltd operates at ROE of 20.7%. For the last three years the average ROE was 23.3%.
Capital expenditures (CAPEX)
Chow Tai Fook Jewellery Group Ltd's CAPEX/Revenue was 1.54% in FY2014. The company's CAPEX/Revenue dropped on 0.659 pp from 2.19% in FY2011 to 1.54% in FY2014. Average CAPEX/Revenue for the last three years was 1.55%.
Leverage (Debt)
Having such a fast growth profile the company keeps low debt level at 0.8x Net Debt/EBITDA. If we look for the longer period Chow Tai Fook Jewellery Group Ltd showed fast leverage growth of 0.53x from 0.25x in FY2011 to 0.78x in FY2014.
Valuation vs. comparable companies
The company trades at 11.1x EV/EBITDA which is 49.3% lower than 22.0x Retail industry avearge calculated based on 122 companies. The company trades at 13.9x P/E which is 30.6% lower than 20.1x Retail industry avearge calculated based on 40 companies.
Peers in Retail
Below you can find Chow Tai Fook Jewellery Group Ltd benchmarking vs. other companies in Retail 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, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Man Wah Holdings Ltd ($1999) | | 29.9% | 13.9% | 12.5% | 22.8% |
| Le Saunda Holdings Ltd ($738) | | 32.0% | 17.1% | 14.1% | 15.7% |
| Tse Sui Luen Jewellery International Ltd ($417) | | 24.8% | 33.4% | 6.1% | 13.9% |
| Dickson Concepts International Ltd ($113) | | -6.3% | 17.1% | 3.5% | 5.5% |
| IT Ltd ($999) | | 28.0% | 49.7% | 14.0% | 3.1% |
| |
|---|
| Median (7 companies) | | 24.8% | 17.1% | 6.1% | 5.5% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | | 52.8% | 61.4% | 1.5% | 34.8% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Le Saunda Holdings Ltd ($738) | 60.6% | 62.9% | 64.4% | 64.7% | 67.1% |
| G-Vision International Holdings Ltd ($657) | 63.7% | 63.1% | 63.3% | 64.0% | 63.8% |
| Sincere Co Ltd/The ($244) | 65.3% | 64.4% | 62.9% | 65.6% | 62.8% |
| IT Ltd ($999) | 60.7% | 63.3% | 61.7% | 58.8% | 59.9% |
| Dickson Concepts International Ltd ($113) | 56.3% | 53.4% | 54.0% | 54.1% | 51.1% |
| |
|---|
| Median (7 companies) | 60.6% | 62.9% | 61.7% | 58.8% | 59.9% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 28.6% | 28.3% | 29.1% | 28.4% | 27.3% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Man Wah Holdings Ltd ($1999) | 24.5% | 17.8% | 9.6% | 15.6% | 22.2% |
| Le Saunda Holdings Ltd ($738) | 17.2% | 18.5% | 17.0% | 14.7% | 15.6% |
| IT Ltd ($999) | 14.4% | 15.2% | 13.7% | 11.0% | 10.3% |
| Dickson Concepts International Ltd ($113) | 9.1% | 13.1% | 8.8% | 9.6% | 6.9% |
| Tse Sui Luen Jewellery International Ltd ($417) | 12.2% | 10.3% | 8.7% | 5.4% | 4.8% |
| |
|---|
| Median (7 companies) | 15.0% | 13.1% | 8.8% | 9.6% | 6.9% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 12.7% | 13.9% | 15.6% | 13.6% | 12.6% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sincere Co Ltd/The ($244) | 0.7% | 3.9% | 2.9% | 3.7% | 12.0% |
| Man Wah Holdings Ltd ($1999) | 4.9% | 10.6% | 19.0% | 8.2% | 6.2% |
| IT Ltd ($999) | 4.5% | 12.7% | 6.7% | 4.8% | 3.8% |
| Le Saunda Holdings Ltd ($738) | 4.4% | 3.7% | 3.2% | 2.8% | 2.4% |
| Dickson Concepts International Ltd ($113) | 2.6% | 3.8% | 7.5% | 3.5% | 2.3% |
| |
|---|
| Median (7 companies) | 2.6% | 3.9% | 3.2% | 3.5% | 2.4% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 1.2% | 2.2% | 1.5% | 1.6% | 1.5% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Man Wah Holdings Ltd ($1999) | 59.1% | 27.9% | 9.4% | 15.6% | 24.6% |
| Le Saunda Holdings Ltd ($738) | 16.6% | 20.5% | 19.1% | 16.5% | 18.5% |
| IT Ltd ($999) | 20.9% | 22.3% | 20.3% | 14.2% | 10.1% |
| Tse Sui Luen Jewellery International Ltd ($417) | 23.5% | 20.2% | 18.1% | 9.1% | 8.2% |
| Dickson Concepts International Ltd ($113) | 10.2% | 15.7% | 9.1% | 9.1% | 5.5% |
| |
|---|
| Median (7 companies) | 16.6% | 20.2% | 9.4% | 9.1% | 8.2% |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 27.7% | 31.1% | 26.4% | 17.1% | 18.8% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Tse Sui Luen Jewellery International Ltd ($417) | -0.1x | 0.4x | 1.2x | 2.2x | 3.7x |
| IT Ltd ($999) | -1.3x | -0.3x | 0.1x | 0.1x | -0.5x |
| Man Wah Holdings Ltd ($1999) | -0.3x | -2.4x | -1.5x | -1.2x | -1.2x |
| Le Saunda Holdings Ltd ($738) | -1.6x | -1.4x | -1.6x | -1.6x | -2.0x |
| Dickson Concepts International Ltd ($113) | -3.0x | -2.3x | -2.4x | -2.5x | -3.3x |
| |
|---|
| Median (5 companies) | -0.9x | -1.1x | -0.7x | -1.4x | -1.2x |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | 0.1x | 0.2x | 0.5x | -0.3x | 0.8x |
