Over the last few years Huabao International Holdings Ltd showed solid growth in fundamentals
25/06/2014 • About Huabao International Holdings Ltd (
$336) • By InTwits
Pay attention to Huabao International Holdings Ltd as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Huabao International Holdings Ltd showed fast growth in the last financial year. Huabao International Holdings Ltd's revenue surged on 16.2% in FY2014. The growth also happened in EBITDA of 18.0% for the same period.
If we look for the longer period Huabao International Holdings Ltd showed fast revenue growth of 14.1% from FY2011 to FY2014 annualy. EBITDA surged on 10.3% from FY2011 to FY2014 annualy.
Huabao International Holdings Ltd ($336) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 2,366 | 2,852 | 3,311 | 3,646 | 4,237 |
|---|
| Revenue growth, % | | 20.5% | 16.1% | 10.1% | 16.2% |
|---|
| Gross margin, % | 75.5% | 74.3% | 70.5% | 69.1% | 70.8% |
|---|
| SG&A, % | 9.43% | 8.72% | 10.3% | 12.5% | 13.7% |
|---|
| EBITDA | 1,574 | 1,894 | 2,111 | 2,156 | 2,544 |
|---|
| EBITDA growth, % | | 20.3% | 11.5% | 2.1% | 18.0% |
|---|
| EBITDA margin, % | 66.5% | 66.4% | 63.8% | 59.1% | 60.0% |
|---|
| Net Income | 1,340 | 1,604 | 1,750 | 1,716 | 1,977 |
|---|
| Net Income margin, % | 56.6% | 56.3% | 52.9% | 47.1% | 46.7% |
|---|
| |
| CAPEX | 32 | 45 | 597 | 335 | 162 |
|---|
| CAPEX/Revenue, % | 1.35% | 1.56% | 18.0% | 9.20% | 3.82% |
|---|
| Debt | 250 | 744 | 928 | 465 | 530 |
|---|
| Cash | 1,679 | 1,676 | 2,287 | 1,886 | 2,375 |
|---|
| Net Debt/EBITDA | -0.9x | -0.5x | -0.6x | -0.7x | -0.7x |
|---|
| |
| ROIC, % | 41.3% | 34.6% | 28.7% | 25.2% | 26.2% |
|---|
| ROE, % | 40.4% | 36.3% | 30.8% | 25.2% | 24.8% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. EBITDA margin increased slightly on 0.900 pp from 59.1% to 60% in FY2014. If we look for the longer period EBITDA margin decreased on 6.40 pp from 66.4% in FY2011 to 60% in FY2014.
Huabao International Holdings Ltd shows attractive ROIC at 26.2% for the last 12 months which assumes stable development model. Three years ago it was higher at 34.6%. It's average level of ROIC for the last three years was 26.7%.
Huabao International Holdings Ltd showed small Net Income margin decline of 0.400 pp from 47.1% to 46.7% in FY2014. If we look for the longer period Huabao International Holdings Ltd's Net Income margin dropped on 9.60 pp from 56.3% in FY2011 to 46.7% in FY2014.
Huabao International Holdings Ltd operates at ROE of 24.8%. For the last three years the average ROE was 26.9%.
Capital expenditures (CAPEX)
In FY2014 Huabao International Holdings Ltd had CAPEX/Revenue of 3.82%. CAPEX/Revenue surged on 2.26 pp from 1.56% in FY2011 to 3.82% in FY2014. For the last three years the average CAPEX/Revenue was 10.4%.
Leverage (Debt)
The company has negative net debt at -0.7x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Huabao International Holdings Ltd's leverage surged on 0.23x from -0.49x in FY2011 to -0.73x in FY2014.
Valuation vs. comparable companies
At the end of trading day today Huabao International Holdings Ltd traded at 4.4x EV/EBITDA which is 76.1% lower than 18.3x Chemicals peer group avearge calculated on the basis of 70 companies. The market closed today at 6.6x P/E for Huabao International Holdings Ltd which is 47.5% lower than 12.5x Chemicals peer group avearge calculated on the basis of 11 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 4.7x EV/(EBITDA-CAPEX) for Huabao International Holdings Ltd which is 87.2% higher than 2.5x Chemicals peer group avearge calculated on the basis of 9 companies.
Management team
Huabao International Holdings Ltd is run by Chu Lam Yiu as a CEO.
