China South City Holdings Ltd is a powerful growth stock
01/07/2014 • About China South City Holdings Ltd (
$1668) • By InTwits
Have you thought about China South City Holdings Ltd as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
China South City Holdings Ltd showed growth in the last financial year. The company's revenue surged on 79.9% in FY2014. EBITDA also increased considerably: 37.7% for the same period.
In the longer period China South City Holdings Ltd showed fast revenue growth of 82.0% from FY2011 to FY2014 annualy. EBITDA surged on 36.3% from FY2011 to FY2014 annualy.
China South City Holdings Ltd ($1668) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 1,570 | 2,234 | 3,671 | 7,488 | 13,468 |
|---|
| Revenue growth, % | | 42.3% | 64.3% | 104.0% | 79.9% |
|---|
| Gross margin, % | 62.6% | 59.7% | 60.9% | 55.8% | 48.6% |
|---|
| SG&A, % | 17.3% | 14.3% | 14.7% | 11.0% | 10.7% |
|---|
| EBITDA | 2,172 | 2,505 | 3,356 | 4,603 | 6,337 |
|---|
| EBITDA growth, % | | 15.3% | 34.0% | 37.1% | 37.7% |
|---|
| EBITDA margin, % | 138% | 112% | 91.4% | 61.5% | 47.1% |
|---|
| Net Income | 1,330 | 1,552 | 2,071 | 2,750 | 3,494 |
|---|
| Net Income margin, % | 84.7% | 69.5% | 56.4% | 36.7% | 25.9% |
|---|
| |
| CAPEX | 2,208 | 1,849 | 2,327 | 3,083 | 3,332 |
|---|
| CAPEX/Revenue, % | 141% | 82.8% | 63.4% | 41.2% | 24.7% |
|---|
| Debt | 4,203 | 6,143 | 6,618 | 11,853 | 17,519 |
|---|
| Cash | 3,694 | 4,521 | 3,316 | 6,265 | 11,303 |
|---|
| Net Debt/EBITDA | 0.2x | 0.6x | 1.0x | 1.2x | 1.0x |
|---|
| |
| ROIC, % | 17.9% | 14.0% | 15.2% | 15.9% | 15.9% |
|---|
| ROE, % | 19.9% | 16.0% | 17.6% | 19.1% | 19.5% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. If we look for the longer period China South City Holdings Ltd showed big decline in EBITDA margin of 65 pp from 112% in FY2011 to 47.1% in FY2014.
We call China South City Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 15.9%. Three years ago it was a bit lower at 14.0%. It's average ROIC for the last three years was 15.7%.
The company's Net Income margin dropped on 10.8 pp from 36.7% to 25.9% in FY2014. In the longer period China South City Holdings Ltd showed big decline in Net Income margin of 43.6 pp from 69.5% in FY2011 to 25.9% in FY2014.
China South City Holdings Ltd operates at ROE of 19.5%. It's average ROE for the last three years was 18.7%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.China South City Holdings Ltd's CAPEX/Revenue was 24.7% in FY2014. CAPEX/Revenue dropped on 58.0 pp from 82.8% in FY2011 to 24.7% in FY2014. It's average level of CAPEX/Revenue for the last three years was 43.1%.
Leverage (Debt)
The company has low debt level at 1.0x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period leverage surged on 0.33x from 0.65x in FY2011 to 0.98x in FY2014.
Peers in Real Estate
Below we provide China South City Holdings Ltd benchmarking against other companies in Real Estate industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Wang On Group Ltd ($1222) | | -2.7% | -26.6% | 81.1% | 126.7% |
| Beijing Capital Juda Ltd ($1329) | | -14.1% | 38.4% | -15.5% | 27.7% |
| GR Properties Ltd ($108) | | 154.9% | 21.6% | -82.9% | 14.6% |
| Kong Shum Union Property Management Holding Ltd ($8181) | | | | 2.7% | 14.4% |
| Tern Properties Co Ltd ($277) | | 3.1% | 5.1% | 10.7% | 12.2% |
| |
|---|
| Median (10 companies) | | 3.1% | 5.1% | 5.7% | 9.7% |
|---|
| China South City Holdings Ltd ($1668) | | 42.3% | 64.3% | 104.0% | 79.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Tern Properties Co Ltd ($277) | 95.8% | 96.9% | 96.7% | 98.4% | 98.4% |
| GR Properties Ltd ($108) | 50.7% | 37.4% | 39.3% | | 98.2% |
| Ground Properties Co Ltd ($989) | 40.4% | 43.1% | 44.6% | 55.1% | 70.1% |
| Termbray Industries International Holdings Ltd ($93) | 57.3% | 54.1% | 53.3% | 54.7% | 56.8% |
| Wang On Group Ltd ($1222) | 29.7% | 31.9% | 39.9% | 49.0% | 55.9% |
| |
|---|
| Median (9 companies) | 48.0% | 42.0% | 41.7% | 51.5% | 55.9% |
|---|
| China South City Holdings Ltd ($1668) | 62.6% | 59.7% | 60.9% | 55.8% | 48.6% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Tern Properties Co Ltd ($277) | 92.7% | 82.9% | 103.0% | 112.8% | 78.4% |
| Wang On Group Ltd ($1222) | 22.8% | 15.3% | 16.6% | 28.2% | 41.7% |
| Sino Harbour Property Group Ltd ($1663) | 47.4% | 49.6% | 40.5% | 34.2% | 22.9% |
| TAI Cheung Holdings Ltd ($88) | 49.3% | 49.2% | 49.5% | 49.8% | 6.3% |
| Beijing Capital Juda Ltd ($1329) | 16.1% | 16.6% | 12.7% | 12.7% | 5.2% |
| |
|---|
| Median (10 companies) | 16.1% | 16.6% | 14.7% | 20.5% | 4.1% |
|---|
| China South City Holdings Ltd ($1668) | 138.3% | 112.1% | 91.4% | 61.5% | 47.1% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Henry Group Holdings Ltd ($859) | 370.5% | 364.6% | 432.0% | 616.8% | 195.1% |
| GR Properties Ltd ($108) | 88.2% | 4.7% | 9.2% | 20.4% | 36.9% |
| TAI Cheung Holdings Ltd ($88) | 0.2% | 0.0% | 0.0% | 0.0% | 29.4% |
| Wang On Group Ltd ($1222) | 21.7% | 12.7% | 8.1% | 0.5% | 26.4% |
| Ground Properties Co Ltd ($989) | 2.3% | 0.4% | 2.6% | 2.2% | 3.8% |
| |
|---|
| Median (10 companies) | 11.2% | 4.7% | 1.6% | 1.3% | 3.0% |
|---|
| China South City Holdings Ltd ($1668) | 140.6% | 82.8% | 63.4% | 41.2% | 24.7% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Wang On Group Ltd ($1222) | 5.1% | 2.3% | 1.5% | 4.4% | 13.2% |
| Kong Shum Union Property Management Holding Ltd ($8181) | | | | 17.6% | 13.0% |
| Sino Harbour Property Group Ltd ($1663) | 13.0% | 17.7% | 17.8% | 12.1% | 4.9% |
| Beijing Capital Juda Ltd ($1329) | 61.0% | 30.9% | 20.8% | 11.7% | 4.7% |
| Tern Properties Co Ltd ($277) | 2.9% | 2.2% | 2.6% | 2.7% | 1.9% |
| |
|---|
| Median (10 companies) | 2.9% | 2.3% | 1.5% | 6.5% | 1.0% |
|---|
| China South City Holdings Ltd ($1668) | 17.9% | 14.0% | 15.2% | 15.9% | 15.9% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Henry Group Holdings Ltd ($859) | | 1,484.2x | 140.1x | 103.1x | |
| GR Properties Ltd ($108) | | 27.7x | | 15.6x | |
| Wang On Group Ltd ($1222) | 2.7x | -2.0x | 6.4x | 4.3x | 0.8x |
| Kong Shum Union Property Management Holding Ltd ($8181) | | | 1.2x | 3.5x | -1.6x |
| Tern Properties Co Ltd ($277) | 5.2x | 6.5x | 3.3x | 1.8x | 1.7x |
| |
|---|
| Median (9 companies) | 0.5x | 0.1x | 1.2x | 1.8x | 1.2x |
|---|
| China South City Holdings Ltd ($1668) | 0.2x | 0.6x | 1.0x | 1.2x | 1.0x |
