Eye on Travel Expert Asia Enterprises Ltd as a growth stock
02/07/2014 • About Travel Expert Asia Enterprises Ltd (
$1235) • By InTwits
Travel Expert Asia Enterprises Ltd is a fast-growing stock in Leisure Time industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Travel Expert Asia Enterprises Ltd showed fast growth in the last financial year. The company's revenue surged on 19.5% in FY2014. Together with revenue growth Travel Expert Asia Enterprises Ltd also managed to keep EBITDA growth. EBITDA grew 34.7% for the same period.
In the last 3 years the company showed fast revenue growth of 15.5% from FY2011 to FY2014 annualy. EBITDA surged on 12.0% from FY2011 to FY2014 annualy.
Travel Expert Asia Enterprises Ltd ($1235) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 169 | 205 | 229 | 264 | 316 |
|---|
| Revenue growth, % | | 21.5% | 11.9% | 15.3% | 19.5% |
|---|
| SG&A, % | | | | 87.9% | 85.5% |
|---|
| EBITDA | 37 | 41 | 40 | 43 | 58 |
|---|
| EBITDA growth, % | | 11.1% | -3.2% | 7.8% | 34.7% |
|---|
| EBITDA margin, % | 21.9% | 20.1% | 17.4% | 16.2% | 18.3% |
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| Net Income | 30 | 31 | 30 | 41 | 43 |
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| Net Income margin, % | 17.9% | 15.2% | 13.2% | 15.6% | 13.7% |
|---|
| |
| CAPEX | 3 | 5 | 52 | 59 | 7 |
|---|
| CAPEX/Revenue, % | 1.87% | 2.46% | 22.5% | 22.3% | 2.37% |
|---|
| Debt | 0 | 0 | 7 | 27 | 25 |
|---|
| Cash | 83 | 95 | 57 | 78 | 122 |
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| Net Debt/EBITDA | -2.2x | -2.3x | -1.3x | -1.2x | -1.7x |
|---|
| |
| ROIC, % | 73.1% | 179.4% | 50.9% | 26.7% | 29.8% |
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| ROE, % | 65.0% | 152.3% | 47.1% | 34.3% | 30.0% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. EBITDA margin surged on 2.10 pp from 16.2% to 18.3% in FY2014. In the longer period EBITDA margin decreased on 1.80 pp from 20.1% in FY2011 to 18.3% in FY2014.
We call Travel Expert Asia Enterprises Ltd an attractive growth stock as together with the growth it delivers high ROIC at 29.8%. Three years ago it was considerably higher at 179%. Average ROIC for the last three years was 35.8%.
Net Income margin dropped on 1.90 pp from 15.6% to 13.7% in FY2014. In the longer period Net Income margin decreased on 1.50 pp from 15.2% in FY2011 to 13.7% in FY2014.
Travel Expert Asia Enterprises Ltd operates at ROE of 30.0%. It's average ROE for the last three years was 37.1%.
Capital expenditures (CAPEX)
Travel Expert Asia Enterprises Ltd's CAPEX/Revenue was 2.37% in FY2014. Travel Expert Asia Enterprises Ltd showed small CAPEX/Revenue decline of 0.0885 pp from 2.46% in FY2011 to 2.37% in FY2014. For the last three years the average CAPEX/Revenue was 15.7%.
Leverage (Debt)
Having such a fast growth profile the company keeps negative net debt at -1.7x Net Debt/EBITDA. In the last 3 years Travel Expert Asia Enterprises Ltd's leverage surged on 0.62x from -2.31x in FY2011 to -1.69x in FY2014.
Valuation vs. comparable companies
The company trades at 7.2x EV/EBITDA which is 68.2% lower than 22.6x Leisure Time industry avearge calculated based on 12 companies. At the end of trading day today Travel Expert Asia Enterprises Ltd traded at 11.9x P/E which is 87.4% lower than 93.8x Leisure Time peer group avearge calculated on the basis of 6 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Travel Expert Asia Enterprises Ltd traded at 8.3x EV/(EBITDA-CAPEX) which is higher vs. -2.8x Leisure Time peer group avearge calculated on the basis of 5 companies.
