Looking for growth? Don't miss CNQC International Holdings Ltd with its track record of fast growth
02/07/2014 • About CNQC International Holdings Ltd (
$1240) • By InTwits
CNQC International Holdings Ltd is a growth stock in Engineering&Construction industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
CNQC International Holdings Ltd showed growth in the last financial year. The company's revenue surged on 104% in FY2014. The growth also happened in EBITDA of 103% for the same period.
In the longer period the company showed fast revenue growth of 67.9% from FY2011 to FY2014 annualy. EBITDA surged on 57.6% from FY2011 to FY2014 annualy.
CNQC International Holdings Ltd ($1240) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 51 | 258 | 313 | 598 | 1,218 |
|---|
| Revenue growth, % | | 401.9% | 21.6% | 91.0% | 103.7% |
|---|
| Gross margin, % | 36.6% | 27.5% | 19.1% | 19.1% | 18.7% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 21 | 61 | 62 | 118 | 239 |
|---|
| EBITDA growth, % | | 186.8% | 1.8% | 89.8% | 102.8% |
|---|
| EBITDA margin, % | 41.4% | 23.7% | 19.8% | 19.7% | 19.6% |
|---|
| Net Income | 11 | 35 | 26 | 65 | 156 |
|---|
| Net Income margin, % | 21.1% | 13.7% | 8.23% | 10.9% | 12.8% |
|---|
| |
| CAPEX | 37 | 77 | 43 | 74 | 128 |
|---|
| CAPEX/Revenue, % | 71.4% | 29.8% | 13.6% | 12.3% | 10.5% |
|---|
| Debt | 18 | 92 | 109 | 142 | 197 |
|---|
| Cash | 2 | 45 | 47 | 58 | 189 |
|---|
| Net Debt/EBITDA | 0.8x | 0.8x | 1.0x | 0.7x | 0.0x |
|---|
| |
| ROIC, % | | 23.1% | 12.2% | 22.3% | 40.4% |
|---|
| ROE, % | | 34.7% | 16.4% | 29.9% | 59.2% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period the company's EBITDA margin dropped on 4.10 pp from 23.7% in FY2011 to 19.6% in FY2014.
CNQC International Holdings Ltd shows attractive ROIC at 40.4% for the last 12 months which assumes stable development model. Three years ago it was considerably lower at 23.1%. For the last three years the average ROIC was 25.0%.
Net Income margin surged on 1.90 pp from 10.9% to 12.8% in FY2014. In the longer period the company showed decline of 0.900 pp from 13.7% in FY2011 to 12.8% in FY2014.
CNQC International Holdings Ltd operates at ROE of 59.2%. Average ROE for the last three years was 35.1%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 10.5%. The company showed big decline in CAPEX/Revenue of 19.2 pp from 29.8% in FY2011 to 10.5% in FY2014. For the last three years the average CAPEX/Revenue was 12.2%.
Leverage (Debt)
The company has low debt level at 0.0x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period the company showed big decline in leverage of 0.74x from 0.77x in FY2011 to 0.03x in FY2014.
Valuation vs. comparable companies
The market closed today at 3.4x EV/EBITDA for CNQC International Holdings Ltd which is 84.1% lower than 21.5x Engineering&Construction peer group avearge calculated on the basis of 55 companies. The company trades at 5.2x P/E which is 38.4% lower than 8.4x Engineering&Construction industry avearge calculated based on 12 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 7.4x EV/(EBITDA-CAPEX) for CNQC International Holdings Ltd which is 64.2% lower than 20.7x Engineering&Construction peer group avearge calculated on the basis of 12 companies.
Peers in Engineering&Construction
Below you can find CNQC International Holdings Ltd benchmarking vs. other companies in Engineering&Construction 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 |
|---|
| Yau Lee Holdings Ltd ($406) | | 3.2% | 30.5% | -10.0% | 56.1% |
| Chun Wo Development Holdings Ltd ($711) | | 15.2% | 6.4% | 53.2% | 33.9% |
| Deson Development International Holdings ($262) | | -10.5% | 83.1% | -3.6% | 24.9% |
| Louis XIII Holdings Ltd ($577) | | 18.9% | -0.7% | 65.7% | 20.3% |
| KFM Kingdom Holdings Ltd ($3816) | | 53.0% | 15.9% | -11.0% | 11.7% |
| |
|---|
| Median (9 companies) | | 18.9% | 15.9% | 25.9% | 11.7% |
|---|
| CNQC International Holdings Ltd ($1240) | | 401.9% | 21.6% | 91.0% | 103.7% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| KFM Kingdom Holdings Ltd ($3816) | 23.4% | 30.3% | 24.6% | 24.3% | 22.0% |
| PYI Corp Ltd ($498) | 9.0% | 8.2% | 8.1% | 5.1% | 16.3% |
| CNC Holdings Ltd ($8356) | 18.1% | 12.0% | 9.9% | 15.3% | 15.4% |
| Hanison Construction Holdings Ltd ($896) | 9.5% | 11.0% | 13.3% | 17.0% | 15.3% |
| Deson Development International Holdings ($262) | 24.2% | 13.2% | 18.1% | 16.9% | 10.4% |
| |
|---|
| Median (9 companies) | 9.0% | 8.2% | 8.1% | 9.5% | 10.4% |
|---|
| CNQC International Holdings Ltd ($1240) | 36.6% | 27.5% | 19.1% | 19.1% | 18.7% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| KFM Kingdom Holdings Ltd ($3816) | 11.3% | 21.1% | 12.3% | 9.7% | 9.1% |
| CNC Holdings Ltd ($8356) | 16.2% | 9.3% | -1.7% | 9.4% | 8.1% |
| Vantage International Holdings Ltd ($15) | 5.8% | 6.4% | 4.3% | 8.3% | 3.4% |
| Hanison Construction Holdings Ltd ($896) | -0.7% | -5.0% | 3.0% | 6.9% | 2.8% |
| Deson Development International Holdings ($262) | 14.6% | 2.2% | 9.8% | 7.4% | 2.5% |
| |
|---|
| Median (9 companies) | 3.2% | 2.2% | 2.3% | 6.9% | 2.5% |
|---|
| CNQC International Holdings Ltd ($1240) | 41.4% | 23.7% | 19.8% | 19.7% | 19.6% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| PYI Corp Ltd ($498) | 6.6% | 6.6% | 3.7% | 4.2% | 24.5% |
| KFM Kingdom Holdings Ltd ($3816) | 4.2% | 6.5% | 4.6% | 11.5% | 14.9% |
| Louis XIII Holdings Ltd ($577) | 1.1% | 2.3% | 1.2% | 29.5% | 9.3% |
| CNC Holdings Ltd ($8356) | 3.7% | 2.5% | 4.7% | 6.4% | 7.2% |
| Yau Lee Holdings Ltd ($406) | 20.0% | 4.4% | 10.0% | 3.9% | 1.6% |
| |
|---|
| Median (9 companies) | 3.7% | 2.5% | 1.2% | 4.2% | 1.6% |
|---|
| CNQC International Holdings Ltd ($1240) | 71.4% | 29.8% | 13.6% | 12.3% | 10.5% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| KFM Kingdom Holdings Ltd ($3816) | | 35.8% | 17.1% | 7.5% | 6.6% |
| Vantage International Holdings Ltd ($15) | 9.9% | 11.1% | 6.5% | 13.2% | 4.3% |
| Chun Wo Development Holdings Ltd ($711) | -0.7% | -1.4% | 2.3% | 5.0% | 3.1% |
| Hanison Construction Holdings Ltd ($896) | -0.7% | -2.7% | 1.9% | 5.2% | 1.9% |
| Yau Lee Holdings Ltd ($406) | 1.6% | 0.0% | -0.0% | 1.2% | 1.7% |
| |
|---|
| Median (9 companies) | 3.2% | 0.9% | 1.9% | 4.1% | 1.7% |
|---|
| CNQC International Holdings Ltd ($1240) | | 23.1% | 12.2% | 22.3% | 40.4% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| CNC Holdings Ltd ($8356) | 0.1x | -0.7x | | 22.0x | 21.9x |
| Deson Development International Holdings ($262) | 1.7x | 3.1x | 3.8x | 4.9x | 13.7x |
| Chun Wo Development Holdings Ltd ($711) | | | 14.3x | 8.1x | 12.6x |
| Yau Lee Holdings Ltd ($406) | 1.8x | 14.6x | 19.5x | 9.7x | 9.2x |
| Hanison Construction Holdings Ltd ($896) | | | 14.9x | 4.9x | 8.2x |
| |
|---|
| Median (8 companies) | 1.7x | 2.1x | 9.2x | 4.9x | 8.7x |
|---|
| CNQC International Holdings Ltd ($1240) | 0.8x | 0.8x | 1.0x | 0.7x | 0.0x |
