Looking for growth stocks? Pay attention to Luk Fook Holdings International Ltd
02/07/2014 • About Luk Fook Holdings International Ltd (
$590) • By InTwits
Luk Fook Holdings International Ltd is an attractive growth stock in Retail industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Luk Fook Holdings International Ltd showed growth in the last financial year. The company's revenue surged on 43.3% in FY2014. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 52.7% for the same period.
In the last 3 years Luk Fook Holdings International Ltd showed fast revenue growth of 33.4% from FY2011 to FY2014 annualy. EBITDA surged on 31.4% from FY2011 to FY2014 annualy.
Luk Fook Holdings International Ltd ($590) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 5,386 | 8,091 | 11,907 | 13,412 | 19,215 |
|---|
| Revenue growth, % | | 50.2% | 47.2% | 12.6% | 43.3% |
|---|
| Gross margin, % | 24.0% | 23.7% | 23.2% | 21.1% | 21.9% |
|---|
| SG&A, % | 12.6% | 11.3% | 10.2% | 10.8% | 10.8% |
|---|
| EBITDA | 679 | 1,074 | 1,659 | 1,594 | 2,434 |
|---|
| EBITDA growth, % | | 58.2% | 54.5% | -3.9% | 52.7% |
|---|
| EBITDA margin, % | 12.6% | 13.3% | 13.9% | 11.9% | 12.7% |
|---|
| Net Income | 531 | 866 | 1,334 | 1,243 | 1,865 |
|---|
| Net Income margin, % | 9.87% | 10.7% | 11.2% | 9.27% | 9.71% |
|---|
| |
| CAPEX | 315 | 101 | 153 | 307 | 258 |
|---|
| CAPEX/Revenue, % | 5.84% | 1.25% | 1.29% | 2.29% | 1.34% |
|---|
| Debt | 314 | 0 | 0 | 0 | 568 |
|---|
| Cash | 287 | 966 | 1,538 | 1,187 | 1,646 |
|---|
| Net Debt/EBITDA | 0.0x | -0.9x | -0.9x | -0.7x | -0.4x |
|---|
| |
| ROIC, % | 36.3% | 36.6% | 34.1% | 24.3% | 30.6% |
|---|
| ROE, % | 36.5% | 34.1% | 29.6% | 20.7% | 26.5% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Luk Fook Holdings International Ltd's EBITDA margin increased on 0.800 pp from 11.9% to 12.7% in FY2014. In the longer period the company's EBITDA margin decreased slightly on 0.600 pp from 13.3% in FY2011 to 12.7% in FY2014.
We call Luk Fook Holdings International Ltd an attractive growth stock as together with the growth it delivers high ROIC at 30.6%. Three years ago it was higher at 36.6%. It's average ROIC for the last three years was 29.7%.
Luk Fook Holdings International Ltd showed small growth in Net Income margin of 0.400 pp from 9.30% to 9.70% in FY2014. In the longer period Net Income margin decreased on 1 pp from 10.7% in FY2011 to 9.70% in FY2014.
Luk Fook Holdings International Ltd operates at ROE of 26.5%. It's average ROE for the last three years was 25.6%.
Capital expenditures (CAPEX)
The company's CAPEX/Revenue was 1.34% in FY2014. The company's CAPEX/Revenue increased on 0.0965 pp from 1.25% in FY2011 to 1.34% in FY2014. It's average CAPEX/Revenue for the last three years was 1.64%.
Leverage (Debt)
Having such a fast growth profile Luk Fook Holdings International Ltd keeps negative net debt at -0.4x Net Debt/EBITDA. In the last 3 years Luk Fook Holdings International Ltd showed fast leverage growth of 0.46x from -0.90x in FY2011 to -0.44x in FY2014.
Valuation vs. comparable companies
The company trades at 5.1x EV/EBITDA which is 76.6% lower than 22.0x Retail industry avearge calculated based on 122 companies. At the end of trading day today Luk Fook Holdings International Ltd traded at 7.3x P/E which is 63.7% lower than 20.1x Retail peer group avearge calculated on the basis of 40 companies.
Management team
Luk Fook Holdings International Ltd is run by Wong Wai Sheung as a CEO and by Chan So Kuen "Kathy" as a CFO.
Peers in Retail
Below you can find Luk Fook Holdings International 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 |
|---|
| Chow Tai Fook Jewellery Group Ltd ($1929) | | 52.8% | 61.4% | 1.5% | 34.8% |
| 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% |
| Bauhaus International Holdings Ltd ($483) | | 27.5% | 14.6% | 11.5% | 10.3% |
| |
|---|
| Median (16 companies) | | 20.6% | 15.1% | 1.7% | 5.7% |
|---|
| Luk Fook Holdings International Ltd ($590) | | 50.2% | 47.2% | 12.6% | 43.3% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Moiselle International Holdings Ltd ($130) | 80.5% | 81.4% | 81.2% | 83.8% | 80.6% |
| 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% |
| Bauhaus International Holdings Ltd ($483) | 70.1% | 70.0% | 69.4% | 64.1% | 63.7% |
| Sincere Co Ltd/The ($244) | 65.3% | 64.4% | 62.9% | 65.6% | 62.8% |
| |
|---|
| Median (16 companies) | 54.5% | 52.4% | 51.0% | 50.5% | 47.4% |
|---|
| Luk Fook Holdings International Ltd ($590) | 24.0% | 23.7% | 23.2% | 21.1% | 21.9% |
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% |
| Cafe de Coral Holdings Ltd ($341) | 16.0% | 15.3% | 13.0% | 13.8% | 14.5% |
| Bauhaus International Holdings Ltd ($483) | 16.5% | 17.8% | 12.7% | 11.0% | 13.2% |
| Moiselle International Holdings Ltd ($130) | 18.1% | 21.6% | 16.0% | 12.7% | 12.7% |
| |
|---|
| Median (16 companies) | 12.8% | 14.5% | 9.2% | 8.4% | 6.4% |
|---|
| Luk Fook Holdings International Ltd ($590) | 12.6% | 13.3% | 13.9% | 11.9% | 12.7% |
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% |
| Zhong Fa Zhan Holdings Ltd ($475) | 1.4% | 91.0% | 3.4% | 0.1% | 4.7% |
| Cafe de Coral Holdings Ltd ($341) | 6.3% | 5.8% | 9.6% | 7.7% | 4.5% |
| Bauhaus International Holdings Ltd ($483) | 1.8% | 8.7% | 10.6% | 2.6% | 4.0% |
| |
|---|
| Median (16 companies) | 1.6% | 3.9% | 3.4% | 2.7% | 2.6% |
|---|
| Luk Fook Holdings International Ltd ($590) | 5.8% | 1.2% | 1.3% | 2.3% | 1.3% |
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% |
| Bauhaus International Holdings Ltd ($483) | 25.9% | 32.5% | 20.5% | 17.1% | 23.2% |
| Cafe de Coral Holdings Ltd ($341) | 22.1% | 19.5% | 16.4% | 18.0% | 19.8% |
| Chow Tai Fook Jewellery Group Ltd ($1929) | 27.7% | 31.1% | 26.4% | 17.1% | 18.8% |
| Le Saunda Holdings Ltd ($738) | 16.6% | 20.5% | 19.1% | 16.5% | 18.5% |
| |
|---|
| Median (16 companies) | 13.4% | 18.4% | 10.6% | 7.7% | 4.8% |
|---|
| Luk Fook Holdings International Ltd ($590) | 36.3% | 36.6% | 34.1% | 24.3% | 30.6% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.7x | -0.8x | 0.6x | 4.0x | 9.3x |
| Tse Sui Luen Jewellery International Ltd ($417) | -0.1x | 0.4x | 1.2x | 2.2x | 3.7x |
| Oriental Watch Holdings ($398) | 0.4x | -1.0x | 1.2x | 1.8x | 0.9x |
| Chow Tai Fook Jewellery Group Ltd ($1929) | 0.1x | 0.2x | 0.5x | -0.3x | 0.8x |
| IT Ltd ($999) | -1.3x | -0.3x | 0.1x | 0.1x | -0.5x |
| |
|---|
| Median (12 companies) | -1.2x | -1.0x | -1.1x | -1.1x | -1.1x |
|---|
| Luk Fook Holdings International Ltd ($590) | 0.0x | -0.9x | -0.9x | -0.7x | -0.4x |
