Eye on Tsui Wah Holdings Ltd as a growth stock
03/07/2014 • About Tsui Wah Holdings Ltd (
$1314) • By InTwits
Pay attention to Tsui Wah Holdings Ltd as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Tsui Wah Holdings Ltd showed growth in the last financial year. The company's revenue surged on 35.9% in FY2014. At the same time the company well managed its profitability and also showed EBITDA growth of 21.6% for the same period.
In the last 3 years the company showed fast revenue growth of 35.1% from FY2011 to FY2014 annualy. EBITDA surged on 27.1% from FY2011 to FY2014 annualy.
Tsui Wah Holdings Ltd ($1314) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 440 | 598 | 763 | 1,084 | 1,474 |
|---|
| Revenue growth, % | | 35.9% | 27.5% | 42.2% | 35.9% |
|---|
| Gross margin, % | 69.6% | 69.4% | 69.0% | 69.4% | 69.3% |
|---|
| SG&A, % | 0.766% | 0.472% | 0.380% | 0.539% | 0.430% |
|---|
| EBITDA | 82 | 104 | 147 | 175 | 213 |
|---|
| EBITDA growth, % | | 26.8% | 41.5% | 19.3% | 21.6% |
|---|
| EBITDA margin, % | 18.6% | 17.3% | 19.2% | 16.1% | 14.4% |
|---|
| Net Income | 54 | 65 | 104 | 130 | 156 |
|---|
| Net Income margin, % | 12.2% | 10.9% | 13.6% | 12.0% | 10.6% |
|---|
| |
| CAPEX | 15 | 31 | 63 | 100 | 449 |
|---|
| CAPEX/Revenue, % | 3.41% | 5.19% | 8.29% | 9.26% | 30.5% |
|---|
| Debt | 0 | 13 | 0 | 1 | 88 |
|---|
| Cash | 39 | 63 | 92 | 917 | 635 |
|---|
| Net Debt/EBITDA | -0.5x | -0.5x | -0.6x | -5.2x | -2.6x |
|---|
| |
| ROIC, % | | 46.9% | 50.1% | 20.2% | 12.8% |
|---|
| ROE, % | | 42.1% | 47.3% | 20.0% | 14.3% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period the company showed big decline in EBITDA margin of 2.90 pp from 17.3% in FY2011 to 14.4% in FY2014.
We call Tsui Wah Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 12.8%. During the last three years it dropped - it was 46.9% in FY2011. Average ROIC for the last three years was 27.7%.
Tsui Wah Holdings Ltd showed big decline in Net Income margin of 1.40 pp from 12% to 10.6% in FY2014. In the longer period the company's Net Income margin decreased slightly on 0.300 pp from 10.9% in FY2011 to 10.6% in FY2014.
Tsui Wah Holdings Ltd operates at ROE of 14.3%. Average ROE for the last three years was 27.2%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 30.5% in FY2014. CAPEX/Revenue surged on 25.3 pp from 5.19% in FY2011 to 30.5% in FY2014. Average CAPEX/Revenue for the last three years was 16.0%.
Leverage (Debt)
Tsui Wah Holdings Ltd has negative net debt at -2.6x Net Debt/EBITDA - at the same time with high growth. In the longer period leverage surged on 2.09x from -0.48x in FY2011 to -2.57x in FY2014.
Valuation vs. comparable companies
The market closed today at 22.0x EV/EBITDA for Tsui Wah Holdings Ltd which is the same as 22.0x Retail peer group avearge calculated on the basis of 122 companies. The company trades at 33.5x P/E which is not surprisingly 67% higher than 20.1x Retail industry avearge calculated based on 40 companies.
Peers in Retail
Below you can find Tsui Wah Holdings 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 |
|---|
| Luk Fook Holdings International Ltd ($590) | | 50.2% | 47.2% | 12.6% | 43.3% |
| 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% |
| Sa Sa International Holdings Ltd ($178) | | 19.2% | 30.7% | 19.7% | 14.2% |
| |
|---|
| Median (22 companies) | | 19.8% | 16.2% | 4.5% | 5.7% |
|---|
| Tsui Wah Holdings Ltd ($1314) | | 35.9% | 27.5% | 42.2% | 35.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.0% | 77.5% | 91.1% | 99.4% | 99.5% |
| 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% |
| |
|---|
| Median (22 companies) | 48.5% | 48.2% | 46.6% | 46.6% | 45.1% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 69.6% | 69.4% | 69.0% | 69.4% | 69.3% |
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% |
| Sa Sa International Holdings Ltd ($178) | 12.8% | 13.8% | 14.8% | 15.1% | 14.8% |
| 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% |
| |
|---|
| Median (22 companies) | 12.6% | 13.2% | 11.9% | 10.3% | 8.5% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 18.6% | 17.3% | 19.2% | 16.1% | 14.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Culture Landmark Investment Ltd ($674) | 13.2% | 4.6% | 11.6% | 19.4% | 15.7% |
| 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% |
| |
|---|
| Median (22 companies) | 2.0% | 3.9% | 3.9% | 3.1% | 2.9% |
|---|
| Tsui Wah Holdings Ltd ($1314) | 3.4% | 5.2% | 8.3% | 9.3% | 30.5% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sa Sa International Holdings Ltd ($178) | 39.2% | 45.7% | 53.5% | 52.7% | 49.0% |
| Luk Fook Holdings International Ltd ($590) | 36.3% | 36.6% | 34.1% | 24.3% | 30.6% |
| Fairwood Holdings Ltd ($52) | 27.4% | 27.4% | 28.0% | 29.1% | 28.6% |
| 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% |
| |
|---|
| Median (22 companies) | 13.4% | 18.4% | 16.1% | 9.1% | 6.9% |
|---|
| Tsui Wah Holdings Ltd ($1314) | | 46.9% | 50.1% | 20.2% | 12.8% |
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 |
| Stelux Holdings International Ltd ($84) | 2.0x | 0.8x | 0.7x | 1.0x | 1.0x |
| 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 |
| |
|---|
| Median (16 companies) | -0.8x | -1.0x | -0.8x | -0.8x | -0.7x |
|---|
| Tsui Wah Holdings Ltd ($1314) | -0.5x | -0.5x | -0.6x | -5.2x | -2.6x |
