Time Watch Investments Ltd is a growth stock to keep your eyes on
06/10/2014 • About Time Watch Investments Ltd (
$2033) • By InTwits
Time Watch Investments Ltd is a fast-growing stock in Miscellaneous Manufactur industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Time Watch Investments Ltd showed fast growth in the last financial year. Time Watch Investments Ltd's revenue surged on 25.6% in FY2014. In addition to revenue Time Watch Investments Ltd also keeps delivering EBITDA growth. It was 45.4% in FY2014
In the longer period Time Watch Investments Ltd showed fast revenue growth of 26.4% from FY2011 to FY2014 annualy. EBITDA surged on 32.6% from FY2011 to FY2014 annualy.
Time Watch Investments Ltd ($2033) financials for the last 5 years
| mln. HKD | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 920 | 1,189 | 1,525 | 1,912 | 2,402 |
|---|
| Revenue growth, % | | 29.3% | 28.2% | 25.4% | 25.6% |
|---|
| Gross margin, % | 48.4% | 58.5% | 60.2% | 60.6% | 65.0% |
|---|
| SG&A, % | | | | 44.5% | 48.0% |
|---|
| EBITDA | 107 | 200 | 269 | 321 | 467 |
|---|
| EBITDA growth, % | | 87.6% | 34.2% | 19.4% | 45.4% |
|---|
| EBITDA margin, % | 11.6% | 16.8% | 17.6% | 16.8% | 19.4% |
|---|
| Net Income | 61 | 135 | 184 | 214 | 310 |
|---|
| Net Income margin, % | 6.60% | 11.3% | 12.1% | 11.2% | 12.9% |
|---|
| |
| CAPEX | 21 | 26 | 33 | 52 | 100 |
|---|
| CAPEX/Revenue, % | 2.31% | 2.22% | 2.15% | 2.73% | 4.17% |
|---|
| Debt | 201 | 204 | 292 | 49 | 39 |
|---|
| Cash | 71 | 110 | 157 | 537 | 660 |
|---|
| Net Debt/EBITDA | 1.2x | 0.5x | 0.5x | -1.5x | -1.3x |
|---|
| |
| ROIC, % | | 30.5% | 34.5% | 27.1% | 27.8% |
|---|
| ROE, % | | 36.9% | 44.4% | 25.7% | 22.8% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. The company's EBITDA margin surged on 2.60 pp from 16.8% to 19.4% in FY2014. If we look for the longer period EBITDA margin surged on 2.60 pp from 16.8% in FY2011 to 19.4% in FY2014.
We call Time Watch Investments Ltd an attractive growth stock as together with the growth it delivers high ROIC at 27.8%. During the last three years it decreased - it was 30.5% in FY2011. It's average ROIC for the last three years was 29.8%.
The company's Net Income margin surged on 1.70 pp from 11.2% to 12.9% in FY2014. If we look for the longer period Time Watch Investments Ltd showed fast Net Income margin growth of 1.60 pp from 11.3% in FY2011 to 12.9% in FY2014.
Time Watch Investments Ltd operates at ROE of 22.8%. Average ROE for the last three years was 31.0%.
Capital expenditures (CAPEX)
In FY2014 Time Watch Investments Ltd had CAPEX/Revenue of 4.17%. The company showed fast CAPEX/Revenue growth of 1.94 pp from 2.22% in FY2011 to 4.17% in FY2014. It's average CAPEX/Revenue for the last three years was 3.02%.
Leverage (Debt)
The company has negative net debt at -1.3x Net Debt/EBITDA - at the same time with high growth. In the longer period the company showed big decline in leverage of 1.80x from 0.47x in FY2011 to -1.33x in FY2014.
Valuation vs. comparable companies
The company trades at 4.3x EV/EBITDA which is 80.1% lower than 21.8x Miscellaneous Manufactur industry avearge calculated based on 27 companies. At the end of trading day today Time Watch Investments Ltd traded at 8.5x P/E which is 51.5% lower than 17.6x Miscellaneous Manufactur peer group avearge calculated on the basis of 10 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Time Watch Investments Ltd traded at 5.5x EV/(EBITDA-CAPEX) which is 458% higher than 1.0x Miscellaneous Manufactur peer group avearge calculated on the basis of 9 companies.
Peers in Miscellaneous Manufactur
Below we provide Time Watch Investments Ltd benchmarking against other companies in Miscellaneous Manufactur 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 |
|---|
| VS International Group Ltd ($1002) | | 8.9% | -7.1% | -19.3% | 12.3% |
| Herald Holdings Ltd ($114) | | 10.7% | -13.8% | -3.9% | -0.4% |
| Karrie International Hldgs ($1050) | | 15.4% | -11.6% | 0.1% | -11.3% |
| IDT International Ltd ($167) | | 16.4% | -1.6% | -1.2% | -14.3% |
| China Environmental Energy Investment Ltd ($986) | | -13.6% | 154.5% | -26.7% | -40.0% |
| |
|---|
| Median (6 companies) | | 13.1% | -7.5% | -2.5% | -12.8% |
|---|
| Time Watch Investments Ltd ($2033) | | 29.3% | 28.2% | 25.4% | 25.6% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Man Sang International Ltd ($938) | 18.5% | 34.7% | 42.4% | 32.8% | 60.3% |
| Herald Holdings Ltd ($114) | 27.0% | 24.0% | 23.4% | 25.7% | 24.9% |
| IDT International Ltd ($167) | 35.2% | 32.8% | 30.3% | 28.0% | 24.9% |
| Karrie International Hldgs ($1050) | 6.8% | 6.7% | 8.2% | 10.6% | 14.3% |
| VS International Group Ltd ($1002) | 11.2% | 8.6% | 9.8% | 8.8% | 12.3% |
| |
|---|
| Median (6 companies) | 19.3% | 22.5% | 18.7% | 18.1% | 19.6% |
|---|
| Time Watch Investments Ltd ($2033) | 48.4% | 58.5% | 60.2% | 60.6% | 65.0% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Man Sang International Ltd ($938) | -8.9% | 18.7% | 24.9% | 15.4% | 37.0% |
| Karrie International Hldgs ($1050) | 2.5% | 2.7% | 2.7% | 5.0% | 6.6% |
| VS International Group Ltd ($1002) | 8.4% | 4.3% | 6.4% | 4.6% | 5.9% |
| Herald Holdings Ltd ($114) | 12.3% | 8.3% | 5.2% | 6.4% | 4.6% |
| IDT International Ltd ($167) | 1.5% | 6.0% | 4.3% | 0.2% | -1.4% |
| |
|---|
| Median (6 companies) | 3.1% | 5.2% | 4.7% | 4.8% | 5.2% |
|---|
| Time Watch Investments Ltd ($2033) | 11.6% | 16.8% | 17.6% | 16.8% | 19.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| China Environmental Energy Investment Ltd ($986) | 2.8% | 77.7% | 6.1% | 0.4% | 17.9% |
| Karrie International Hldgs ($1050) | 3.7% | 2.6% | 4.9% | 4.7% | 5.2% |
| Man Sang International Ltd ($938) | 7.8% | 5.6% | 1.6% | 0.6% | 3.7% |
| Herald Holdings Ltd ($114) | 2.8% | 1.4% | 3.2% | 5.6% | 2.4% |
| VS International Group Ltd ($1002) | 4.6% | 3.4% | 4.7% | 2.1% | 1.8% |
| |
|---|
| Median (6 companies) | 3.2% | 3.0% | 4.0% | 1.5% | 3.1% |
|---|
| Time Watch Investments Ltd ($2033) | 2.3% | 2.2% | 2.2% | 2.7% | 4.2% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Karrie International Hldgs ($1050) | 0.6% | 1.7% | 1.1% | 4.4% | 7.0% |
| Herald Holdings Ltd ($114) | 17.7% | 11.0% | 4.7% | 6.2% | 3.9% |
| Man Sang International Ltd ($938) | -2.4% | 3.8% | 4.5% | 3.6% | 1.4% |
| VS International Group Ltd ($1002) | 2.0% | -2.5% | 0.2% | -2.8% | 1.4% |
| IDT International Ltd ($167) | -6.4% | -0.1% | -1.7% | -6.8% | -10.6% |
| |
|---|
| Median (6 companies) | -0.9% | 0.8% | 0.7% | 0.4% | 1.4% |
|---|
| Time Watch Investments Ltd ($2033) | | 30.5% | 34.5% | 27.1% | 27.8% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| VS International Group Ltd ($1002) | 5.8x | 8.6x | 5.1x | 6.5x | 4.4x |
| Karrie International Hldgs ($1050) | 1.1x | 2.4x | 0.2x | 0.2x | -0.2x |
| Man Sang International Ltd ($938) | | -6.8x | -4.6x | -1.6x | -3.0x |
| Herald Holdings Ltd ($114) | -1.7x | -2.2x | -3.4x | -1.9x | -3.0x |
| |
|---|
| Median (4 companies) | 1.1x | -0.3x | -1.4x | -1.6x | -1.6x |
|---|
| Time Watch Investments Ltd ($2033) | 1.2x | 0.5x | 0.5x | -1.5x | -1.3x |
