Eye on Xinyi Solar Holdings Ltd as a growth stock: its revenue grew 25.0% and EBITDA 15.7% annually over the last three years
09/03/2015 • About Xinyi Solar Holdings Ltd (
$968) • By InTwits
Xinyi Solar Holdings Ltd is a growth stock in Energy-Alternate Sources industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Xinyi Solar Holdings Ltd showed fast growth in the last financial year. Xinyi Solar Holdings Ltd's revenue surged on 22.5% in FY2014. EBITDA also increased considerably: 46.1% for the same period.
In the last 3 years the company showed fast revenue growth of 25.0% from 2011 to 2014 annualy. EBITDA surged on 15.7% from 2011 to 2014 annualy.
Xinyi Solar Holdings Ltd ($968) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 1,077 | 1,234 | 1,533 | 1,968 | 2,410 |
|---|
| Revenue growth, % | | 14.5% | 24.3% | 28.3% | 22.5% |
|---|
| Gross margin, % | 51.5% | 35.9% | 17.2% | 30.1% | 31.6% |
|---|
| SG&A, % | 9.07% | 7.91% | 7.92% | 10.4% | 6.44% |
|---|
| EBITDA | 518 | 441 | 250 | 468 | 684 |
|---|
| EBITDA growth, % | | -14.8% | -43.3% | 87.0% | 46.1% |
|---|
| EBITDA margin, % | 48.1% | 35.8% | 16.3% | 23.8% | 28.4% |
|---|
| Net Income | 408 | 321 | 120 | 304 | 493 |
|---|
| Net Income margin, % | 37.9% | 26.0% | 7.82% | 15.4% | 20.5% |
|---|
| |
| CAPEX | 577 | 879 | 348 | 240 | 2,381 |
|---|
| CAPEX/Revenue, % | 53.6% | 71.2% | 22.7% | 12.2% | 98.8% |
|---|
| Debt | 0 | 0 | 0 | 0 | 1,300 |
|---|
| Cash | 20 | 32 | 54 | 279 | 543 |
|---|
| Net Debt/EBITDA | -0.0x | -0.1x | -0.2x | -0.6x | 1.1x |
|---|
| |
| ROIC, % | 44.9% | 33.6% | 13.8% | 21.6% | 16.9% |
|---|
| ROE, % | 39.3% | 28.6% | 12.1% | 18.0% | 17.6% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. EBITDA margin surged on 4.60 pp from 23.8% to 28.4% in 2014. In the longer period Xinyi Solar Holdings Ltd's EBITDA margin dropped on 7.40 pp from 35.8% in 2011 to 28.4% in 2014.
We call Xinyi Solar Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 16.9%. Three years ago it was considerably higher at 33.6%. For the last three years the average ROIC was 17.5%.
Net Income margin surged on 5.10 pp from 15.4% to 20.5% in 2014. If we look for the longer period Xinyi Solar Holdings Ltd's Net Income margin dropped on 5.50 pp from 26% in 2011 to 20.5% in 2014.
Xinyi Solar Holdings Ltd operates at ROE of 17.6%. It's average ROE for the last three years was 15.9%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 98.8%. Xinyi Solar Holdings Ltd showed fast CAPEX/Revenue growth of 27.6 pp from 71.2% in 2011 to 98.8% in 2014. It's average CAPEX/Revenue for the last three years was 44.6%.
Leverage (Debt)
Having such a fast growth profile Xinyi Solar Holdings Ltd keeps medium debt level at 1.1x Net Debt/EBITDA. If we look for the longer period Xinyi Solar Holdings Ltd showed fast leverage growth of 1.18x from -0.07x in 2011 to 1.11x in 2014.
Valuation vs. comparable companies
The company trades at 22.3x EV/EBITDA which is 5.91% higher than 21.1x Energy-Alternate Sources industry avearge calculated based on 12 companies. At the end of trading day today Xinyi Solar Holdings Ltd traded at 29.4x P/E which is 17.9% higher than 24.9x Energy-Alternate Sources peer group avearge calculated on the basis of 3 companies.
Management team
Lee Yau-Ching runs Xinyi Solar Holdings Ltd as a CEO.
