PAX Global Technology Ltd is an attractive growth stock
12/03/2015 • About PAX Global Technology Ltd (
$327) • By InTwits
PAX Global Technology Ltd is an attractive growth stock in Computers industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
PAX Global Technology Ltd showed growth in the last financial year. The company's revenue surged on 61.2% in FY2014. In addition to revenue PAX Global Technology Ltd also keeps delivering EBITDA growth. It was 74.6% in FY2014
If we look for the longer period the company showed fast revenue growth of 29.1% from 2011 to 2014 annualy. EBITDA surged on 28.8% from 2011 to 2014 annualy.
PAX Global Technology Ltd ($327) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 724 | 1,103 | 1,313 | 1,472 | 2,373 |
|---|
| Revenue growth, % | | 52.5% | 19.0% | 12.1% | 61.2% |
|---|
| Gross margin, % | 40.3% | 35.5% | 35.3% | 36.7% | 36.4% |
|---|
| SG&A, % | 14.6% | 15.0% | 14.2% | 15.4% | 14.8% |
|---|
| EBITDA | 177 | 209 | 216 | 256 | 447 |
|---|
| EBITDA growth, % | | 17.9% | 3.4% | 18.5% | 74.6% |
|---|
| EBITDA margin, % | 24.5% | 18.9% | 16.5% | 17.4% | 18.8% |
|---|
| Net Income | 145 | 182 | 183 | 227 | 392 |
|---|
| Net Income margin, % | 20.1% | 16.5% | 13.9% | 15.4% | 16.5% |
|---|
| |
| CAPEX | 5 | 2 | 3 | 1 | 7 |
|---|
| CAPEX/Revenue, % | 0.630% | 0.214% | 0.210% | 0.0955% | 0.316% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 1,067 | 1,152 | 1,358 | 1,698 | 1,919 |
|---|
| Net Debt/EBITDA | -6.0x | -5.5x | -6.3x | -6.6x | -4.3x |
|---|
| |
| ROIC, % | 20.0% | 14.1% | 12.3% | 12.8% | 18.7% |
|---|
| ROE, % | 17.0% | 12.6% | 10.7% | 11.6% | 16.9% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. PAX Global Technology Ltd's EBITDA margin increased on 1.40 pp from 17.4% to 18.8% in 2014. If we look for the longer period PAX Global Technology Ltd showed small EBITDA margin decline of 0.100 pp from 18.9% in 2011 to 18.8% in 2014.
PAX Global Technology Ltd shows attractive ROIC at 18.7% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 14.1%. For the last three years the average ROIC was 14.6%.
The company's Net Income margin increased on 1.10 pp from 15.4% to 16.5% in 2014. In the longer period Net Income margin didn't change on 0 pp from 16.5% in 2011 to 16.5% in 2014.
PAX Global Technology Ltd operates at ROE of 16.9%. It's average level of ROE for the last three years was 13.1%.
Capital expenditures (CAPEX)
In FY2014 PAX Global Technology Ltd had CAPEX/Revenue of 0.316%. The company showed fast CAPEX/Revenue growth of 0.101 pp from 0.214% in 2011 to 0.316% in 2014. For the last three years the average CAPEX/Revenue was 0.207%.
Leverage (Debt)
Having such a fast growth profile PAX Global Technology Ltd keeps negative net debt at -4.3x Net Debt/EBITDA. If we look for the longer period the company showed fast leverage growth of 1.22x from -5.51x in 2011 to -4.29x in 2014.
Valuation vs. comparable companies
The company trades at 15.6x EV/EBITDA which is 29.6% lower than 22.2x Computers industry avearge calculated based on 29 companies. The market closed today at 22.7x P/E for PAX Global Technology Ltd which is 14.1% lower than 26.4x Computers peer group avearge calculated on the basis of 7 companies.
Peers in Computers
Below we provide PAX Global Technology Ltd benchmarking against other companies in Computers 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 |
|---|
| Alibaba Health Information Technology Ltd ($241) | | 29.4% | 29.4% | -96.7% | 73.0% |
| Thiz Technology Group Ltd ($8119) | | 136.4% | -4.1% | -95.1% | 72.2% |
| Lenovo Group Ltd ($992) | | 30.0% | 37.0% | 14.5% | 14.3% |
| Wai Chun Group Holdings Ltd ($1013) | | 6.8% | 58.2% | 1.9% | -2.7% |
| Group Sense International Ltd ($601) | | -6.1% | -23.1% | -19.9% | -8.9% |
| |
|---|
| Median (5 companies) | | 29.4% | 29.4% | -19.9% | 14.3% |
|---|
| PAX Global Technology Ltd ($327) | | 52.5% | 19.0% | 12.1% | 61.2% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Thiz Technology Group Ltd ($8119) | 11.0% | 2.9% | 8.8% | 63.8% | 86.2% |
| Alibaba Health Information Technology Ltd ($241) | 13.2% | 10.1% | 11.4% | -12.6% | 49.3% |
| Group Sense International Ltd ($601) | 27.9% | 28.3% | 26.8% | 23.2% | 19.6% |
| Wai Chun Group Holdings Ltd ($1013) | 15.3% | 15.4% | 13.2% | 15.1% | 15.1% |
| Lenovo Group Ltd ($992) | 10.8% | 10.9% | 11.7% | 12.0% | 13.1% |
| |
|---|
| Median (5 companies) | 12.1% | 10.9% | 11.7% | 15.1% | 19.6% |
|---|
| PAX Global Technology Ltd ($327) | 40.3% | 35.5% | 35.3% | 36.7% | 36.4% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Lenovo Group Ltd ($992) | 2.3% | 2.6% | 2.6% | 3.1% | 3.6% |
| Group Sense International Ltd ($601) | -0.4% | -2.7% | -11.6% | -13.9% | -16.6% |
| Wai Chun Group Holdings Ltd ($1013) | -34.2% | -20.4% | -13.8% | -9.2% | -33.7% |
| Alibaba Health Information Technology Ltd ($241) | -2.5% | -4.4% | -4.3% | -193.1% | -132.6% |
| Thiz Technology Group Ltd ($8119) | -130.9% | -39.1% | -47.4% | -847.3% | -506.6% |
| |
|---|
| Median (5 companies) | -18.4% | -4.4% | -11.6% | -13.9% | -33.7% |
|---|
| PAX Global Technology Ltd ($327) | 24.5% | 18.9% | 16.5% | 17.4% | 18.8% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Alibaba Health Information Technology Ltd ($241) | 2.3% | 2.1% | 4.4% | 46.3% | 17.2% |
| Group Sense International Ltd ($601) | 3.0% | 4.7% | 6.3% | 2.9% | 5.6% |
| Lenovo Group Ltd ($992) | 0.5% | 0.6% | 1.0% | 1.1% | 1.5% |
| Wai Chun Group Holdings Ltd ($1013) | 2.0% | 13.4% | 0.8% | 0.9% | 1.4% |
| Thiz Technology Group Ltd ($8119) | 1.5% | 0.4% | 0.0% | 0.6% | 1.3% |
| |
|---|
| Median (5 companies) | 1.8% | 2.1% | 1.0% | 1.1% | 1.5% |
|---|
| PAX Global Technology Ltd ($327) | 0.6% | 0.2% | 0.2% | 0.1% | 0.3% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Lenovo Group Ltd ($992) | 10.4% | 18.9% | 26.2% | 30.5% | 34.7% |
| Alibaba Health Information Technology Ltd ($241) | -7.4% | -9.6% | -11.1% | -13.1% | -13.0% |
| Group Sense International Ltd ($601) | -4.9% | -6.7% | -14.9% | -15.7% | -21.3% |
| Thiz Technology Group Ltd ($8119) | -27.8% | -74.8% | -88.7% | -189.4% | -36.1% |
| Wai Chun Group Holdings Ltd ($1013) | -28.0% | -22.5% | -31.9% | -18.6% | -59.1% |
| |
|---|
| Median (6 companies) | -7.4% | -9.6% | -14.9% | -15.7% | -21.3% |
|---|
| PAX Global Technology Ltd ($327) | 20.0% | 14.1% | 12.3% | 12.8% | 18.7% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Lenovo Group Ltd ($992) | -4.8x | -4.8x | -4.9x | -2.8x | -2.5x |
| |
|---|
| Median (1 company) | -4.8x | -4.8x | -4.9x | -2.8x | -2.5x |
|---|
| PAX Global Technology Ltd ($327) | -6.0x | -5.5x | -6.3x | -6.6x | -4.3x |
