Looking for growth stocks? Pay attention to China LotSynergy Holdings Ltd
23/03/2015 • About China LotSynergy Holdings Ltd (
$1371) • By InTwits
China LotSynergy Holdings Ltd is an attractive growth stock in Entertainment industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
China LotSynergy Holdings Ltd showed growth in the last financial year. China LotSynergy Holdings Ltd's revenue surged on 39.1% in FY2014. Together with revenue growth China LotSynergy Holdings Ltd also managed to keep EBITDA growth. EBITDA grew 28.3% for the same period.
If we look for the longer period China LotSynergy Holdings Ltd showed fast revenue growth of 25.1% from 2011 to 2014 annualy. EBITDA surged on 21.6% from 2011 to 2014 annualy.
China LotSynergy Holdings Ltd ($1371) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 283 | 528 | 607 | 744 | 1,035 |
|---|
| Revenue growth, % | | 86.9% | 15.0% | 22.5% | 39.1% |
|---|
| Gross margin, % | 78.0% | 81.7% | 79.5% | 73.1% | 70.1% |
|---|
| SG&A, % | 34.2% | 21.9% | 26.8% | 22.6% | 21.6% |
|---|
| EBITDA | 158 | 323 | 324 | 453 | 581 |
|---|
| EBITDA growth, % | | 104.4% | 0.2% | 39.7% | 28.3% |
|---|
| EBITDA margin, % | 55.9% | 61.2% | 53.3% | 60.9% | 56.1% |
|---|
| Net Income | 152 | 66 | 68 | 89 | 100 |
|---|
| Net Income margin, % | 53.9% | 12.6% | 11.1% | 11.9% | 9.66% |
|---|
| |
| CAPEX | 37 | 47 | 253 | 218 | 153 |
|---|
| CAPEX/Revenue, % | 13.3% | 8.82% | 41.7% | 29.3% | 14.8% |
|---|
| Debt | 251 | 449 | 613 | 797 | 1,500 |
|---|
| Cash | 314 | 404 | 267 | 340 | 419 |
|---|
| Net Debt/EBITDA | -0.4x | 0.1x | 1.1x | 1.0x | 1.9x |
|---|
| |
| ROIC, % | 7.3% | 18.0% | 15.5% | 16.9% | 14.8% |
|---|
| ROE, % | 17.5% | 6.9% | 6.5% | 7.8% | 6.8% |
|---|
Profitability and return on investment
EBITDA margin declined slightly from 60.9% in FY2013 to 56.1% in FY2014. If we look for the longer period the company showed decline of 5.10 pp from 61.2% in 2011 to 56.1% in 2014.
We call China LotSynergy Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 14.8%. During the last three years it dropped - it was 18.0% in FY2011. It's average level of ROIC for the last three years was 15.8%.
The company's Net Income margin dropped on 2.20 pp from 11.9% to 9.70% in 2014. In the longer period the company's Net Income margin dropped on 2.90 pp from 12.6% in 2011 to 9.70% in 2014.
China LotSynergy Holdings Ltd operates at ROE of 6.77%. Average ROE for the last three years was 7.01%.
Capital expenditures (CAPEX)
To fuel this fast growth China LotSynergy Holdings Ltd had to invest in CAPEX.In FY2014 China LotSynergy Holdings Ltd had CAPEX/Revenue of 14.8%. CAPEX/Revenue surged on 5.95 pp from 8.82% in 2011 to 14.8% in 2014. For the last three years the average CAPEX/Revenue was 28.6%.
Leverage (Debt)
China LotSynergy Holdings Ltd has medium debt level at 1.9x Net Debt/EBITDA to maintain high growth. If we look for the longer period China LotSynergy Holdings Ltd showed fast leverage growth of 1.72x from 0.14x in 2011 to 1.86x in 2014.
Valuation vs. comparable companies
At the end of trading day today China LotSynergy Holdings Ltd traded at 10.3x EV/EBITDA which is 53.6% lower than 22.2x Entertainment peer group avearge calculated on the basis of 29 companies. The market closed today at 49.0x P/E for China LotSynergy Holdings Ltd which is 10.4% lower than 54.7x Entertainment peer group avearge calculated on the basis of 5 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 14.0x EV/(EBITDA-CAPEX) for China LotSynergy Holdings Ltd which is higher vs. -3.6x Entertainment peer group avearge calculated on the basis of 6 companies.
Peers in Entertainment
Below you can find China LotSynergy Holdings Ltd benchmarking vs. other companies in Entertainment 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 |
|---|
| China 3D Digital Entertainment Ltd ($8078) | | -41.9% | -67.2% | 295.2% | 185.2% |
| Universe International Holdings Ltd ($1046) | | 10.2% | -42.2% | 4.3% | 159.4% |
| China Vanguard Group Ltd ($8156) | | 15.6% | -7.0% | -62.7% | 145.0% |
| Neptune Group Ltd ($70) | | 6.9% | 4.5% | 33.3% | 23.0% |
| Dynam Japan Holdings Co Ltd ($6889) | | 2.5% | -2.7% | -0.7% | 1.1% |
| |
|---|
| Median (10 companies) | | 8.6% | -2.6% | 7.9% | -1.8% |
|---|
| China LotSynergy Holdings Ltd ($1371) | | 86.9% | 15.0% | 22.5% | 39.1% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Amax International Holdings Ltd ($959) | | | | 92.1% | 98.6% |
| China Vanguard Group Ltd ($8156) | 64.9% | 65.0% | 63.8% | 88.2% | 93.8% |
| Bingo Group Holdings Ltd ($8220) | 1.7% | 2.0% | 2.2% | 71.2% | 55.1% |
| Pegasus Entertainment Holdings Ltd ($1326) | 41.3% | 48.3% | 40.9% | 33.9% | 44.3% |
| Mei Ah Entertainment Group Ltd ($391) | 41.4% | 40.3% | 30.8% | 12.5% | 42.9% |
| |
|---|
| Median (8 companies) | 22.4% | 20.2% | 30.8% | 35.3% | 43.6% |
|---|
| China LotSynergy Holdings Ltd ($1371) | 78.0% | 81.7% | 79.5% | 73.1% | 70.1% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Neptune Group Ltd ($70) | 139.8% | 101.1% | 98.6% | 98.6% | 86.6% |
| Universe International Holdings Ltd ($1046) | 54.2% | 62.2% | 36.6% | 44.6% | 74.6% |
| China Vanguard Group Ltd ($8156) | -13.4% | 2.8% | -15.0% | -51.8% | 30.0% |
| Dynam Japan Holdings Co Ltd ($6889) | 27.7% | 24.0% | 24.5% | 25.7% | 24.6% |
| Bingo Group Holdings Ltd ($8220) | -8.7% | -31.2% | -39.9% | 35.3% | 24.4% |
| |
|---|
| Median (10 companies) | 10.9% | 17.1% | 12.8% | 19.8% | 23.3% |
|---|
| China LotSynergy Holdings Ltd ($1371) | 55.9% | 61.2% | 53.3% | 60.9% | 56.1% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Mei Ah Entertainment Group Ltd ($391) | 30.8% | 2.5% | 6.8% | 3.6% | 25.4% |
| Amax International Holdings Ltd ($959) | 0.9% | 18.7% | 10.4% | 2.7% | 17.2% |
| Dynam Japan Holdings Co Ltd ($6889) | 6.7% | 3.6% | 4.5% | 6.5% | 5.6% |
| China Vanguard Group Ltd ($8156) | 11.5% | 3.1% | 5.0% | 58.3% | 4.0% |
| Neway Group Holdings Ltd ($55) | 1.3% | 8.7% | 8.5% | 2.4% | 3.6% |
| |
|---|
| Median (10 companies) | 1.1% | 2.8% | 4.8% | 3.1% | 3.4% |
|---|
| China LotSynergy Holdings Ltd ($1371) | 13.3% | 8.8% | 41.7% | 29.3% | 14.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Dynam Japan Holdings Co Ltd ($6889) | | 22.5% | 23.8% | 25.4% | 21.8% |
| Neptune Group Ltd ($70) | 24.9% | 22.0% | 22.8% | 23.8% | 21.1% |
| Pegasus Entertainment Holdings Ltd ($1326) | | 94.5% | 82.1% | 18.5% | 10.3% |
| China Vanguard Group Ltd ($8156) | -1.2% | -0.8% | -4.3% | -14.3% | 7.6% |
| Bingo Group Holdings Ltd ($8220) | -37.2% | -75.9% | -80.0% | 5.1% | 5.4% |
| |
|---|
| Median (10 companies) | -2.7% | 1.4% | -2.3% | -0.8% | 1.9% |
|---|
| China LotSynergy Holdings Ltd ($1371) | 7.3% | 18.0% | 15.5% | 16.9% | 14.8% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| China 3D Digital Entertainment Ltd ($8078) | 134.1x | -11.9x | | -0.5x | 2.3x |
| Neptune Group Ltd ($70) | 0.2x | 0.0x | -0.3x | -0.1x | -0.0x |
| Universe International Holdings Ltd ($1046) | -1.9x | -1.0x | -2.6x | -1.4x | -0.5x |
| Dynam Japan Holdings Co Ltd ($6889) | 0.9x | 0.8x | -0.0x | -0.8x | -0.7x |
| Mei Ah Entertainment Group Ltd ($391) | 0.4x | -1.0x | -0.1x | -0.7x | -1.3x |
| |
|---|
| Median (9 companies) | 0.4x | -0.6x | -0.4x | -1.0x | -1.3x |
|---|
| China LotSynergy Holdings Ltd ($1371) | -0.4x | 0.1x | 1.1x | 1.0x | 1.9x |
