Essex Bio-technology Ltd demonstrated healthy growth in recent years
25/03/2015 • About Essex Bio-technology Ltd (
$1061) • By InTwits
Essex Bio-technology Ltd is a growth stock in Biotechnology industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Essex Bio-technology Ltd showed growth in the last financial year. The company's revenue surged on 49.3% in FY2014. Together with revenue growth Essex Bio-technology Ltd also managed to keep EBITDA growth. EBITDA grew 45.0% for the same period.
In the last 3 years the company showed fast revenue growth of 34.6% from 2011 to 2014 annualy. EBITDA surged on 42.2% from 2011 to 2014 annualy.
Essex Bio-technology Ltd ($1061) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 146 | 213 | 267 | 347 | 518 |
|---|
| Revenue growth, % | | 45.4% | 25.6% | 29.9% | 49.3% |
|---|
| Gross margin, % | 91.8% | 90.5% | 91.2% | 89.6% | 79.3% |
|---|
| SG&A, % | | | 72.9% | 68.5% | 60.5% |
|---|
| EBITDA | 35 | 38 | 51 | 76 | 110 |
|---|
| EBITDA growth, % | | 8.9% | 32.6% | 49.6% | 45.0% |
|---|
| EBITDA margin, % | 24.1% | 18.0% | 19.0% | 21.9% | 21.3% |
|---|
| Net Income | 27 | 33 | 39 | 55 | 75 |
|---|
| Net Income margin, % | 18.2% | 15.6% | 14.6% | 15.8% | 14.5% |
|---|
| |
| CAPEX | 7 | 21 | 98 | 36 | 8 |
|---|
| CAPEX/Revenue, % | 4.68% | 9.92% | 36.6% | 10.4% | 1.45% |
|---|
| Debt | 0 | 0 | 74 | 51 | 51 |
|---|
| Cash | 79 | 37 | 60 | 55 | 62 |
|---|
| Net Debt/EBITDA | -2.2x | -1.0x | 0.3x | -0.0x | -0.1x |
|---|
| |
| ROIC, % | 27.0% | 24.7% | 22.6% | 25.2% | 28.5% |
|---|
| ROE, % | 22.1% | 22.5% | 21.7% | 24.4% | 25.7% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the last 3 years the company's EBITDA margin surged on 3.30 pp from 18% in 2011 to 21.3% in 2014.
We call Essex Bio-technology Ltd an attractive growth stock as together with the growth it delivers high ROIC at 28.5%. Three years ago it was a bit lower at 24.7%. It's average level of ROIC for the last three years was 25.4%.
Net Income margin decreased on 1.30 pp from 15.8% to 14.5% in 2014. In the last 3 years Essex Bio-technology Ltd showed decline of 1.10 pp from 15.6% in 2011 to 14.5% in 2014.
Essex Bio-technology Ltd operates at ROE of 25.7%. Average ROE for the last three years was 23.9%.
Capital expenditures (CAPEX)
Essex Bio-technology Ltd's CAPEX/Revenue was 1.45% in FY2014. Essex Bio-technology Ltd's CAPEX/Revenue dropped on 8.47 pp from 9.92% in 2011 to 1.45% in 2014. It's average CAPEX/Revenue for the last three years was 16.2%.
Leverage (Debt)
Having such a fast growth profile Essex Bio-technology Ltd keeps negative net debt at -0.1x Net Debt/EBITDA. In the longer period leverage surged on 0.86x from -0.96x in 2011 to -0.10x in 2014.
Valuation vs. comparable companies
At the end of trading day today Essex Bio-technology Ltd traded at 20.5x EV/EBITDA which is the same as 20.4x Biotechnology peer group avearge calculated on the basis of 21 companies. The market closed today at 30.2x P/E for Essex Bio-technology Ltd which is 30.5% higher than 23.1x Biotechnology peer group avearge calculated on the basis of 3 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 22.0x EV/(EBITDA-CAPEX) for Essex Bio-technology Ltd which is 49.9% lower than 44.0x Biotechnology peer group avearge calculated on the basis of 2 companies.
Peers in Biotechnology
Below we provide Essex Bio-technology Ltd benchmarking against other companies in Biotechnology 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 |
|---|
| Uni-Bio Science Group Ltd ($690) | | -48.2% | -25.7% | 46.1% | 23.1% |
| Amgen Inc ($4332) | | 3.5% | 10.8% | 8.2% | 7.4% |
| CK Life Sciences International Holdings Inc ($775) | | 30.3% | 29.4% | 9.4% | -0.3% |
| China Regenerative Medicine International Ltd ($8158) | | 8,636.7% | -95.1% | 975.8% | -63.0% |
| |
|---|
| Median (4 companies) | | 16.9% | -7.5% | 27.8% | 3.5% |
|---|
| Essex Bio-technology Ltd ($1061) | | 45.4% | 25.6% | 29.9% | 49.3% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Uni-Bio Science Group Ltd ($690) | 52.1% | 62.1% | 67.2% | 79.5% | 80.0% |
| Amgen Inc ($4332) | 85.3% | 84.4% | 81.5% | 82.1% | 78.0% |
| CK Life Sciences International Holdings Inc ($775) | 30.5% | 33.6% | 34.2% | 35.0% | 35.1% |
| China Regenerative Medicine International Ltd ($8158) | 20.0% | 64.4% | 33.6% | -17.3% | 31.0% |
| |
|---|
| Median (4 companies) | 41.3% | 63.2% | 50.7% | 57.3% | 56.5% |
|---|
| Essex Bio-technology Ltd ($1061) | 91.8% | 90.5% | 91.2% | 89.6% | 79.3% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Amgen Inc ($4332) | 43.6% | 34.5% | 38.6% | 38.3% | 41.3% |
| CK Life Sciences International Holdings Inc ($775) | 11.9% | 9.3% | 9.9% | 10.0% | 10.7% |
| Uni-Bio Science Group Ltd ($690) | -20.7% | -8.0% | -25.3% | -0.3% | -45.9% |
| China Regenerative Medicine International Ltd ($8158) | -107,460.0% | -1,318.5% | -40,521.9% | -3,443.4% | -19,703.9% |
| |
|---|
| Median (4 companies) | -4.4% | 0.6% | -7.7% | 4.8% | -17.6% |
|---|
| Essex Bio-technology Ltd ($1061) | 24.1% | 18.0% | 19.0% | 21.9% | 21.3% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| China Regenerative Medicine International Ltd ($8158) | 101,613.3% | 1,076.2% | 40,271.9% | 810.7% | 3,305.9% |
| Uni-Bio Science Group Ltd ($690) | 0.7% | 5.1% | 23.9% | 28.9% | 35.5% |
| CK Life Sciences International Holdings Inc ($775) | 2.2% | 5.4% | 3.8% | 5.8% | 9.9% |
| Amgen Inc ($4332) | 3.9% | 3.6% | 4.0% | 3.7% | 3.6% |
| |
|---|
| Median (4 companies) | 3.1% | 5.3% | 14.0% | 17.3% | 22.7% |
|---|
| Essex Bio-technology Ltd ($1061) | 4.7% | 9.9% | 36.6% | 10.4% | 1.5% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Amgen Inc ($4332) | 15.7% | 11.1% | 13.0% | 11.7% | 11.2% |
| CK Life Sciences International Holdings Inc ($775) | 3.4% | 3.0% | 4.2% | 4.1% | 4.3% |
| Uni-Bio Science Group Ltd ($690) | -9.7% | -7.4% | -9.0% | -7.3% | -15.6% |
| China Regenerative Medicine International Ltd ($8158) | -10.7% | -10.9% | -16.0% | -11.9% | -16.4% |
| |
|---|
| Median (4 companies) | -3.1% | -2.2% | -2.4% | -1.6% | -5.7% |
|---|
| Essex Bio-technology Ltd ($1061) | 27.0% | 24.7% | 22.6% | 25.2% | 28.5% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| CK Life Sciences International Holdings Inc ($775) | 1.5x | 5.4x | 4.3x | 6.1x | 6.4x |
| Amgen Inc ($4332) | 1.5x | 2.7x | 3.5x | 4.0x | 3.3x |
| |
|---|
| Median (2 companies) | 1.5x | 4.0x | 3.9x | 5.0x | 4.8x |
|---|
| Essex Bio-technology Ltd ($1061) | -2.2x | -1.0x | 0.3x | -0.0x | -0.1x |
