Looking for a growth stock? Pay attention to Tongda Group Holdings Ltd
25/03/2015 • About Tongda Group Holdings Ltd (
$698) • By InTwits
Have you thought about Tongda Group Holdings Ltd as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Tongda Group Holdings Ltd showed growth in the last financial year. The company's revenue surged on 32.1% in FY2014. Together with revenue growth Tongda Group Holdings Ltd also managed to keep EBITDA growth. EBITDA grew 44.7% for the same period.
In the longer period Tongda Group Holdings Ltd showed fast revenue growth of 15.0% from 2011 to 2014 annualy. EBITDA surged on 22.3% from 2011 to 2014 annualy.
Tongda Group Holdings Ltd ($698) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 2,348 | 3,147 | 3,408 | 3,627 | 4,791 |
|---|
| Revenue growth, % | | 34.0% | 8.3% | 6.4% | 32.1% |
|---|
| Gross margin, % | 17.4% | 19.2% | 21.4% | 22.0% | 23.9% |
|---|
| SG&A, % | 7.49% | 7.71% | 8.58% | 9.82% | 9.23% |
|---|
| EBITDA | 349 | 482 | 583 | 610 | 882 |
|---|
| EBITDA growth, % | | 38.2% | 21.0% | 4.5% | 44.7% |
|---|
| EBITDA margin, % | 14.9% | 15.3% | 17.1% | 16.8% | 18.4% |
|---|
| Net Income | 201 | 250 | 300 | 360 | 502 |
|---|
| Net Income margin, % | 8.56% | 7.95% | 8.80% | 9.93% | 10.5% |
|---|
| |
| CAPEX | 201 | 180 | 266 | 178 | 547 |
|---|
| CAPEX/Revenue, % | 8.55% | 5.71% | 7.80% | 4.90% | 11.4% |
|---|
| Debt | 452 | 640 | 653 | 850 | 980 |
|---|
| Cash | 184 | 254 | 221 | 178 | 360 |
|---|
| Net Debt/EBITDA | 0.8x | 0.8x | 0.7x | 1.1x | 0.7x |
|---|
| |
| ROIC, % | 12.1% | 14.3% | 15.2% | 13.5% | 16.5% |
|---|
| ROE, % | 13.6% | 14.4% | 15.2% | 15.8% | 16.9% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. Tongda Group Holdings Ltd's EBITDA margin increased on 1.60 pp from 16.8% to 18.4% in 2014. In the longer period EBITDA margin surged on 3.10 pp from 15.3% in 2011 to 18.4% in 2014.
We call Tongda Group Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 16.5%. During the last three years it surged - it was 14.3% in FY2011. Average ROIC for the last three years was 15.1%.
The company's Net Income margin increased on 0.600 pp from 9.90% to 10.5% in 2014. In the last 3 years Tongda Group Holdings Ltd showed fast Net Income margin growth of 2.50 pp from 8% in 2011 to 10.5% in 2014.
Tongda Group Holdings Ltd operates at ROE of 16.9%. For the last three years the average ROE was 16.0%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 11.4%. Tongda Group Holdings Ltd's CAPEX/Revenue surged on 5.70 pp from 5.71% in 2011 to 11.4% in 2014. It's average CAPEX/Revenue for the last three years was 8.04%.
Leverage (Debt)
Having such a fast growth profile the company keeps low debt level at 0.7x Net Debt/EBITDA. If we look for the longer period Tongda Group Holdings Ltd's leverage dropped on 0.10x from 0.80x in 2011 to 0.70x in 2014.
Valuation vs. comparable companies
The market closed today at 8.3x EV/EBITDA for Tongda Group Holdings Ltd which is 63.2% lower than 22.5x Electronics peer group avearge calculated on the basis of 52 companies. At the end of trading day today Tongda Group Holdings Ltd traded at 13.3x P/E which is 67.5% lower than 40.9x Electronics peer group avearge calculated on the basis of 18 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 21.7x EV/(EBITDA-CAPEX) for Tongda Group Holdings Ltd which is 2,550% higher than 0.8x Electronics peer group avearge calculated on the basis of 16 companies.
Peers in Electronics
Below we provide Tongda Group Holdings Ltd benchmarking against other companies in Electronics 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 |
|---|
| Technovator International Ltd ($1206) | | 31.6% | 27.4% | 34.1% | 35.9% |
| Advanced Card Systems Holdings Ltd ($8210) | | 25.3% | 36.9% | 20.8% | 26.7% |
| QPL International Holdings Ltd ($243) | | 8.9% | -21.1% | -22.2% | 21.0% |
| Sandmartin International Holdings Ltd ($482) | | 2.8% | -16.3% | 4.1% | 19.0% |
| Hi Sun Technology China Ltd ($818) | | -7.0% | 3.5% | 49.1% | 18.1% |
| |
|---|
| Median (24 companies) | | 16.1% | -10.1% | -4.9% | 9.9% |
|---|
| Tongda Group Holdings Ltd ($698) | | 34.0% | 8.3% | 6.4% | 32.1% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Advanced Card Systems Holdings Ltd ($8210) | 54.0% | 51.4% | 54.0% | 58.1% | 49.5% |
| TeleEye Holdings Ltd ($8051) | 51.4% | 51.6% | 44.0% | 42.1% | 38.5% |
| Hi Sun Technology China Ltd ($818) | 18.9% | 20.8% | 28.1% | 37.4% | 33.3% |
| Technovator International Ltd ($1206) | 34.0% | 37.3% | 35.8% | 33.8% | 26.6% |
| Kingwell Group Ltd ($1195) | -1.6% | 8.7% | 4.4% | 13.5% | 24.1% |
| |
|---|
| Median (23 companies) | 13.2% | 12.5% | 13.3% | 13.3% | 13.1% |
|---|
| Tongda Group Holdings Ltd ($698) | 17.4% | 19.2% | 21.4% | 22.0% | 23.9% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Technovator International Ltd ($1206) | 15.9% | 19.2% | 19.0% | 19.0% | 20.8% |
| Advanced Card Systems Holdings Ltd ($8210) | 14.5% | 14.2% | 19.6% | 21.7% | 17.8% |
| Kingboard Laminates Holdings Ltd ($1888) | 26.1% | 17.6% | 15.5% | 15.6% | 15.0% |
| GCL New Energy Holdings Ltd ($451) | 13.8% | 12.1% | 10.8% | 11.1% | 12.6% |
| Man Yue Technology Holdings Ltd ($894) | 15.7% | 15.1% | 14.6% | 13.1% | 12.0% |
| |
|---|
| Median (24 companies) | 8.9% | 4.1% | 2.7% | 3.1% | 3.4% |
|---|
| Tongda Group Holdings Ltd ($698) | 14.9% | 15.3% | 17.1% | 16.8% | 18.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Irico Group Electronics Co Ltd ($438) | 156.7% | 92.0% | 39.9% | 30.4% | 17.4% |
| Truly International Holdings Ltd ($732) | 6.8% | 7.3% | 6.5% | 5.7% | 10.2% |
| Yeebo International Hldg ($259) | 0.9% | 7.5% | 4.1% | 3.4% | 8.3% |
| Elec & Eltek International Co Ltd ($1151) | 6.3% | 12.8% | 6.0% | 9.4% | 8.0% |
| Suga International Holdings Ltd ($912) | 5.9% | 1.5% | 1.3% | 6.2% | 7.9% |
| |
|---|
| Median (24 companies) | 3.7% | 3.2% | 3.6% | 3.2% | 4.7% |
|---|
| Tongda Group Holdings Ltd ($698) | 8.6% | 5.7% | 7.8% | 4.9% | 11.4% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Advanced Card Systems Holdings Ltd ($8210) | 13.9% | 15.5% | 26.7% | 24.7% | 20.2% |
| Technovator International Ltd ($1206) | 18.2% | 21.1% | 21.2% | 16.9% | 14.2% |
| Suga International Holdings Ltd ($912) | 18.3% | 23.0% | 19.4% | 11.9% | 14.2% |
| Truly International Holdings Ltd ($732) | 9.5% | 10.2% | 12.7% | 21.1% | 13.6% |
| GCL New Energy Holdings Ltd ($451) | 3.6% | 5.2% | 4.1% | 3.0% | 7.9% |
| |
|---|
| Median (24 companies) | 4.8% | 4.4% | 1.9% | 2.5% | 2.1% |
|---|
| Tongda Group Holdings Ltd ($698) | 12.1% | 14.3% | 15.2% | 13.5% | 16.5% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| National Electronic Hldgs ($213) | 24.3x | 43.0x | 16.3x | 30.2x | 84.8x |
| Willas-Array Electronics Holdings Ltd ($854) | 2.9x | 2.8x | 2.2x | 2.6x | 5.7x |
| Pine Technology Holdings Ltd ($1079) | 2.5x | | 8.0x | 3.3x | 4.9x |
| Man Yue Technology Holdings Ltd ($894) | 1.1x | 1.7x | 2.1x | 2.7x | 3.3x |
| Daiwa Associate Holdings ($1037) | 7.1x | 6.2x | 10.4x | 2.6x | 2.8x |
| |
|---|
| Median (17 companies) | 0.8x | 0.7x | 1.1x | 1.2x | 1.5x |
|---|
| Tongda Group Holdings Ltd ($698) | 0.8x | 0.8x | 0.7x | 1.1x | 0.7x |
