Sinopharm Group Co Ltd demonstrates profitable growth
30/03/2015 • About Sinopharm Group Co Ltd (
$1099) • By InTwits
Sinopharm Group Co Ltd is an attractive growth stock in Pharmaceuticals industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Sinopharm Group Co Ltd showed fast growth in the last financial year. Sinopharm Group Co Ltd's revenue surged on 19.9% in FY2014. In addition to revenue Sinopharm Group Co Ltd also keeps delivering EBITDA growth. It was 28.3% in FY2014
In the last 3 years the company showed fast revenue growth of 25.1% from 2011 to 2014 annualy. EBITDA surged on 28.5% from 2011 to 2014 annualy.
Sinopharm Group Co Ltd ($1099) financials for the last 5 years
| mln. CNY | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 69,234 | 102,225 | 136,502 | 166,866 | 200,131 |
|---|
| Revenue growth, % | | 47.7% | 33.5% | 22.2% | 19.9% |
|---|
| Gross margin, % | 8.43% | 8.17% | 8.05% | 8.02% | 8.16% |
|---|
| SG&A, % | 5.01% | 4.75% | 4.58% | 4.45% | 4.25% |
|---|
| EBITDA | 2,709 | 4,096 | 5,436 | 6,779 | 8,697 |
|---|
| EBITDA growth, % | | 51.2% | 32.7% | 24.7% | 28.3% |
|---|
| EBITDA margin, % | 3.91% | 4.01% | 3.98% | 4.06% | 4.35% |
|---|
| Net Income | 1,209 | 1,561 | 1,979 | 2,250 | 2,875 |
|---|
| Net Income margin, % | 1.75% | 1.53% | 1.45% | 1.35% | 1.44% |
|---|
| |
| CAPEX | 1,516 | 1,101 | 1,422 | 1,224 | 1,645 |
|---|
| CAPEX/Revenue, % | 2.19% | 1.08% | 1.04% | 0.733% | 0.822% |
|---|
| Debt | 3,435 | 13,849 | 16,140 | 25,141 | 29,455 |
|---|
| Cash | 7,475 | 13,091 | 9,802 | 14,002 | 15,232 |
|---|
| Net Debt/EBITDA | -1.5x | 0.2x | 1.2x | 1.6x | 1.6x |
|---|
| |
| ROIC, % | 13.9% | 13.5% | 13.0% | 12.9% | 12.9% |
|---|
| ROE, % | 10.3% | 11.4% | 12.0% | 11.5% | 11.7% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Sinopharm Group Co Ltd showed small growth in EBITDA margin of 0.200 pp from 4.10% to 4.30% in 2014. If we look for the longer period EBITDA margin increased on 0.300 pp from 4% in 2011 to 4.30% in 2014.
Sinopharm Group Co Ltd shows attractive ROIC at 12.9% for the last 12 months which assumes stable development model. During the last three years it decreased slightly - it was 13.5% in FY2011. It's average level of ROIC for the last three years was 12.9%.
The company showed Net Income margin growth of 0.100 pp from 1.30% to 1.40% in 2014. In the longer period Sinopharm Group Co Ltd's Net Income margin decreased on 0.1000 pp from 1.50% in 2011 to 1.40% in 2014.
Sinopharm Group Co Ltd operates at ROE of 11.7%. It's average level of ROE for the last three years was 11.7%.
Capital expenditures (CAPEX)
In FY2014 Sinopharm Group Co Ltd had CAPEX/Revenue of 0.822%. The company showed big decline in CAPEX/Revenue of 0.255 pp from 1.08% in 2011 to 0.822% in 2014. It's average CAPEX/Revenue for the last three years was 0.866%.
Leverage (Debt)
The company has medium debt level at 1.6x Net Debt/EBITDA to maintain high growth. In the last 3 years the company showed fast leverage growth of 1.45x from 0.19x in 2011 to 1.64x in 2014.
Peers in Pharmaceuticals
Below we provide Sinopharm Group Co Ltd benchmarking against other companies in Pharmaceuticals 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 |
|---|
| Hong Kong Life Sciences and Technology Group Ltd ($8085) | | 7.0% | -10.0% | -45.4% | 1,636.5% |
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | | -17.7% | 15.1% | -99.9% | 480.0% |
| United Gene High-Tech Group Ltd ($399) | | -81.4% | -71.8% | -60.5% | 196.0% |
| China Traditional Chinese Medicine Co Ltd ($570) | | 3.1% | 22.3% | 35.2% | 90.0% |
| Dragonite International Ltd ($329) | | -8.8% | -10.5% | 13.5% | 64.8% |
| |
|---|
| Median (18 companies) | | 11.1% | 2.8% | 13.5% | 12.0% |
|---|
| Sinopharm Group Co Ltd ($1099) | | 47.7% | 33.5% | 22.2% | 19.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 71.9% | 72.6% | 65.2% | 77.9% | 72.1% |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | 55.9% | 61.6% | 67.4% | 65.0% | 68.4% |
| Tianda Pharmaceuticals Ltd ($455) | 76.4% | 79.6% | 74.5% | 68.8% | 64.1% |
| China Traditional Chinese Medicine Co Ltd ($570) | 55.8% | 54.0% | 54.7% | 59.2% | 62.0% |
| Livzon Pharmaceutical Group Inc ($1513) | 52.7% | 55.2% | 59.6% | 62.8% | 60.9% |
| |
|---|
| Median (17 companies) | 30.8% | 35.9% | 37.4% | 37.8% | 48.3% |
|---|
| Sinopharm Group Co Ltd ($1099) | 8.4% | 8.2% | 8.0% | 8.0% | 8.2% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Asia Resources Holdings Ltd ($899) | -8.9% | 3.5% | -80.8% | 25.1% | 113.7% |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 18.2% | 18.8% | 20.3% | 23.8% | 38.5% |
| Tianda Pharmaceuticals Ltd ($455) | 57.7% | 66.9% | 77.7% | 42.0% | 33.2% |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 47.4% | 32.9% | 60.6% | 21.0% | 28.8% |
| Extrawell Pharmaceutical Holdings Ltd ($858) | 9.4% | 4.0% | 11.2% | 9.5% | 27.3% |
| |
|---|
| Median (17 companies) | 9.6% | 15.3% | 12.1% | 14.2% | 15.4% |
|---|
| Sinopharm Group Co Ltd ($1099) | 3.9% | 4.0% | 4.0% | 4.1% | 4.3% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 25.1% | 0.2% | | 11,100.0% | 103.4% |
| Extrawell Pharmaceutical Holdings Ltd ($858) | 0.7% | 5.7% | 1.7% | 20.6% | 92.4% |
| Asia Resources Holdings Ltd ($899) | 28.6% | 12.2% | 4.4% | 8.1% | 92.0% |
| Dragonite International Ltd ($329) | 15.5% | 2.0% | 27.8% | 19.3% | 19.1% |
| China NT Pharma Group Co Ltd ($1011) | 2.6% | 0.8% | 5.9% | 1.2% | 13.1% |
| |
|---|
| Median (17 companies) | 7.0% | 7.1% | 6.3% | 7.5% | 8.3% |
|---|
| Sinopharm Group Co Ltd ($1099) | 2.2% | 1.1% | 1.0% | 0.7% | 0.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | 43.8% | 34.4% | 27.6% | 22.2% | 19.9% |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 25.0% | 17.7% | 12.6% | 14.0% | 17.8% |
| Tong Ren Tang Technologies Co Ltd ($1666) | 15.2% | 17.2% | 21.4% | 18.4% | 16.2% |
| Guangzhou Baiyunshan Pharmaceutical Holdings Co Ltd ($874) | 4.8% | 4.0% | 12.3% | 12.8% | 14.3% |
| China Traditional Chinese Medicine Co Ltd ($570) | 11.5% | 8.4% | 17.6% | 9.3% | 12.2% |
| |
|---|
| Median (18 companies) | 7.6% | 7.8% | 9.0% | 6.6% | 7.2% |
|---|
| Sinopharm Group Co Ltd ($1099) | 13.9% | 13.5% | 13.0% | 12.9% | 12.9% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| China NT Pharma Group Co Ltd ($1011) | 2.6x | 0.4x | | | 7.2x |
| China Traditional Chinese Medicine Co Ltd ($570) | -0.4x | 1.8x | 1.1x | 2.7x | 1.1x |
| Livzon Pharmaceutical Group Inc ($1513) | -0.8x | -1.4x | 0.1x | 0.9x | 0.9x |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | -1.1x | -1.7x | -0.4x | -0.4x | -0.3x |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | -0.7x | 0.1x | 0.3x | 0.2x | -0.8x |
| |
|---|
| Median (12 companies) | -1.4x | -1.4x | -0.4x | -0.4x | -1.6x |
|---|
| Sinopharm Group Co Ltd ($1099) | -1.5x | 0.2x | 1.2x | 1.6x | 1.6x |
