Is TravelSky Technology Ltd a solid growth stock? - The numbers tells it is
01/04/2015 • About TravelSky Technology Ltd (
$696) • By InTwits
TravelSky Technology Ltd is a fast-growing stock in Software industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
TravelSky Technology Ltd showed fast growth in the last financial year. The company's revenue surged on 18.3% in FY2014. EBITDA also increased: 5.44% for the same period.
In the last 3 years TravelSky Technology Ltd showed fast revenue growth of 13.3% from 2011 to 2014 annualy. EBITDA increased on 2.33% from 2011 to 2014 annualy.
TravelSky Technology Ltd ($696) financials for the last 5 years
| mln. CNY | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 3,054 | 3,672 | 4,061 | 4,509 | 5,336 |
|---|
| Revenue growth, % | | 20.2% | 10.6% | 11.1% | 18.3% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 1,392 | 1,588 | 1,549 | 1,614 | 1,702 |
|---|
| EBITDA growth, % | | 14.1% | -2.5% | 4.2% | 5.4% |
|---|
| EBITDA margin, % | 45.6% | 43.3% | 38.1% | 35.8% | 31.9% |
|---|
| Net Income | 894 | 1,047 | 1,133 | 1,206 | 1,653 |
|---|
| Net Income margin, % | 29.3% | 28.5% | 27.9% | 26.7% | 31.0% |
|---|
| |
| CAPEX | 2,345 | 212 | 363 | 979 | 964 |
|---|
| CAPEX/Revenue, % | 76.8% | 5.77% | 8.94% | 21.7% | 18.1% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 899 | 890 | 1,739 | 2,349 | 1,995 |
|---|
| Net Debt/EBITDA | -0.6x | -0.6x | -1.1x | -1.5x | -1.2x |
|---|
| |
| ROIC, % | 15.1% | 16.2% | 15.0% | 13.8% | 12.5% |
|---|
| ROE, % | 14.0% | 14.7% | 14.4% | 13.9% | 17.0% |
|---|
Profitability and return on investment
Despite revenue growth EBITDA margin declined slightly from 35.8% in FY2013 to 31.9% in FY2014. If we look for the longer period TravelSky Technology Ltd showed big decline in EBITDA margin of 11.4 pp from 43.3% in 2011 to 31.9% in 2014.
We call TravelSky Technology Ltd an attractive growth stock as together with the growth it delivers high ROIC at 12.5%. Three years ago it was a bit higher at 16.2%. It's average level of ROIC for the last three years was 13.8%.
TravelSky Technology Ltd's Net Income margin surged on 4.30 pp from 26.7% to 31% in 2014. If we look for the longer period Net Income margin increased on 2.50 pp from 28.5% in 2011 to 31% in 2014.
TravelSky Technology Ltd operates at ROE of 17.0%. For the last three years the average ROE was 15.1%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 18.1%. CAPEX/Revenue surged on 12.3 pp from 5.77% in 2011 to 18.1% in 2014. It's average level of CAPEX/Revenue for the last three years was 16.2%.
Leverage (Debt)
TravelSky Technology Ltd has negative net debt at -1.2x Net Debt/EBITDA - at the same time with high growth. In the longer period leverage surged on 0.61x from -0.56x in 2011 to -1.17x in 2014.
Management team
TravelSky Technology Ltd is run by Xiao Yinhong as a CEO.
Peers in Software
Below we provide TravelSky Technology Ltd benchmarking against other companies in Software 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 |
|---|
| Pizu Group Holdings Ltd ($8053) | | -55.1% | 40.3% | -42.9% | 1,742.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | | 194.6% | 164.0% | 33.6% | 100.5% |
| China Mobile Games and Cultural Investment Ltd ($8081) | | -16.7% | 393.7% | -6.6% | 92.2% |
| Epicurean and Co Ltd ($8213) | | -38.5% | 177.0% | 185.7% | 62.6% |
| China Bio Cassava Holdings Ltd ($8129) | | -15.0% | -14.2% | 38.8% | 55.1% |
| |
|---|
| Median (26 companies) | | 13.2% | 6.6% | 23.9% | 22.9% |
|---|
| TravelSky Technology Ltd ($696) | | 20.2% | 10.6% | 11.1% | 18.3% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 89.7% | 90.2% | 90.4% | 97.4% | 98.4% |
| China Mobile Games and Cultural Investment Ltd ($8081) | 13.2% | 19.4% | 6.5% | 45.3% | 84.8% |
| Kingdee International Software Group Co Ltd ($268) | 76.5% | 70.1% | 65.0% | 75.3% | 82.5% |
| Kingsoft Corp Ltd ($3888) | 86.5% | 85.5% | 86.8% | 86.3% | 82.4% |
| Aurum Pacific China Group Ltd ($8148) | 26.4% | 63.1% | | 81.4% | 72.9% |
| |
|---|
| Median (26 companies) | 45.0% | 46.4% | 44.3% | 40.5% | 39.7% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sinosoft Technology Group Ltd ($1297) | 47.0% | 55.5% | 62.6% | 54.9% | 57.2% |
| International Entertainment Corp ($1009) | 67.4% | 235.1% | 50.8% | 64.0% | 54.9% |
| Microsoft Corp ($4338) | 42.8% | 42.8% | 33.5% | 39.2% | 38.0% |
| Kingdee International Software Group Co Ltd ($268) | 30.8% | 19.5% | 7.8% | 33.2% | 37.2% |
| Boyaa Interactive International Ltd ($434) | 47.8% | 38.9% | 38.5% | 25.8% | 30.7% |
| |
|---|
| Median (26 companies) | -0.6% | 1.9% | 2.2% | 7.9% | 5.4% |
|---|
| TravelSky Technology Ltd ($696) | 45.6% | 43.3% | 38.1% | 35.8% | 31.9% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| China Eco-Farming Ltd ($8166) | 47.4% | 0.3% | 0.6% | 0.7% | 18.1% |
| Kingsoft Corp Ltd ($3888) | 6.0% | 6.8% | 4.3% | 3.8% | 14.3% |
| Sing Lee Software Group Ltd ($8076) | 13.4% | 19.4% | 3.3% | 0.2% | 14.0% |
| Epicurean and Co Ltd ($8213) | 0.5% | 18.7% | 25.3% | 10.4% | 10.3% |
| Aurum Pacific China Group Ltd ($8148) | 4.8% | 0.0% | | 2.9% | 7.5% |
| |
|---|
| Median (25 companies) | 1.7% | 1.8% | 1.2% | 2.1% | 2.6% |
|---|
| TravelSky Technology Ltd ($696) | 76.8% | 5.8% | 8.9% | 21.7% | 18.1% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Microsoft Corp ($4338) | 48.1% | 43.4% | 28.6% | 30.3% | 26.2% |
| Sinosoft Technology Group Ltd ($1297) | | 31.6% | 34.0% | 21.9% | 20.2% |
| Boyaa Interactive International Ltd ($434) | | 100.4% | 75.3% | 21.3% | 20.0% |
| ITE Holdings Ltd ($8092) | 3.3% | -19.6% | -15.0% | 10.6% | 16.8% |
| Beijing Beida Jade Bird Universal Sci-Tech Co Ltd ($8095) | 5.8% | 5.6% | 8.9% | 10.7% | 11.0% |
| |
|---|
| Median (26 companies) | -5.0% | -3.7% | -3.6% | -1.0% | -2.4% |
|---|
| TravelSky Technology Ltd ($696) | 15.1% | 16.2% | 15.0% | 13.8% | 12.5% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | | 346.1x |
| Epicurean and Co Ltd ($8213) | | 2.9x | 2.3x | 4.7x | 12.3x |
| Sing Lee Software Group Ltd ($8076) | | | | | 6.2x |
| China Technology Solar Power Holdings Ltd ($8111) | | | | 7.4x | 3.3x |
| Kingdee International Software Group Co Ltd ($268) | -1.3x | -0.1x | 5.0x | 1.1x | 0.5x |
| |
|---|
| Median (16 companies) | -0.9x | -1.0x | -1.0x | -1.3x | -0.7x |
|---|
| TravelSky Technology Ltd ($696) | -0.6x | -0.6x | -1.1x | -1.5x | -1.2x |
