Lee's Pharmaceutical Holdings Ltd's three year revenue growth was 33.7% and EBITDA growth was 32.9% per year
02/04/2015 • About Lee's Pharmaceutical Holdings Ltd (
$950) • By InTwits
Have you thought about Lee's Pharmaceutical 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
Lee's Pharmaceutical Holdings Ltd showed growth in the last financial year. The company's revenue surged on 37.1% in FY2014. EBITDA also increased considerably: 32.7% for the same period.
In the last 3 years Lee's Pharmaceutical Holdings Ltd showed fast revenue growth of 33.7% from 2011 to 2014 annualy. EBITDA surged on 32.9% from 2011 to 2014 annualy.
Lee's Pharmaceutical Holdings Ltd ($950) financials for the last 5 years
| mln. HKD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 256 | 400 | 534 | 697 | 955 |
|---|
| Revenue growth, % | | 56.2% | 33.7% | 30.4% | 37.1% |
|---|
| Gross margin, % | 69.8% | 73.0% | 71.3% | 72.2% | 70.2% |
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| SG&A, % | 42.4% | 48.4% | 45.4% | 43.2% | 42.8% |
|---|
| EBITDA | 78 | 109 | 147 | 194 | 257 |
|---|
| EBITDA growth, % | | 41.1% | 34.2% | 31.7% | 32.7% |
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| EBITDA margin, % | 30.3% | 27.4% | 27.5% | 27.8% | 26.9% |
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| Net Income | 58 | 84 | 114 | 150 | 193 |
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| Net Income margin, % | 22.7% | 21.0% | 21.3% | 21.6% | 20.2% |
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| |
| CAPEX | 7 | 34 | 99 | 146 | 68 |
|---|
| CAPEX/Revenue, % | 2.87% | 8.49% | 18.6% | 20.9% | 7.11% |
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| Debt | 18 | 19 | 32 | 70 | 52 |
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| Cash | 120 | 134 | 334 | 379 | 393 |
|---|
| Net Debt/EBITDA | -1.3x | -1.1x | -2.1x | -1.6x | -1.3x |
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| |
| ROIC, % | 31.8% | 31.3% | 26.1% | 22.0% | 22.4% |
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| ROE, % | 30.1% | 30.3% | 25.5% | 22.0% | 22.4% |
|---|
Profitability and return on investment
Despite revenue growth EBITDA margin declined slightly from 27.8% in FY2013 to 26.9% in FY2014. In the last 3 years the company's EBITDA margin decreased slightly on 0.500 pp from 27.4% in 2011 to 26.9% in 2014.
Lee's Pharmaceutical Holdings Ltd shows attractive ROIC at 22.4% for the last 12 months which assumes stable development model. Three years ago it was higher at 31.3%. For the last three years the average ROIC was 23.5%.
Net Income margin decreased on 1.40 pp from 21.6% to 20.2% in 2014. If we look for the longer period Lee's Pharmaceutical Holdings Ltd's Net Income margin decreased slightly on 0.800 pp from 21% in 2011 to 20.2% in 2014.
Lee's Pharmaceutical Holdings Ltd operates at ROE of 22.4%. It's average ROE for the last three years was 23.3%.
Capital expenditures (CAPEX)
To fuel this fast growth Lee's Pharmaceutical Holdings Ltd had to invest in CAPEX.The company's CAPEX/Revenue was 7.11% in FY2014. The company showed big decline in CAPEX/Revenue of 1.39 pp from 8.49% in 2011 to 7.11% in 2014. For the last three years the average CAPEX/Revenue was 15.5%.
Leverage (Debt)
The company has negative net debt at -1.3x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage surged on 0.27x from -1.06x in 2011 to -1.33x in 2014.
Valuation vs. comparable companies
The market closed today at 23.5x EV/EBITDA for Lee's Pharmaceutical Holdings Ltd which is 37.1% higher than 17.1x Pharmaceuticals peer group avearge calculated on the basis of 266 companies. The company trades at 33.0x P/E which is not surprisingly 28.6% higher than 25.7x Pharmaceuticals industry avearge calculated based on 24 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 31.9x EV/(EBITDA-CAPEX) which is higher vs. -3.4x Pharmaceuticals industry avearge calculated based on 20 companies.
Peers in Pharmaceuticals
Below we provide Lee's Pharmaceutical Holdings 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 (27 companies) | | 15.4% | 13.4% | 19.3% | 17.4% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | | 56.2% | 33.7% | 30.4% | 37.1% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Consun Pharmaceutical Group Ltd ($1681) | 79.0% | 75.5% | 75.7% | 79.1% | 78.3% |
| Sino Biopharmaceutical Ltd ($1177) | 80.8% | 78.5% | 78.5% | 77.5% | 76.4% |
| 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% |
| |
|---|
| Median (25 companies) | 30.8% | 35.9% | 37.4% | 35.3% | 43.7% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 69.8% | 73.0% | 71.3% | 72.2% | 70.2% |
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% |
| Pak Fah Yeow International Ltd ($239) | 34.6% | 28.7% | 33.9% | 28.4% | 52.4% |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 18.2% | 18.8% | 20.3% | 23.8% | 38.5% |
| Consun Pharmaceutical Group Ltd ($1681) | 37.3% | 39.6% | 41.2% | 38.3% | 34.4% |
| Tianda Pharmaceuticals Ltd ($455) | 57.7% | 66.9% | 77.7% | 42.0% | 33.2% |
| |
|---|
| Median (26 companies) | 17.0% | 17.2% | 16.7% | 18.2% | 19.3% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 30.3% | 27.4% | 27.5% | 27.8% | 26.9% |
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 Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 4.8% | 17.4% | 38.7% | 34.1% | 13.7% |
| |
|---|
| Median (26 companies) | 5.8% | 5.7% | 5.9% | 6.7% | 7.5% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 2.9% | 8.5% | 18.6% | 20.9% | 7.1% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 27.8% | 19.9% | 26.2% | 26.8% | 26.5% |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | 43.8% | 34.4% | 27.6% | 22.2% | 19.9% |
| CSPC Pharmaceutical Group Ltd ($1093) | 13.9% | 9.9% | 14.5% | 12.8% | 18.1% |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 25.0% | 17.7% | 12.6% | 14.0% | 17.8% |
| China Pioneer Pharma Holdings Ltd ($1345) | | 27.4% | 34.4% | 25.1% | 17.2% |
| |
|---|
| Median (27 companies) | 10.4% | 8.7% | 10.8% | 7.8% | 9.3% |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | 31.8% | 31.3% | 26.1% | 22.0% | 22.4% |
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 Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 0.4x | 2.5x | 5.4x | 4.0x | 3.4x |
| Shanghai Fosun Pharmaceutical Group Co Ltd ($2196) | 5.7x | 2.4x | 0.8x | 1.4x | 2.2x |
| Sinopharm Group Co Ltd ($1099) | -1.5x | 0.2x | 1.2x | 1.6x | 1.6x |
| China Pioneer Pharma Holdings Ltd ($1345) | 0.5x | 2.3x | 1.8x | -1.0x | 1.2x |
| |
|---|
| Median (21 companies) | -0.8x | -0.2x | 0.0x | 0.0x | -0.3x |
|---|
| Lee's Pharmaceutical Holdings Ltd ($950) | -1.3x | -1.1x | -2.1x | -1.6x | -1.3x |
