The growth of China Harmony Auto Holding Ltd is hard to miss
03/04/2015 • About China Harmony Auto Holding Ltd (
$3836) • By InTwits
China Harmony Auto Holding Ltd is an attractive growth stock in Retail industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
China Harmony Auto Holding Ltd showed fast growth in the last financial year. The company's revenue surged on 22.4% in FY2014. Together with revenue growth China Harmony Auto Holding Ltd also managed to keep EBITDA growth. EBITDA grew 25.2% for the same period.
If we look for the longer period China Harmony Auto Holding Ltd showed fast revenue growth of 49.8% from 2011 to 2014 annualy. EBITDA surged on 41.3% from 2011 to 2014 annualy.
China Harmony Auto Holding Ltd ($3836) financials for the last 5 years
| mln. | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 1,801 | 3,032 | 5,657 | 8,333 | 10,196 |
|---|
| Revenue growth, % | | 68.3% | 86.6% | 47.3% | 22.4% |
|---|
| Gross margin, % | 12.8% | 13.8% | 11.7% | 12.0% | 10.7% |
|---|
| SG&A, % | 4.10% | 3.98% | 4.78% | 6.53% | 6.27% |
|---|
| EBITDA | 166 | 319 | 473 | 720 | 901 |
|---|
| EBITDA growth, % | | 92.0% | 48.3% | 52.1% | 25.2% |
|---|
| EBITDA margin, % | 9.23% | 10.5% | 8.37% | 8.64% | 8.84% |
|---|
| Net Income | 113 | 220 | 351 | 404 | 544 |
|---|
| Net Income margin, % | 6.26% | 7.27% | 6.20% | 4.85% | 5.34% |
|---|
| |
| CAPEX | 56 | 175 | 877 | 664 | 1,028 |
|---|
| CAPEX/Revenue, % | 3.13% | 5.76% | 15.5% | 7.97% | 10.1% |
|---|
| Debt | 390 | 852 | 2,056 | 2,669 | 3,001 |
|---|
| Cash | 193 | 179 | 343 | 784 | 831 |
|---|
| Net Debt/EBITDA | 1.2x | 2.1x | 3.6x | 2.6x | 2.4x |
|---|
| |
| ROIC, % | | 23.1% | 18.3% | 15.8% | 13.8% |
|---|
| ROE, % | | 37.0% | 48.7% | 28.8% | 22.0% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company's EBITDA margin increased slightly on 0.200 pp from 8.60% to 8.80% in 2014. In the last 3 years China Harmony Auto Holding Ltd showed big decline in EBITDA margin of 1.70 pp from 10.5% in 2011 to 8.80% in 2014.
China Harmony Auto Holding Ltd shows attractive ROIC at 13.8% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 23.1% in FY2011. Average ROIC for the last three years was 16.0%.
Net Income margin surged on 0.500 pp from 4.80% to 5.30% in 2014. If we look for the longer period China Harmony Auto Holding Ltd showed big decline in Net Income margin of 2 pp from 7.30% in 2011 to 5.30% in 2014.
China Harmony Auto Holding Ltd operates at ROE of 22.0%. It's average ROE for the last three years was 33.1%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2014 China Harmony Auto Holding Ltd had CAPEX/Revenue of 10.1%. China Harmony Auto Holding Ltd's CAPEX/Revenue surged on 4.31 pp from 5.76% in 2011 to 10.1% in 2014. For the last three years the average CAPEX/Revenue was 11.2%.
Leverage (Debt)
Having such a fast growth profile the company keeps medium debt level at 2.4x Net Debt/EBITDA. In the longer period the company's leverage surged on 0.30x from 2.11x in 2011 to 2.41x in 2014.
Peers in Retail
Below you can find China Harmony Auto Holding Ltd benchmarking vs. other companies in Retail industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Ming Fung Jewellery Group Ltd ($860) | | 21.9% | 3.3% | -14.9% | 54.3% |
| Merry Garden Holdings Ltd ($1237) | | 53.9% | 37.1% | 12.8% | 47.6% |
| Luk Fook Holdings International Ltd ($590) | | 50.2% | 47.2% | 12.6% | 43.3% |
| NewOcean Energy Holdings Ltd ($342) | | 19.3% | 23.1% | 15.9% | 36.0% |
| Tsui Wah Holdings Ltd ($1314) | | 35.9% | 27.5% | 42.2% | 35.9% |
| |
|---|
| Median (92 companies) | | 20.8% | 10.2% | 5.7% | 2.9% |
|---|
| China Harmony Auto Holding Ltd ($3836) | | 68.3% | 86.6% | 47.3% | 22.4% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.0% | 77.5% | 91.1% | 99.4% | 99.5% |
| Modern Beauty Salon Holdings Ltd ($919) | 96.4% | 97.3% | 97.4% | 95.9% | 96.8% |
| Vongroup Ltd ($318) | | | | | 95.1% |
| Nanjing Sinolife United Co Ltd ($3332) | 79.7% | 80.6% | 86.5% | 89.3% | 90.9% |
| Embry Holdings Ltd ($1388) | 80.5% | 82.3% | 81.2% | 80.4% | 82.3% |
| |
|---|
| Median (84 companies) | 42.7% | 42.3% | 39.8% | 41.5% | 42.0% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 12.8% | 13.8% | 11.7% | 12.0% | 10.7% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Maoye International Holdings Ltd ($848) | 50.9% | 45.5% | 47.4% | 46.3% | 73.2% |
| China Dongxiang Group Co Ltd ($3818) | 42.6% | 5.6% | 6.0% | 5.6% | 58.3% |
| Nanjing Sinolife United Co Ltd ($3332) | 34.8% | 47.8% | 51.6% | 56.9% | 54.4% |
| Lifestyle International Holdings Ltd ($1212) | 42.9% | 49.6% | 47.5% | 47.0% | 44.7% |
| Golden Eagle Retail Group Ltd ($3308) | 55.9% | 52.1% | 48.5% | 47.3% | 42.8% |
| |
|---|
| Median (92 companies) | 12.8% | 13.4% | 11.3% | 7.1% | 8.9% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 9.2% | 10.5% | 8.4% | 8.6% | 8.8% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Intime Retail Group Co Ltd ($1833) | 51.3% | 58.4% | 28.3% | 55.4% | 37.0% |
| Future Bright Holdings Ltd ($703) | 13.6% | 6.2% | 2.6% | 3.7% | 36.8% |
| Sage International Group Ltd ($8082) | | 20.4% | 236.6% | 28.2% | 35.4% |
| Maoye International Holdings Ltd ($848) | 46.1% | 30.9% | 32.8% | 24.1% | 31.5% |
| Tsui Wah Holdings Ltd ($1314) | 3.4% | 5.2% | 8.3% | 9.3% | 30.5% |
| |
|---|
| Median (92 companies) | 3.1% | 3.9% | 4.0% | 3.6% | 3.4% |
|---|
| China Harmony Auto Holding Ltd ($3836) | 3.1% | 5.8% | 15.5% | 8.0% | 10.1% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | -24.3% | 48.1% | 50.7% | -4.6% | 81.3% |
| Starbucks Corp ($4337) | 35.2% | 36.4% | 36.4% | -6.0% | 52.8% |
| Sa Sa International Holdings Ltd ($178) | 39.2% | 45.7% | 53.5% | 52.7% | 49.0% |
| Coach Inc ($6388) | 73.9% | 82.0% | 82.3% | 68.7% | 45.0% |
| Nanjing Sinolife United Co Ltd ($3332) | | 57.4% | 67.3% | 68.1% | 32.2% |
| |
|---|
| Median (92 companies) | 16.0% | 17.2% | 12.3% | 7.2% | 8.3% |
|---|
| China Harmony Auto Holding Ltd ($3836) | | 23.1% | 18.3% | 15.8% | 13.8% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.7x | -0.8x | 0.6x | 4.0x | 9.3x |
| China Yongda Automobiles Services Holdings Ltd ($3669) | 2.2x | 3.3x | 3.4x | 4.7x | 5.5x |
| NewOcean Energy Holdings Ltd ($342) | 15.6x | 35.2x | 6.2x | 6.1x | 5.3x |
| Tse Sui Luen Jewellery International Ltd ($417) | -0.1x | 0.4x | 1.2x | 2.2x | 3.7x |
| Parkson Retail Group Ltd ($3368) | 1.2x | 0.4x | 0.8x | 2.3x | 3.6x |
| |
|---|
| Median (70 companies) | -0.7x | -0.9x | -0.6x | -0.9x | -0.3x |
|---|
| China Harmony Auto Holding Ltd ($3836) | 1.2x | 2.1x | 3.6x | 2.6x | 2.4x |
