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Eye on China Fiber Optic Network System Group Ltd with its long history of healthy growth

06/04/2015 • About China Fiber Optic Network System Group Ltd ($3777) • By InTwits

Pay attention to China Fiber Optic Network System Group Ltd as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


China Fiber Optic Network System Group Ltd showed fast growth in the last financial year. China Fiber Optic Network System Group Ltd's revenue surged on 24.4% in FY2014. EBITDA also increased considerably: 26.8% for the same period.

If we look for the longer period the company showed fast revenue growth of 20.7% from 2011 to 2014 annualy. EBITDA surged on 20.9% from 2011 to 2014 annualy.

China Fiber Optic Network System Group Ltd ($3777) financials for the last 5 years

mln. CNY 2010 2011 2012 2013 2014
Revenue8381,2571,4941,7762,209
Revenue growth, %50.0%18.9%18.8%24.4%
Gross margin, %32.0%31.8%28.5%29.0%30.7%
SG&A, %4.50%4.86%5.72%
EBITDA257364421507643
EBITDA growth, %41.7%15.6%20.5%26.8%
EBITDA margin, %30.6%29.0%28.1%28.5%29.1%
Net Income182253272333425
Net Income margin, % 21.7%20.1%18.2%18.7%19.2%
 
CAPEX13630872289290
CAPEX/Revenue, %16.3%24.5%4.80%16.3%13.1%
Debt274498416691694
Cash128550796769851
Net Debt/EBITDA0.6x-0.1x-0.9x-0.2x-0.2x
 
ROIC, %25.6%23.1%18.8%17.6%16.6%
ROE, %29.7%26.7%20.1%18.9%17.1%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. China Fiber Optic Network System Group Ltd showed small growth in EBITDA margin of 0.600 pp from 28.5% to 29.1% in 2014. If we look for the longer period EBITDA margin showed almost no change on 0.100 pp from 29% in 2011 to 29.1% in 2014.

China Fiber Optic Network System Group Ltd shows attractive ROIC at 16.6% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 23.1% in FY2011. It's average ROIC for the last three years was 17.7%.

The company's Net Income margin increased slightly on 0.500 pp from 18.7% to 19.2% in 2014. If we look for the longer period Net Income margin decreased slightly on 0.900 pp from 20.1% in 2011 to 19.2% in 2014.

China Fiber Optic Network System Group Ltd operates at ROE of 17.1%. It's average level of ROE for the last three years was 18.7%.

Capital expenditures (CAPEX)


To fuel this fast growth the company had to invest in CAPEX.China Fiber Optic Network System Group Ltd's CAPEX/Revenue was 13.1% in FY2014. The company's CAPEX/Revenue dropped on 11.4 pp from 24.5% in 2011 to 13.1% in 2014. For the last three years the average CAPEX/Revenue was 11.4%.

Leverage (Debt)


Having such a fast growth profile the company keeps negative net debt at -0.2x Net Debt/EBITDA. If we look for the longer period leverage surged on 0.10x from -0.15x in 2011 to -0.24x in 2014.

Peers in Telecommunications


Below you can find China Fiber Optic Network System Group Ltd benchmarking vs. other companies in Telecommunications 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
China Energine International Holdings Ltd ($1185)-41.8%143.6%34.3%103.1%
MOBI Development Co Ltd ($947)-23.4%-13.8%29.1%85.6%
Vodatel Networks Holdings Ltd ($8033)34.4%-5.9%-4.6%81.7%
Gold Tat Group International Ltd ($8266)34.7%29.4%1,582.2%77.0%
Great World Co Holdings Ltd ($8003)-99.1%1,651.8%-81.7%61.9%
 
Median (42 companies)7.9%11.4%8.3%8.3%
China Fiber Optic Network System Group Ltd ($3777)50.0%18.9%18.8%24.4%


Top companies by Gross margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Synertone Communication Corp ($1613)59.2%65.4%68.1%64.1%70.5%
Zhi Cheng Holdings Ltd ($8130)29.1%61.6%45.9%41.0%64.0%
APT Satellite Holdings Ltd ($1045)48.7%52.3%58.7%64.1%62.5%
Hong Kong Television Network Ltd ($1137)87.6%-59.6%-101.3%59.7%
Cisco Systems Inc ($4333)64.0%61.4%61.2%60.6%58.9%
 
Median (36 companies)26.8%33.1%22.1%27.2%28.1%
China Fiber Optic Network System Group Ltd ($3777)32.0%31.8%28.5%29.0%30.7%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Asia Satellite Telecommunications Holdings Ltd ($1135)78.5%83.5%86.5%85.8%81.6%
APT Satellite Holdings Ltd ($1045)83.3%76.7%81.0%78.9%77.5%
Synertone Communication Corp ($1613)44.9%49.5%44.9%48.5%49.4%
PCCW Ltd ($8)37.3%31.4%32.0%31.9%39.2%
China Mobile Ltd ($941)48.9%47.1%43.7%38.2%36.9%
 
Median (42 companies)12.9%14.0%11.1%6.8%8.4%
China Fiber Optic Network System Group Ltd ($3777)30.6%29.0%28.1%28.5%29.1%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Hong Kong Television Network Ltd ($1137)22.2%12,435.9%504.9%1,283.5%
Asia Satellite Telecommunications Holdings Ltd ($1135)41.3%61.8%93.8%71.7%75.0%
Hanny Holdings Ltd ($275)2.8%80.8%19.8%11.6%28.3%
APT Satellite Holdings Ltd ($1045)161.8%155.2%74.3%2.5%27.2%
China Electronics Corp Holdings Co Ltd ($85)2.2%1.5%1.8%8.3%27.1%
 
Median (42 companies)3.3%3.7%2.5%3.8%4.1%
China Fiber Optic Network System Group Ltd ($3777)16.3%24.5%4.8%16.3%13.1%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
VTech Holdings Ltd ($303)46.3%40.5%37.6%39.5%40.0%
TCL Communication Technology Holdings Ltd ($2618)10.8%6.4%-1.6%6.0%17.2%
China U-Ton Holdings Ltd ($6168)69.5%35.7%25.0%16.2%
ETS Group Ltd ($8031)27.1%41.8%21.5%31.9%14.5%
China Mobile Ltd ($941)26.2%23.5%21.4%17.6%14.0%
 
Median (42 companies)10.8%6.9%5.2%6.0%7.2%
China Fiber Optic Network System Group Ltd ($3777)25.6%23.1%18.8%17.6%16.6%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
China Energine International Holdings Ltd ($1185)13.3x
China Electronics Corp Holdings Co Ltd ($85)-3.2x-2.1x-2.0x-1.3x12.5x
Synertone Communication Corp ($1613)0.2x-0.3x-0.4x-2.2x4.8x
CITIC Telecom International Holdings Ltd ($1883)-0.5x-0.3x-0.2x3.5x3.4x
HKT Trust & HKT Ltd ($6823)4.0x2.9x2.8x2.7x3.2x
 
Median (30 companies)-0.2x-0.1x-0.2x-0.0x0.7x
China Fiber Optic Network System Group Ltd ($3777)0.6x-0.1x-0.9x-0.2x-0.2x