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Tysan Holdings Ltd demonstrated fast growth in recent years. Will the growth continue?

18/06/2015 • About Tysan Holdings Ltd ($687) • By InTwits

Tysan Holdings Ltd is a fast-growing stock in Engineering&Construction industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Tysan Holdings Ltd showed growth in the last financial year. The company's revenue surged on 38.0% in FY2015. In addition to revenue Tysan Holdings Ltd also keeps delivering EBITDA growth. It was 46.5% in FY2015

If we look for the longer period the company showed fast revenue growth of 27.2% from FY2012 to FY2015 annualy. EBITDA surged on 66.3% from FY2012 to FY2015 annualy.

Tysan Holdings Ltd ($687) financials for the last 5 years

mln. HKD FY2011 FY2012 FY2013 FY2014 FY2015
Revenue2,6602,3483,7673,5044,836
Revenue growth, %-11.7%60.4%-7.0%38.0%
Gross margin, %22.3%9.19%11.7%18.4%17.8%
SG&A, %3.22%2.34%4.03%1.85%
EBITDA587186432583854
EBITDA growth, %-68.4%132.5%34.9%46.5%
EBITDA margin, %22.1%7.91%11.5%16.6%17.7%
Net Income37398348270399
Net Income margin, % 14.0%4.17%9.25%7.71%8.26%
 
CAPEX853047562133
CAPEX/Revenue, %3.19%12.9%2.00%1.76%2.75%
Debt461598836586368
Cash9914841,0181,5481,287
Net Debt/EBITDA-0.9x0.6x-0.4x-1.7x-1.1x
 
ROIC, %16.1%4.1%10.6%14.0%21.0%
ROE, %22.1%5.0%16.0%11.2%15.3%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. The company's EBITDA margin increased on 1.10 pp from 16.6% to 17.7% in FY2015. In the longer period Tysan Holdings Ltd's EBITDA margin surged on 9.80 pp from 7.90% in FY2012 to 17.7% in FY2015.

We call Tysan Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 21.0%. During the last three years it surged - it was 4.09% in FY2012. It's average ROIC for the last three years was 15.2%.

The company showed Net Income margin growth of 0.600 pp from 7.70% to 8.30% in FY2015. In the longer period Net Income margin surged on 4.10 pp from 4.20% in FY2012 to 8.30% in FY2015.

Tysan Holdings Ltd operates at ROE of 15.3%. It's average level of ROE for the last three years was 14.2%.

Capital expenditures (CAPEX)


Tysan Holdings Ltd's CAPEX/Revenue was 2.75% in FY2015. CAPEX/Revenue dropped on 10.2 pp from 12.9% in FY2012 to 2.75% in FY2015. For the last three years the average CAPEX/Revenue was 2.17%.

Leverage (Debt)


Having such a fast growth profile Tysan Holdings Ltd keeps negative net debt at -1.1x Net Debt/EBITDA. If we look for the longer period the company showed big decline in leverage of 1.69x from 0.61x in FY2012 to -1.08x in FY2015.

Valuation vs. comparable companies


At the end of trading day today Tysan Holdings Ltd traded at 2.8x EV/EBITDA which is 91.1% lower than 31.3x Engineering&Construction peer group avearge calculated on the basis of 55 companies. The company trades at 8.3x P/E which is 33.4% lower than 12.4x Engineering&Construction industry avearge calculated based on 16 companies.

Peers in Engineering&Construction


Below we provide Tysan Holdings Ltd benchmarking against other companies in Engineering&Construction 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, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Richly Field China Development Ltd ($313)-45.0%464.2%
Junefield Department Store Group Ltd ($758)22.9%-20.3%-24.9%126.6%
CNQC International Holdings Ltd ($1240)401.9%21.6%91.0%103.7%
Wison Engineering Services Co Ltd ($2236)1.2%-2.9%-24.9%90.3%
China Resources and Transportation Group Ltd ($269)-37.0%939.8%3,196.3%87.9%
 
Median (38 companies)11.1%11.5%19.2%11.3%44.4%
Tysan Holdings Ltd ($687)-11.7%60.4%-7.0%38.0%


Top companies by Gross margin, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Huayu Expressway Group Ltd ($1823)2.2%43.6%65.6%64.0%
HNA Infrastructure Company Ltd ($357)61.6%66.4%62.1%62.4%
Freetech Road Recycling Technology Holdings Ltd ($6888)50.1%54.1%54.3%41.5%
Grand Ming Group Holdings Ltd ($1271)20.4%11.0%18.1%35.7%19.7%
China Saite Group Co Ltd ($153)29.4%32.1%33.7%29.8%
 
Median (33 companies)11.0%12.4%12.1%11.9%13.0%
Tysan Holdings Ltd ($687)22.3%9.2%11.7%18.4%17.8%


Top companies by EBITDA margin, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Huayu Expressway Group Ltd ($1823)-0.5%46.2%73.8%77.1%
HNA Infrastructure Company Ltd ($357)60.0%62.8%63.7%62.8%
Beijing Capital International Airport Co Ltd ($694)55.1%53.4%52.9%50.3%
Cheung Kong Infrastructure Holdings Ltd ($1038)39.8%31.2%20.6%36.2%
Grand Ming Group Holdings Ltd ($1271)17.5%10.0%15.8%31.0%19.0%
 
Median (39 companies)8.5%9.2%7.1%5.7%10.6%
Tysan Holdings Ltd ($687)22.1%7.9%11.5%16.6%17.7%


Top companies by CAPEX/Revenue, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
HNA Infrastructure Company Ltd ($357)43.3%36.8%5.7%85.4%
PYI Corp Ltd ($498)6.6%3.7%4.2%24.5%
Shun Cheong Holdings ($650)7.2%16.4%8.0%23.9%
Freetech Road Recycling Technology Holdings Ltd ($6888)6.1%4.2%7.7%20.2%
KFM Kingdom Holdings Ltd ($3816)6.5%4.6%11.5%14.9%
 
Median (39 companies)4.7%2.5%3.5%2.6%17.9%
Tysan Holdings Ltd ($687)3.2%12.9%2.0%1.8%2.7%


Top companies by ROIC, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Chun Sing Engineering Holdings Ltd ($2277)98.3%54.9%
CNQC International Holdings Ltd ($1240)23.1%12.2%22.3%40.4%
China Saite Group Co Ltd ($153)46.3%64.0%53.2%35.3%
China Machinery Engineering Corp ($1829)35.5%24.9%20.4%16.0%
China State Construction International Holdings Ltd ($3311)9.9%10.2%10.7%12.2%
 
Median (40 companies)6.9%5.5%4.6%3.3%-4.1%
Tysan Holdings Ltd ($687)16.1%4.1%10.6%14.0%21.0%


Top companies by Net Debt / EBITDA

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
China Resources and Transportation Group Ltd ($269)66.7x
CNC Holdings Ltd ($8356)-0.7x22.0x21.9x24.3x
Deson Development International Holdings ($262)3.1x3.8x4.9x13.7x
Chun Wo Development Holdings Ltd ($711)14.3x8.1x12.6x
Hsin Chong Construction Group Ltd ($404)4.3x1.8x8.0x10.2x
 
Median (32 companies)0.8x2.4x3.5x3.1x15.1x
Tysan Holdings Ltd ($687)-0.9x0.6x-0.4x-1.7x-1.1x