SmarTone Telecommunications Holdings Ltd's growth is outstanding: revenue grew 23.3% annually over the last three years
08/09/2015 • About SmarTone Telecommunications Holdings Ltd (
$315) • By InTwits
Pay attention to SmarTone Telecommunications Holdings Ltd as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
SmarTone Telecommunications Holdings Ltd showed growth in the last financial year. SmarTone Telecommunications Holdings Ltd's revenue surged on 40.9% in FY2015. In addition to revenue SmarTone Telecommunications Holdings Ltd also keeps delivering EBITDA growth. It was 13.0% in FY2015
If we look for the longer period the company showed fast revenue growth of 23.3% from FY2012 to FY2015 annualy. EBITDA decreased slightly on 0.714% from FY2012 to FY2015 annualy.
SmarTone Telecommunications Holdings Ltd ($315) financials for the last 5 years
| mln. HKD | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Revenue | 6,631 | 9,952 | 12,067 | 13,244 | 18,659 |
|---|
| Revenue growth, % | | 50.1% | 21.2% | 9.8% | 40.9% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 2,136 | 2,984 | 2,994 | 2,586 | 2,921 |
|---|
| EBITDA growth, % | | 39.7% | 0.3% | -13.6% | 13.0% |
|---|
| EBITDA margin, % | 32.2% | 30.0% | 24.8% | 19.5% | 15.7% |
|---|
| Net Income | 754 | 1,023 | 843 | 537 | 935 |
|---|
| Net Income margin, % | 11.4% | 10.3% | 6.99% | 4.06% | 5.01% |
|---|
| |
| CAPEX | 680 | 809 | 1,255 | 824 | 757 |
|---|
| CAPEX/Revenue, % | 10.3% | 8.13% | 10.4% | 6.22% | 4.06% |
|---|
| Debt | 550 | 66 | 2,595 | 2,840 | 2,969 |
|---|
| Cash | 820 | 1,268 | 646 | 1,837 | 2,304 |
|---|
| Net Debt/EBITDA | -0.1x | -0.4x | 0.7x | 0.4x | 0.2x |
|---|
| |
| ROIC, % | 30.2% | 37.2% | 23.1% | 12.8% | 17.7% |
|---|
| ROE, % | 27.0% | 34.2% | 27.7% | 17.4% | 26.6% |
|---|
Profitability and return on investment
EBITDA margin declined slightly from 19.5% in FY2014 to 15.7% in FY2015. In the longer period SmarTone Telecommunications Holdings Ltd's EBITDA margin dropped on 14.3 pp from 30% in FY2012 to 15.7% in FY2015.
We call SmarTone Telecommunications Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 17.7%. Three years ago it was considerably higher at 37.2%. It's average ROIC for the last three years was 17.8%.
The company showed fast Net Income margin growth of 0.900 pp from 4.10% to 5% in FY2015. If we look for the longer period Net Income margin dropped on 5.30 pp from 10.3% in FY2012 to 5% in FY2015.
SmarTone Telecommunications Holdings Ltd operates at ROE of 26.6%. For the last three years the average ROE was 23.9%.
Capital expenditures (CAPEX)
In FY2015 SmarTone Telecommunications Holdings Ltd had CAPEX/Revenue of 4.06%. SmarTone Telecommunications Holdings Ltd showed big decline in CAPEX/Revenue of 4.07 pp from 8.13% in FY2012 to 4.06% in FY2015. For the last three years the average CAPEX/Revenue was 6.89%.
Leverage (Debt)
The company has low debt level at 0.2x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage surged on 0.63x from -0.40x in FY2012 to 0.23x in FY2015.
Valuation vs. comparable companies
The company trades at 5.6x EV/EBITDA which is 83.2% lower than 33.2x Telecommunications industry avearge calculated based on 59 companies. The market closed today at 16.7x P/E for SmarTone Telecommunications Holdings Ltd which is 72.6% lower than 61.1x Telecommunications peer group avearge calculated on the basis of 22 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 7.5x EV/(EBITDA-CAPEX) for SmarTone Telecommunications Holdings Ltd which is 62.5% higher than 4.6x Telecommunications peer group avearge calculated on the basis of 17 companies.
Peers in Telecommunications
Below we provide SmarTone Telecommunications Holdings Ltd benchmarking against other companies in Telecommunications 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 |
|---|
| 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) | | 29.4% | 1,582.2% | 77.0% | 26.5% |
| Great World Co Holdings Ltd ($8003) | | 1,651.8% | -81.7% | 61.9% | -3.7% |
| |
|---|
| Median (49 companies) | 8.5% | 8.9% | 7.9% | 6.9% | 20.6% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | | 50.1% | 21.2% | 9.8% | 40.9% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Synertone Communication Corp ($1613) | 65.4% | 68.1% | 64.1% | 70.5% | 50.3% |
| Zhi Cheng Holdings Ltd ($8130) | 61.6% | 45.9% | 41.0% | 64.0% | 19.6% |
| APT Satellite Holdings Ltd ($1045) | 52.3% | 58.7% | 64.1% | 62.5% | |
| Hong Kong Television Network Ltd ($1137) | | -59.6% | -101.3% | 59.7% | |
| Cisco Systems Inc ($4333) | 61.4% | 61.2% | 60.6% | 58.9% | 60.4% |
| |
|---|
| Median (44 companies) | 31.8% | 26.8% | 29.0% | 28.1% | 46.8% |
|---|
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 83.5% | 86.5% | 85.8% | 81.6% | |
| APT Satellite Holdings Ltd ($1045) | 76.7% | 81.0% | 78.9% | 77.5% | |
| Synertone Communication Corp ($1613) | 49.5% | 44.9% | 48.5% | 49.4% | 51.5% |
| PCCW Ltd ($8) | 31.4% | 32.0% | 31.9% | 39.2% | |
| China Mobile Ltd ($941) | 47.1% | 43.7% | 38.2% | 36.9% | |
| |
|---|
| Median (49 companies) | 14.2% | 9.9% | 6.7% | 7.9% | -0.4% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 32.2% | 30.0% | 24.8% | 19.5% | 15.7% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 12,435.9% | 504.9% | 1,283.5% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 61.8% | 93.8% | 71.7% | 75.0% | |
| Hanny Holdings Ltd ($275) | 80.8% | 19.8% | 11.6% | 28.3% | 0.2% |
| APT Satellite Holdings Ltd ($1045) | 155.2% | 74.3% | 2.5% | 27.2% | |
| China Electronics Corp Holdings Co Ltd ($85) | 1.5% | 1.8% | 8.3% | 27.1% | |
| |
|---|
| Median (49 companies) | 3.0% | 2.5% | 3.7% | 3.6% | 1.6% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 10.3% | 8.1% | 10.4% | 6.2% | 4.1% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
| Telecom Service One Holdings Ltd ($8145) | | 95.0% | 5.4% | 26.7% | 39.8% |
| TCL Communication Technology Holdings Ltd ($2618) | 6.4% | -1.6% | 6.0% | 17.2% | |
| China Fiber Optic Network System Group Ltd ($3777) | 23.1% | 18.8% | 17.6% | 16.6% | |
| China U-Ton Holdings Ltd ($6168) | 69.5% | 35.7% | 25.0% | 16.2% | |
| |
|---|
| Median (49 companies) | 6.9% | 5.6% | 5.6% | 5.8% | -1.6% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 30.2% | 37.2% | 23.1% | 12.8% | 17.7% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| CCT Land Holdings Ltd ($261) | | 10.1x | 23.8x | 48.4x | |
| China Energine International Holdings Ltd ($1185) | | | | 13.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.1x | -2.0x | -1.3x | 12.5x | |
| China All Access Holdings Ltd ($633) | -1.0x | 0.9x | 1.8x | 5.2x | |
| Synertone Communication Corp ($1613) | -0.3x | -0.4x | -2.2x | 4.8x | 2.5x |
| |
|---|
| Median (35 companies) | -0.2x | -0.1x | -0.0x | 0.9x | 0.7x |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | -0.1x | -0.4x | 0.7x | 0.4x | 0.2x |
