Beijing Tong Ren Tang Chinese Medicine Co Ltd demonstrates fast growth in fundamentals
18/03/2016 • About Beijing Tong Ren Tang Chinese Medicine Co Ltd (
$8138) • By InTwits
Beijing Tong Ren Tang Chinese Medicine Co Ltd is an attractive growth stock in Pharmaceuticals industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Beijing Tong Ren Tang Chinese Medicine Co Ltd showed fast growth in the last financial year. The company's revenue surged on 27.5% in FY2015. EBITDA also increased considerably: 31.7% for the same period.
If we look for the longer period the company showed fast revenue growth of 42.8% from 2012 to 2015 annualy. EBITDA surged on 51.3% from 2012 to 2015 annualy.
Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) financials for the last 5 years
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 197 | 333 | 614 | 761 | 970 |
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| Revenue growth, % | | 69.3% | 84.4% | 24.0% | 27.5% |
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| Gross margin, % | 67.0% | 70.9% | 68.4% | 71.4% | 70.2% |
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| SG&A, % | 11.3% | 10.7% | 10.7% | 10.3% | 23.9% |
|---|
| EBITDA | 58 | 138 | 279 | 362 | 476 |
|---|
| EBITDA growth, % | | 135.5% | 102.8% | 29.6% | 31.7% |
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| EBITDA margin, % | 29.7% | 41.3% | 45.4% | 47.5% | 49.1% |
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| Net Income | 59 | 156 | 220 | 287 | 354 |
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| Net Income margin, % | 29.9% | 46.8% | 35.8% | 37.7% | 36.5% |
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| |
| CAPEX | 62 | 58 | 123 | 69 | 26 |
|---|
| CAPEX/Revenue, % | 31.6% | 17.4% | 20.1% | 9.08% | 2.70% |
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| Debt | 0 | 0 | 0 | 0 | 1 |
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| Cash | 152 | 228 | 454 | 563 | 760 |
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| Net Debt/EBITDA | -2.6x | -1.7x | -1.6x | -1.6x | -1.6x |
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| |
| ROIC, % | | 25.3% | 27.5% | 23.8% | 25.9% |
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| ROE, % | | 37.3% | 24.9% | 20.8% | 21.5% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Beijing Tong Ren Tang Chinese Medicine Co Ltd showed small growth in EBITDA margin of 1.60 pp from 47.5% to 49.1% in 2015. If we look for the longer period Beijing Tong Ren Tang Chinese Medicine Co Ltd's EBITDA margin surged on 7.80 pp from 41.3% in 2012 to 49.1% in 2015.
Beijing Tong Ren Tang Chinese Medicine Co Ltd shows attractive ROIC at 25.9% for the last 12 months which assumes stable development model. During the last three years it increased slightly - it was 25.3% in FY2012. It's average ROIC for the last three years was 25.7%.
Beijing Tong Ren Tang Chinese Medicine Co Ltd's Net Income margin decreased slightly on 1.20 pp from 37.7% to 36.5% in 2015. In the longer period Beijing Tong Ren Tang Chinese Medicine Co Ltd's Net Income margin dropped on 10.3 pp from 46.8% in 2012 to 36.5% in 2015.
Beijing Tong Ren Tang Chinese Medicine Co Ltd operates at ROE of 21.5%. It's average level of ROE for the last three years was 22.4%.
Capital expenditures (CAPEX)
In FY2015 the company had CAPEX/Revenue of 2.70%. Beijing Tong Ren Tang Chinese Medicine Co Ltd's CAPEX/Revenue dropped on 14.7 pp from 17.4% in 2012 to 2.70% in 2015. It's average CAPEX/Revenue for the last three years was 10.6%.
Leverage (Debt)
Having such a fast growth profile the company keeps negative net debt at -1.6x Net Debt/EBITDA. If we look for the longer period the company's leverage surged on 0.06x from -1.66x in 2012 to -1.59x in 2015.
Valuation vs. comparable companies
The company trades at 12.6x EV/EBITDA which is 29% lower than 17.8x Pharmaceuticals industry avearge calculated based on 266 companies. The company trades at 19.1x P/E which is 64.6% lower than 54.1x Pharmaceuticals industry avearge calculated based on 22 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Beijing Tong Ren Tang Chinese Medicine Co Ltd traded at 13.4x EV/(EBITDA-CAPEX) which is 507% higher than 2.2x Pharmaceuticals peer group avearge calculated on the basis of 17 companies.
Peers in Pharmaceuticals
Below we provide Beijing Tong Ren Tang Chinese Medicine Co 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hong Kong Life Sciences and Technology Group Ltd ($8085) | | -10.0% | -45.4% | 1,636.5% | -52.9% |
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | -17.7% | 15.1% | -99.9% | 480.0% | |
| United Gene High-Tech Group Ltd ($399) | | -71.8% | -60.5% | 196.0% | 14.2% |
| 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 (40 companies) | 18.0% | 14.3% | 13.5% | 16.3% | -14.5% |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | | 69.3% | 84.4% | 24.0% | 27.5% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 83.9% | 82.0% | 81.5% | 80.9% | |
| Consun Pharmaceutical Group Ltd ($1681) | 75.5% | 75.7% | 79.1% | 78.3% | |
| Sino Biopharmaceutical Ltd ($1177) | 78.5% | 78.5% | 77.5% | 76.4% | |
| China Health Group Inc ($8225) | 38.7% | 43.4% | 33.6% | 76.2% | |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 72.6% | 65.2% | 77.9% | 72.1% | 68.7% |
| |
|---|
| Median (38 companies) | 38.0% | 39.1% | 37.2% | 48.7% | 39.6% |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 67.0% | 70.9% | 68.4% | 71.4% | 70.2% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Asia Resources Holdings Ltd ($899) | 3.5% | -80.8% | 25.1% | 113.7% | |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 48.4% | 38.8% | 65.4% | 70.9% | |
| Pak Fah Yeow International Ltd ($239) | 28.7% | 33.9% | 28.4% | 52.4% | |
| Real Nutriceutical Group Ltd ($2010) | 45.6% | 42.8% | 43.4% | 46.0% | |
| China Shineway Pharmaceutical Group Ltd ($2877) | 47.8% | 37.8% | 40.1% | 40.5% | |
| |
|---|
| Median (39 companies) | 17.4% | 19.6% | 18.8% | 20.8% | -7.3% |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 29.7% | 41.3% | 45.4% | 47.5% | 49.1% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 0.2% | | 11,100.0% | 103.4% | |
| Extrawell Pharmaceutical Holdings Ltd ($858) | 5.7% | 1.7% | 20.6% | 92.4% | 3.6% |
| Asia Resources Holdings Ltd ($899) | 12.2% | 4.4% | 8.1% | 92.0% | |
| Lijun International Pharmaceutical Holding Co Ltd ($2005) | 19.5% | 16.8% | 52.4% | 39.6% | |
| Hao Wen Holdings Ltd ($8019) | 6.4% | 30.0% | 2.3% | 38.2% | |
| |
|---|
| Median (39 companies) | 10.3% | 8.3% | 8.1% | 7.4% | 3.6% |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 31.6% | 17.4% | 20.1% | 9.1% | 2.7% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 18.5% | 16.7% | 20.8% | 33.0% | |
| Sino Biopharmaceutical Ltd ($1177) | 19.9% | 26.2% | 26.8% | 26.5% | |
| Lee's Pharmaceutical Holdings Ltd ($950) | 31.3% | 26.1% | 22.0% | 22.4% | |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 14.3% | 13.7% | 18.3% | 22.0% | |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | 34.4% | 27.6% | 22.2% | 19.9% | |
| |
|---|
| Median (40 companies) | 8.7% | 12.1% | 9.2% | 10.0% | -8.5% |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | | 25.3% | 27.5% | 23.8% | 25.9% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| China NT Pharma Group Co Ltd ($1011) | 0.4x | | | 7.2x | |
| United Laboratories International Holdings Ltd/The ($3933) | 4.4x | 6.5x | 4.6x | 4.2x | |
| Lansen Pharmaceutical Holdings Ltd ($503) | 0.9x | 1.7x | 2.8x | 3.4x | |
| China Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 2.5x | 5.4x | 4.0x | 3.4x | |
| Shandong Xinhua Pharmaceutical Co Ltd ($719) | 1.4x | 3.5x | 3.4x | 2.8x | |
| |
|---|
| Median (32 companies) | -0.4x | 0.0x | -0.2x | -0.6x | 2.3x |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | -2.6x | -1.7x | -1.6x | -1.6x | -1.6x |
