Sinosoft Technology Group Ltd reports 29.5% EBITDA growth and 1.8 pp EBITDA Margin growth from 57.2% to 59.0%
20/03/2016 • About Sinosoft Technology Group Ltd (
$1297) • By InTwits
Sinosoft Technology Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sinosoft Technology Group Ltd is a fast growth stock: 2015 revenue growth was 25.5%, 5 year revenue CAGR was 23.4% at 2015 ROIC 20.8%
- Sinosoft Technology Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 25.6%.
- CAPEX is quite volatile: 5.0 in 2015, 5.4 in 2014, 2.4 in 2013, 0.99 in 2012, 6.2 in 2011
- The company has highly profitable business model: ROIC is at 20.8%
- It operates with high leverage: Net Debt/EBITDA is -0.5x while industry average is -2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sinosoft Technology Group Ltd ($1297) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 184.9 | 226.7 | 280.8 | 347.8 | 436.5 | 25.5% |
| Gross Profit | 108.0 | 150.9 | 180.2 | 218.0 | 284.8 | 30.6% |
| SG&A | 16.1 | 21.0 | 29.0 | 33.9 | 39.7 | 17.2% |
| EBITDA | 102.6 | 142.0 | 154.1 | 199.0 | 257.6 | 29.5% |
| Net Income | 58.8 | 76.2 | 100.9 | 134.5 | 159.5 | 18.6% |
Balance Sheet
|
|---|
| Cash | 47.9 | 52.9 | 287.6 | 102.6 | 128.4 | 25.2% |
| Short Term Debt | 69.4 | 82.3 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 6.2 | 1.0 | 2.4 | 5.4 | 5.0 | -8.7% |
Ratios
|
|---|
| Revenue growth | 21.4% | 22.6% | 23.9% | 23.9% | 25.5% | |
| EBITDA growth | 43.2% | 38.3% | 8.6% | 29.1% | 29.5% | |
| Gross Margin | 58.4% | 66.6% | 64.2% | 62.7% | 65.2% | 2.6% |
| EBITDA Margin | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% | 1.8% |
| Net Income Margin | 31.8% | 33.6% | 35.9% | 38.7% | 36.5% | -2.1% |
| SG&A, % of revenue | 8.7% | 9.3% | 10.3% | 9.7% | 9.1% | -0.6% |
| CAPEX, % of revenue | 3.4% | 0.4% | 0.8% | 1.6% | 1.1% | -0.4% |
| ROIC | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% | 0.5% |
| ROE | 36.6% | 39.0% | 23.6% | 19.7% | 19.7% | -0.1% |
| Net Debt/EBITDA | 0.2x | 0.2x | -1.9x | -0.5x | -0.5x | 0.0x |
Revenue and profitability
The company's Revenue surged on 25.5% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 14.1 pp from -10.0% to -24.1% in FY2015.
Gross Margin increased on 2.6 pp from 62.7% to 65.2% in 2015. SG&A as a % of Revenue decreased slightly on 0.64 pp from 9.7% to 9.1% in 2015.
Net Income marign decreased on 2.1 pp from 38.7% to 36.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 1.1%. The company showed small growth in CAPEX/Revenue of 0.70 pp from 0.44% in 2012 to 1.1% in 2015. Average CAPEX/Revenue for the last three years was 1.2%.
Return on investment
The company operates at high and attractive ROIC (20.76%) while ROE is a bit lower (19.68%). ROIC increased slightly on 0.52 pp from 20.2% to 20.8% in 2015. ROE showed almost no change in 2015.
Leverage (Debt)
The company has no debt. Cash jumped on 25.2% in 2015.
Appendix 1: Peers in Software
Below we provide Sinosoft Technology Group Ltd benchmarking against other companies in Software 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, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | 40.3% | -42.9% | 1,742.9% | 157.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | 194.6% | 164.0% | 33.6% | 100.5% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | -16.7% | 393.7% | -6.6% | 92.2% | |
| Epicurean and Co Ltd ($8213) | | 177.0% | 185.7% | 62.6% | 22.0% |
| China Bio Cassava Holdings Ltd ($8129) | | -14.2% | 38.8% | 55.1% | -19.7% |
| |
|---|
| Median (33 companies) | 20.0% | 9.5% | 10.3% | 20.6% | 5.5% |
|---|
| Sinosoft Technology Group Ltd ($1297) | | 22.6% | 23.9% | 23.9% | 25.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.2% | 90.4% | 97.4% | 98.4% | 98.3% |
| Chanjet Information Technology Co Ltd ($1588) | 91.9% | 89.2% | 91.3% | 92.4% | 91.4% |
| NetDragon Websoft Inc ($777) | 90.1% | 93.4% | 90.8% | 89.3% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | 19.4% | 6.5% | 45.3% | 84.8% | |
| Kingdee International Software Group Co Ltd ($268) | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% |
| |
|---|
| Median (32 companies) | 46.4% | 44.3% | 40.5% | 39.7% | 39.2% |
|---|
| Sinosoft Technology Group Ltd ($1297) | 58.4% | 66.6% | 64.2% | 62.7% | 65.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
| China Binary Sale Technology Ltd ($8255) | 41.3% | 35.1% | 35.4% | 44.4% | 50.5% |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | 25.8% |
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% |
| TravelSky Technology Ltd ($696) | 43.3% | 38.1% | 35.8% | 31.9% | |
| |
|---|
| Median (33 companies) | 11.8% | 8.1% | 10.8% | 8.8% | 0.5% |
|---|
| Sinosoft Technology Group Ltd ($1297) | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| NetDragon Websoft Inc ($777) | 13.3% | 21.1% | 34.6% | 54.6% | |
| China Eco-Farming Ltd ($8166) | 0.3% | 0.6% | 0.7% | 18.1% | |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | |
| |
|---|
| Median (32 companies) | 2.0% | 1.4% | 2.5% | 3.6% | 1.1% |
|---|
| Sinosoft Technology Group Ltd ($1297) | 3.4% | 0.4% | 0.8% | 1.6% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Binary Sale Technology Ltd ($8255) | | 27.7% | 26.9% | 28.4% | 19.0% |
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | 15.6% |
| Finsoft Corp ($8018) | | 140.5% | 4.6% | 25.0% | -5.6% |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| ITE Holdings Ltd ($8092) | -19.6% | -15.0% | 10.6% | 16.8% | 19.8% |
| |
|---|
| Median (33 companies) | 1.6% | 3.0% | 4.6% | 1.2% | -0.2% |
|---|
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | -0.4x |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | 12.0x |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | 0.2x |
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | |
| |
|---|
| Median (21 companies) | -1.0x | -1.1x | -1.5x | -2.3x | -0.4x |
|---|
| Sinosoft Technology Group Ltd ($1297) | 0.2x | 0.2x | -1.9x | -0.5x | -0.5x |
