Eye on Tongda Group Holdings Ltd with its long history of healthy growth
23/03/2016 • About Tongda Group Holdings Ltd (
$698) • By InTwits
Tongda Group Holdings Ltd is a fast-growing stock in Electronics industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Tongda Group Holdings Ltd showed fast growth in the last financial year. The company's revenue surged on 26.8% in FY2015. In addition to revenue Tongda Group Holdings Ltd also keeps delivering EBITDA growth. It was 30.1% in FY2015
In the last 3 years the company showed fast revenue growth of 21.2% from 2012 to 2015 annualy. EBITDA surged on 25.3% from 2012 to 2015 annualy.
Tongda Group Holdings Ltd ($698) financials for the last 5 years
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 3,147 | 3,408 | 3,627 | 4,791 | 6,074 |
|---|
| Revenue growth, % | | 8.3% | 6.4% | 32.1% | 26.8% |
|---|
| Gross margin, % | 19.2% | 21.4% | 22.0% | 23.9% | 24.9% |
|---|
| SG&A, % | 7.71% | 8.58% | 9.82% | 9.23% | 9.78% |
|---|
| EBITDA | 482 | 583 | 610 | 882 | 1,148 |
|---|
| EBITDA growth, % | | 21.0% | 4.5% | 44.7% | 30.1% |
|---|
| EBITDA margin, % | 15.3% | 17.1% | 16.8% | 18.4% | 18.9% |
|---|
| Net Income | 250 | 300 | 360 | 502 | 703 |
|---|
| Net Income margin, % | 7.95% | 8.80% | 9.93% | 10.5% | 11.6% |
|---|
| |
| CAPEX | 180 | 266 | 178 | 547 | 986 |
|---|
| CAPEX/Revenue, % | 5.71% | 7.80% | 4.90% | 11.4% | 16.2% |
|---|
| Debt | 640 | 653 | 850 | 980 | 2,369 |
|---|
| Cash | 254 | 221 | 178 | 360 | 762 |
|---|
| Net Debt/EBITDA | 0.8x | 0.7x | 1.1x | 0.7x | 1.4x |
|---|
| |
| ROIC, % | 14.3% | 15.2% | 13.5% | 16.5% | 16.3% |
|---|
| ROE, % | 14.4% | 15.2% | 15.8% | 16.9% | 18.7% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company's EBITDA margin increased slightly on 0.500 pp from 18.4% to 18.9% in 2015. In the longer period EBITDA margin surged on 1.80 pp from 17.1% in 2012 to 18.9% in 2015.
Tongda Group Holdings Ltd shows attractive ROIC at 16.3% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 15.2%. It's average ROIC for the last three years was 15.4%.
Tongda Group Holdings Ltd showed fast Net Income margin growth of 1.10 pp from 10.5% to 11.6% in 2015. In the longer period the company showed fast Net Income margin growth of 2.80 pp from 8.80% in 2012 to 11.6% in 2015.
Tongda Group Holdings Ltd operates at ROE of 18.7%. For the last three years the average ROE was 17.1%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2015 the company had CAPEX/Revenue of 16.2%. Tongda Group Holdings Ltd's CAPEX/Revenue surged on 8.43 pp from 7.80% in 2012 to 16.2% in 2015. For the last three years the average CAPEX/Revenue was 10.8%.
Leverage (Debt)
Having such a fast growth profile the company keeps medium debt level at 1.4x Net Debt/EBITDA. In the longer period the company's leverage surged on 0.66x from 0.74x in 2012 to 1.40x in 2015.
Valuation vs. comparable companies
The company trades at 9.0x EV/EBITDA which is 73.7% lower than 34.1x Electronics industry avearge calculated based on 52 companies. The company trades at 12.4x P/E which is 96.4% lower than 346.2x Electronics industry avearge calculated based on 16 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 63.8x EV/(EBITDA-CAPEX) for Tongda Group Holdings Ltd which is 2,280% higher than 2.7x Electronics peer group avearge calculated on the basis of 11 companies.
Peers in Electronics
Below we provide Tongda Group Holdings Ltd benchmarking against other companies in Electronics 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 Netcom Technology Holdings Ltd ($8071) | -22.0% | 11.6% | -23.0% | 104.1% | |
| Technovator International Ltd ($1206) | 31.6% | 27.4% | 34.1% | 35.9% | |
| Advanced Card Systems Holdings Ltd ($8210) | 25.3% | 36.9% | 20.8% | 26.7% | |
| Alltronics Holdings Ltd ($833) | 33.9% | -1.6% | -1.6% | 23.4% | |
| QPL International Holdings Ltd ($243) | | -21.1% | -22.2% | 21.0% | -0.2% |
| |
|---|
| Median (48 companies) | 7.3% | -1.7% | 2.8% | 3.7% | -2.5% |
|---|
| Tongda Group Holdings Ltd ($698) | | 8.3% | 6.4% | 32.1% | 26.8% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Advanced Card Systems Holdings Ltd ($8210) | 51.4% | 54.0% | 58.1% | 49.5% | |
| AAC Technologies Holdings Inc ($2018) | 44.0% | 44.2% | 42.7% | 41.4% | |
| TeleEye Holdings Ltd ($8051) | 51.6% | 44.0% | 42.1% | 38.5% | 37.0% |
| Wasion Group Holdings Ltd ($3393) | 30.3% | 32.8% | 35.1% | 34.2% | |
| Datronix Holdings Ltd ($889) | 41.3% | 32.9% | 32.0% | 34.1% | |
| |
|---|
| Median (46 companies) | 13.6% | 14.1% | 13.8% | 13.9% | 15.0% |
|---|
| Tongda Group Holdings Ltd ($698) | 19.2% | 21.4% | 22.0% | 23.9% | 24.9% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| AAC Technologies Holdings Inc ($2018) | 35.2% | 35.8% | 35.8% | 34.9% | |
| Nanjing Sample Technology Co Ltd ($1708) | 31.5% | 26.8% | 21.1% | 22.3% | |
| Wasion Group Holdings Ltd ($3393) | 18.9% | 18.8% | 21.2% | 22.0% | |
| Technovator International Ltd ($1206) | 19.2% | 19.0% | 19.0% | 20.8% | |
| Trigiant Group Ltd ($1300) | 17.0% | 17.6% | 18.2% | 18.5% | 16.2% |
| |
|---|
| Median (48 companies) | 9.0% | 5.9% | 4.1% | 3.4% | 4.6% |
|---|
| Tongda Group Holdings Ltd ($698) | 15.3% | 17.1% | 16.8% | 18.4% | 18.9% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| AKM Industrial Co Ltd ($1639) | 7.4% | 5.0% | 17.4% | 25.2% | |
| AAC Technologies Holdings Inc ($2018) | 25.9% | 18.7% | 8.7% | 19.6% | |
| Irico Group Electronics Co Ltd ($438) | 92.0% | 39.9% | 30.4% | 17.4% | |
| Tech Pro Technology Development Ltd ($3823) | 32.8% | 7.6% | 13.1% | 15.4% | |
| Nanjing Sample Technology Co Ltd ($1708) | 3.7% | 23.9% | 15.5% | 12.0% | |
| |
|---|
| Median (48 companies) | 3.3% | 3.7% | 3.0% | 3.7% | 2.2% |
|---|
| Tongda Group Holdings Ltd ($698) | 5.7% | 7.8% | 4.9% | 11.4% | 16.2% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| AAC Technologies Holdings Inc ($2018) | 22.3% | 29.1% | 30.0% | 26.0% | |
| Advanced Card Systems Holdings Ltd ($8210) | 15.5% | 26.7% | 24.7% | 20.2% | |
| Alltronics Holdings Ltd ($833) | 19.3% | 13.1% | 15.2% | 19.8% | |
| Trigiant Group Ltd ($1300) | 17.9% | 17.8% | 18.3% | 15.2% | 11.2% |
| Changhong Jiahua Holdings Ltd ($8016) | 8.7% | 29.6% | 17.7% | 15.1% | |
| |
|---|
| Median (48 companies) | 5.4% | 4.1% | 3.3% | 2.7% | 0.8% |
|---|
| Tongda Group Holdings Ltd ($698) | 14.3% | 15.2% | 13.5% | 16.5% | 16.3% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| National Electronic Hldgs ($213) | 43.0x | 16.3x | 30.2x | 84.8x | 19.9x |
| Sino-Tech International Holdings Ltd ($724) | | | 15.7x | 24.7x | |
| Eyang Holdings Group Co Ltd ($117) | 4.2x | 3.3x | 3.7x | 17.9x | |
| SAS Dragon Hldg Ltd ($1184) | 2.8x | 7.1x | 2.0x | 6.4x | |
| Willas-Array Electronics Holdings Ltd ($854) | 2.8x | 2.2x | 2.6x | 5.7x | 5.4x |
| |
|---|
| Median (34 companies) | 0.6x | 1.1x | 1.1x | 1.2x | 1.3x |
|---|
| Tongda Group Holdings Ltd ($698) | 0.8x | 0.7x | 1.1x | 0.7x | 1.4x |
