Eye on Tong Ren Tang Technologies Co Ltd as a growth stock
25/03/2016 • About Tong Ren Tang Technologies Co Ltd (
$1666) • By InTwits
Have you thought about Tong Ren Tang Technologies Co Ltd as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Tong Ren Tang Technologies Co Ltd showed fast growth in the last financial year. The company's revenue surged on 19.3% in FY2015. The growth also happened in EBITDA of 23.7% for the same period.
In the longer period Tong Ren Tang Technologies Co Ltd showed fast revenue growth of 17.8% from 2012 to 2015 annualy. EBITDA surged on 22.4% from 2012 to 2015 annualy.
Tong Ren Tang Technologies Co Ltd ($1666) financials for the last 5 years
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 1,936 | 2,439 | 2,911 | 3,341 | 3,987 |
|---|
| Revenue growth, % | | 26.0% | 19.3% | 14.8% | 19.3% |
|---|
| Gross margin, % | 48.4% | 50.7% | 49.5% | 48.3% | 49.9% |
|---|
| SG&A, % | 30.3% | 30.8% | 28.4% | 27.0% | 27.8% |
|---|
| EBITDA | 373 | 520 | 653 | 771 | 954 |
|---|
| EBITDA growth, % | | 39.3% | 25.6% | 18.0% | 23.7% |
|---|
| EBITDA margin, % | 19.3% | 21.3% | 22.4% | 23.1% | 23.9% |
|---|
| Net Income | 255 | 330 | 390 | 462 | 540 |
|---|
| Net Income margin, % | 13.2% | 13.5% | 13.4% | 13.8% | 13.6% |
|---|
| |
| CAPEX | 167 | 114 | 200 | 277 | 177 |
|---|
| CAPEX/Revenue, % | 8.64% | 4.66% | 6.86% | 8.29% | 4.44% |
|---|
| Debt | 125 | 125 | 194 | 100 | 182 |
|---|
| Cash | 681 | 841 | 2,367 | 2,151 | 2,259 |
|---|
| Net Debt/EBITDA | -1.5x | -1.4x | -3.3x | -2.7x | -2.2x |
|---|
| |
| ROIC, % | 17.2% | 21.4% | 18.4% | 16.2% | 17.7% |
|---|
| ROE, % | 15.5% | 18.1% | 15.0% | 13.6% | 14.4% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. EBITDA margin increased slightly on 0.800 pp from 23.1% to 23.9% in 2015. In the longer period EBITDA margin surged on 2.60 pp from 21.3% in 2012 to 23.9% in 2015.
We call Tong Ren Tang Technologies Co Ltd an attractive growth stock as together with the growth it delivers high ROIC at 17.7%. Three years ago it was a bit higher at 21.4%. For the last three years the average ROIC was 17.4%.
The company's Net Income margin decreased slightly on 0.200 pp from 13.8% to 13.6% in 2015. If we look for the longer period Net Income margin increased slightly on 0.100 pp from 13.5% in 2012 to 13.6% in 2015.
Tong Ren Tang Technologies Co Ltd operates at ROE of 14.4%. It's average level of ROE for the last three years was 14.3%.
Capital expenditures (CAPEX)
The company's CAPEX/Revenue was 4.44% in FY2015. Tong Ren Tang Technologies Co Ltd showed small CAPEX/Revenue decline of 0.220 pp from 4.66% in 2012 to 4.44% in 2015. Average CAPEX/Revenue for the last three years was 6.53%.
Leverage (Debt)
Having such a fast growth profile Tong Ren Tang Technologies Co Ltd keeps negative net debt at -2.2x Net Debt/EBITDA. If we look for the longer period the company's leverage surged on 0.80x from -1.38x in 2012 to -2.18x in 2015.
Peers in Pharmaceuticals
Below you can find Tong Ren Tang Technologies Co Ltd benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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) | | 15.1% | -99.9% | 480.0% | -93.1% |
| 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) | 14.9% | 14.3% | 13.5% | 17.1% | -0.3% |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | | 26.0% | 19.3% | 14.8% | 19.3% |
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% | 50.0% | 49.5% |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | 48.4% | 50.7% | 49.5% | 48.3% | 49.9% |
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% | |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 29.7% | 41.3% | 45.4% | 47.5% | 49.1% |
| Real Nutriceutical Group Ltd ($2010) | 45.6% | 42.8% | 43.4% | 46.0% | |
| |
|---|
| Median (39 companies) | 17.4% | 19.6% | 18.8% | 20.8% | 9.0% |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | 19.3% | 21.3% | 22.4% | 23.1% | 23.9% |
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% | 0.0% |
| 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) | 10.9% | 8.8% | 9.7% | 7.4% | 2.9% |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | 8.6% | 4.7% | 6.9% | 8.3% | 4.4% |
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% | |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | | 25.3% | 27.5% | 23.8% | 25.9% |
| 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% | |
| |
|---|
| Median (40 companies) | 8.5% | 12.1% | 9.2% | 10.0% | 0.3% |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | 17.2% | 21.4% | 18.4% | 16.2% | 17.7% |
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 | -1.6x |
|---|
| Tong Ren Tang Technologies Co Ltd ($1666) | -1.5x | -1.4x | -3.3x | -2.7x | -2.2x |
