Sinosoft Technology Group Ltd is an attractive growth stock: revenue grew 24.4% and EBITDA 22.0% annually over the last three years
27/03/2016 • About Sinosoft Technology Group Ltd (
$1297) • By InTwits
Pay attention to Sinosoft Technology Group Ltd as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Sinosoft Technology Group Ltd showed fast growth in the last financial year. The company's revenue surged on 25.5% in FY2015. EBITDA also increased considerably: 29.5% for the same period.
If we look for the longer period Sinosoft Technology Group Ltd showed fast revenue growth of 24.4% from 2012 to 2015 annualy. EBITDA surged on 22.0% from 2012 to 2015 annualy.
Sinosoft Technology Group Ltd ($1297) financials for the last 5 years
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 185 | 227 | 281 | 348 | 437 |
|---|
| Revenue growth, % | | 22.6% | 23.9% | 23.9% | 25.5% |
|---|
| Gross margin, % | 58.4% | 66.6% | 64.2% | 62.7% | 65.2% |
|---|
| SG&A, % | 8.68% | 9.25% | 10.3% | 9.73% | 9.09% |
|---|
| EBITDA | 103 | 142 | 154 | 199 | 258 |
|---|
| EBITDA growth, % | | 38.3% | 8.6% | 29.1% | 29.5% |
|---|
| EBITDA margin, % | 55.5% | 62.6% | 54.9% | 57.2% | 59.0% |
|---|
| Net Income | 59 | 76 | 101 | 135 | 160 |
|---|
| Net Income margin, % | 31.8% | 33.6% | 35.9% | 38.7% | 36.5% |
|---|
| |
| CAPEX | 6 | 1 | 2 | 5 | 5 |
|---|
| CAPEX/Revenue, % | 3.38% | 0.438% | 0.838% | 1.56% | 1.14% |
|---|
| Debt | 69 | 82 | 0 | 0 | 0 |
|---|
| Cash | 48 | 53 | 288 | 103 | 128 |
|---|
| Net Debt/EBITDA | 0.2x | 0.2x | -1.9x | -0.5x | -0.5x |
|---|
| |
| ROIC, % | 31.6% | 34.0% | 21.9% | 20.2% | 20.8% |
|---|
| ROE, % | 36.6% | 39.0% | 23.6% | 19.7% | 19.7% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. EBITDA margin increased slightly on 1.80 pp from 57.2% to 59% in 2015. In the last 3 years the company's EBITDA margin decreased on 3.60 pp from 62.6% in 2012 to 59% in 2015.
We call Sinosoft Technology Group Ltd an attractive growth stock as together with the growth it delivers high ROIC at 20.8%. Three years ago it was considerably higher at 34.0%. For the last three years the average ROIC was 21.0%.
Net Income margin decreased on 2.20 pp from 38.7% to 36.5% in 2015. If we look for the longer period Net Income margin increased on 2.90 pp from 33.6% in 2012 to 36.5% in 2015.
Sinosoft Technology Group Ltd operates at ROE of 19.7%. For the last three years the average ROE was 21.0%.
Capital expenditures (CAPEX)
In FY2015 Sinosoft Technology Group Ltd had CAPEX/Revenue of 1.14%. The company showed fast CAPEX/Revenue growth of 0.701 pp from 0.438% in 2012 to 1.14% in 2015. For the last three years the average CAPEX/Revenue was 1.18%.
Leverage (Debt)
The company has negative net debt at -0.5x Net Debt/EBITDA - at the same time with high growth. In the last 3 years the company's leverage dropped on 0.71x from 0.21x in 2012 to -0.50x in 2015.
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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| 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 |
