Honworld Group Ltd demonstrated fast growth in recent years. Will the growth continue?
05/04/2016 • About Honworld Group Ltd (
$2226) • By InTwits
Honworld Group Ltd is a fast-growing stock in Food industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Honworld Group Ltd showed fast growth in the last financial year. The company's revenue surged on 19.5% in FY2015. Together with revenue growth Honworld Group Ltd also managed to keep EBITDA growth. EBITDA grew 22.0% for the same period.
In the last 3 years Honworld Group Ltd showed fast revenue growth of 33.3% from 2012 to 2015 annualy. EBITDA surged on 31.9% from 2012 to 2015 annualy.
Honworld Group Ltd ($2226) financials for the last 5 years
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 109 | 337 | 530 | 668 | 799 |
|---|
| Revenue growth, % | | 207.9% | 57.3% | 26.0% | 19.5% |
|---|
| Gross margin, % | 42.2% | 57.2% | 59.0% | 57.8% | 56.4% |
|---|
| SG&A, % | 15.8% | 13.9% | 18.8% | 18.2% | 19.4% |
|---|
| EBITDA | 31 | 150 | 223 | 281 | 343 |
|---|
| EBITDA growth, % | | 381.7% | 49.4% | 25.8% | 22.0% |
|---|
| EBITDA margin, % | 28.4% | 44.4% | 42.1% | 42.0% | 42.9% |
|---|
| Net Income | 20 | 98 | 174 | 212 | 229 |
|---|
| Net Income margin, % | 18.5% | 29.2% | 32.8% | 31.7% | 28.6% |
|---|
| |
| CAPEX | 28 | 20 | 57 | 340 | 174 |
|---|
| CAPEX/Revenue, % | 25.3% | 6.02% | 10.8% | 50.8% | 21.8% |
|---|
| Debt | 146 | 216 | 233 | 418 | 645 |
|---|
| Cash | 10 | 2 | 44 | 217 | 186 |
|---|
| Net Debt/EBITDA | 4.4x | 1.4x | 0.8x | 0.7x | 1.3x |
|---|
| |
| ROIC, % | 22.1% | 50.4% | 44.5% | 23.6% | 16.5% |
|---|
| ROE, % | 79.1% | 116.6% | 81.1% | 27.3% | 17.1% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company's EBITDA margin increased slightly on 0.900 pp from 42% to 42.9% in 2015. If we look for the longer period EBITDA margin decreased slightly on 1.50 pp from 44.4% in 2012 to 42.9% in 2015.
Honworld Group Ltd shows attractive ROIC at 16.5% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 50.4% in FY2012. It's average level of ROIC for the last three years was 28.2%.
Net Income margin decreased on 3.10 pp from 31.7% to 28.6% in 2015. In the last 3 years the company's Net Income margin decreased slightly on 0.600 pp from 29.2% in 2012 to 28.6% in 2015.
Honworld Group Ltd operates at ROE of 17.1%. It's average ROE for the last three years was 41.8%.
Capital expenditures (CAPEX)
To this fast growth Honworld Group Ltd had to invest in CAPEX.In FY2015 the company had CAPEX/Revenue of 21.8%. The company's CAPEX/Revenue surged on 15.8 pp from 6.02% in 2012 to 21.8% in 2015. It's average level of CAPEX/Revenue for the last three years was 27.8%.
Leverage (Debt)
Having such a fast growth profile the company keeps medium debt level at 1.3x Net Debt/EBITDA. If we look for the longer period leverage decreased on 0.09x from 1.43x in 2012 to 1.34x in 2015.
Peers in Food
Below we provide Honworld Group Ltd benchmarking against other companies in Food 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 |
|---|
| Imperial Pacific International Holdings Ltd ($1076) | | -27.6% | -18.5% | 2.7% | 70.3% |
| Chinese Food and Beverage Group ($8272) | | 207.7% | 149.2% | 26.8% | 31.6% |
| Huisheng International Holdings Ltd ($1340) | | -2.4% | 5.6% | 8.7% | 25.9% |
| China Huishan Dairy Holdings Co Ltd ($6863) | | 256.3% | 91.5% | 38.3% | 11.1% |
| Lam Soon Hong Kong Ltd ($411) | | 15.1% | 25.2% | 13.8% | 8.1% |
| |
|---|
| Median (32 companies) | 22.5% | 9.8% | 6.4% | 2.7% | -3.7% |
|---|
| Honworld Group Ltd ($2226) | | 207.9% | 57.3% | 26.0% | 19.5% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hung Fook Tong Group Holdings Ltd ($1446) | 57.0% | 60.7% | 60.0% | 58.7% | 60.7% |
| Yashili International Holdings Ltd ($1230) | 52.0% | 53.7% | 53.5% | 51.2% | 50.8% |
| Natural Dairy NZ Holdings Ltd ($462) | 16.3% | -13.7% | 27.5% | 48.8% | 49.6% |
| Christine International Holdings Ltd ($1210) | 51.3% | 50.2% | 49.7% | 47.2% | 47.2% |
| Shenguan Holdings Group Ltd ($829) | 61.9% | 58.2% | 58.5% | 54.9% | 44.2% |
| |
|---|
| Median (31 companies) | 17.7% | 16.5% | 18.5% | 19.8% | 23.7% |
|---|
| Honworld Group Ltd ($2226) | 42.2% | 57.2% | 59.0% | 57.8% | 56.4% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Shenguan Holdings Group Ltd ($829) | 57.2% | 58.7% | 59.2% | 54.5% | 43.6% |
| China Huishan Dairy Holdings Co Ltd ($6863) | 109.2% | 45.1% | 47.9% | 47.1% | 37.2% |
| YuanShengTai Dairy Farm Ltd ($1431) | 147.8% | 40.3% | 48.4% | 47.1% | 35.4% |
| Want Want China Holdings Ltd ($151) | 20.1% | 23.8% | 25.8% | 23.8% | 25.2% |
| China Modern Dairy Holdings Ltd ($1117) | 33.9% | 33.5% | 27.0% | 25.3% | 21.1% |
| |
|---|
| Median (31 companies) | 8.0% | 7.9% | 6.5% | 7.4% | 8.0% |
|---|
| Honworld Group Ltd ($2226) | 28.4% | 44.4% | 42.1% | 42.0% | 42.9% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| China Huishan Dairy Holdings Co Ltd ($6863) | 453.6% | 98.2% | 29.8% | 132.0% | 109.8% |
| YuanShengTai Dairy Farm Ltd ($1431) | 182.5% | 26.1% | 18.3% | 43.4% | 30.1% |
| Yashili International Holdings Ltd ($1230) | 3.6% | 8.2% | 7.1% | 20.1% | 12.5% |
| Vedan International Holdings Ltd ($2317) | 2.8% | 2.5% | 2.4% | 18.8% | 4.0% |
| China Modern Dairy Holdings Ltd ($1117) | 58.9% | 50.6% | | 18.7% | 42.4% |
| |
|---|
| Median (39 companies) | 3.9% | 5.1% | 5.3% | 5.1% | 4.9% |
|---|
| Honworld Group Ltd ($2226) | 25.3% | 6.0% | 10.8% | 50.8% | 21.8% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Want Want China Holdings Ltd ($151) | 24.9% | 27.9% | 29.4% | 22.8% | 21.8% |
| WH Group Ltd ($288) | | 20.3% | 3.6% | 15.0% | 13.3% |
| Tenwow International Holdings Ltd ($1219) | 20.3% | 19.7% | 15.7% | 12.8% | 11.9% |
| Asia Cassava Resources Holdings Ltd ($841) | 13.8% | 4.2% | 5.9% | 13.6% | 11.6% |
| Shenguan Holdings Group Ltd ($829) | 40.6% | 40.0% | 33.2% | 21.4% | 10.0% |
| |
|---|
| Median (32 companies) | 10.4% | 7.6% | 5.9% | 5.5% | 5.6% |
|---|
| Honworld Group Ltd ($2226) | 22.1% | 50.4% | 44.5% | 23.6% | 16.5% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Beijing Jingkelong Co Ltd ($814) | 3.4x | 5.0x | 4.8x | 5.3x | 9.3x |
| China Kangda Food Co Ltd ($834) | 2.1x | 2.8x | 2.5x | 2.3x | 5.4x |
| China Modern Dairy Holdings Ltd ($1117) | 1.3x | 3.7x | 5.2x | 4.1x | 5.3x |
| Asia Cassava Resources Holdings Ltd ($841) | 0.6x | 4.0x | 5.6x | -0.6x | 4.7x |
| China Huishan Dairy Holdings Co Ltd ($6863) | 5.6x | 3.3x | 1.8x | 0.8x | 3.7x |
| |
|---|
| Median (26 companies) | 0.2x | -0.5x | 0.7x | 1.0x | 1.3x |
|---|
| Honworld Group Ltd ($2226) | 4.4x | 1.4x | 0.8x | 0.7x | 1.3x |
