Eye on Sino Biopharmaceutical Ltd as a growth stock
06/04/2016 • About Sino Biopharmaceutical Ltd (
$1177) • By InTwits
Have you thought about Sino Biopharmaceutical 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
Sino Biopharmaceutical Ltd showed fast growth in the last financial year. Sino Biopharmaceutical Ltd's revenue surged on 17.5% in FY2015. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 25.3% for the same period.
If we look for the longer period the company showed fast revenue growth of 24.7% from 2012 to 2015 annualy. EBITDA surged on 27.5% from 2012 to 2015 annualy.
Sino Biopharmaceutical Ltd ($1177) financials for the last 5 years
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 5,782 | 7,497 | 9,901 | 12,378 | 14,550 |
|---|
| Revenue growth, % | | 29.7% | 32.1% | 25.0% | 17.5% |
|---|
| Gross margin, % | 78.5% | 78.5% | 77.5% | 76.4% | 77.7% |
|---|
| SG&A, % | 52.8% | 53.3% | 51.0% | 49.8% | 49.0% |
|---|
| EBITDA | 1,087 | 1,603 | 2,004 | 2,651 | 3,322 |
|---|
| EBITDA growth, % | | 47.4% | 25.0% | 32.3% | 25.3% |
|---|
| EBITDA margin, % | 18.8% | 21.4% | 20.2% | 21.4% | 22.8% |
|---|
| Net Income | 463 | 891 | 1,037 | 1,513 | 1,779 |
|---|
| Net Income margin, % | 8.00% | 11.9% | 10.5% | 12.2% | 12.2% |
|---|
| |
| CAPEX | 286 | 332 | 563 | 610 | 753 |
|---|
| CAPEX/Revenue, % | 4.95% | 4.43% | 5.69% | 4.93% | 5.17% |
|---|
| Debt | 85 | 41 | 74 | 1,724 | 1,726 |
|---|
| Cash | 2,018 | 2,495 | 2,890 | 3,167 | 2,531 |
|---|
| Net Debt/EBITDA | -1.8x | -1.5x | -1.4x | -0.5x | -0.2x |
|---|
| |
| ROIC, % | 19.9% | 26.2% | 26.8% | 26.5% | 26.2% |
|---|
| ROE, % | 12.4% | 21.2% | 20.6% | 25.0% | 24.8% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. Sino Biopharmaceutical Ltd showed EBITDA margin growth of 1.40 pp from 21.4% to 22.8% in 2015. In the longer period EBITDA margin increased on 1.40 pp from 21.4% in 2012 to 22.8% in 2015.
We call Sino Biopharmaceutical Ltd an attractive growth stock as together with the growth it delivers high ROIC at 26.2%. During the last three years it showed almost no change - it was 26.2% in FY2012. For the last three years the average ROIC was 26.5%.
Net Income margin didn't change on 0 pp from 12.2% to 12.2% in 2015. If we look for the longer period Net Income margin increased slightly on 0.300 pp from 11.9% in 2012 to 12.2% in 2015.
Sino Biopharmaceutical Ltd operates at ROE of 24.8%. Average ROE for the last three years was 23.5%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2015 Sino Biopharmaceutical Ltd had CAPEX/Revenue of 5.17%. CAPEX/Revenue surged on 0.747 pp from 4.43% in 2012 to 5.17% in 2015. It's average CAPEX/Revenue for the last three years was 5.26%.
Leverage (Debt)
Having such a fast growth profile Sino Biopharmaceutical Ltd keeps negative net debt at -0.2x Net Debt/EBITDA. In the longer period the company's leverage surged on 1.29x from -1.53x in 2012 to -0.24x in 2015.
Valuation vs. comparable companies
The company trades at 12.2x EV/EBITDA which is 31.3% lower than 17.8x Pharmaceuticals industry avearge calculated based on 266 companies. At the end of trading day today Sino Biopharmaceutical Ltd traded at 23.3x P/E which is 56.9% lower than 54.1x Pharmaceuticals peer group avearge calculated on the basis of 22 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 15.8x EV/(EBITDA-CAPEX) which is not surprisingly 618% higher than 2.2x Pharmaceuticals industry avearge calculated based on 17 companies.
Peers in Pharmaceuticals
Below we provide Sino Biopharmaceutical Ltd benchmarking against other companies in Pharmaceuticals 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 Health Group Inc ($8225) | | 58.5% | -48.0% | -60.1% | 244.1% |
| Wai Yuen Tong Medicine Holdings Ltd ($897) | | -9.9% | 45.9% | -10.5% | 105.6% |
| Oriental Unicorn Agricultural Group Ltd ($8120) | | 30.2% | -78.1% | 16.8% | 100.8% |
| China Traditional Chinese Medicine Co Ltd ($570) | | 22.3% | 35.2% | 90.0% | 40.0% |
| Shandong Luoxin Pharmaceutical Group Stock Co Ltd ($8058) | | 37.0% | 13.5% | 9.4% | 30.5% |
| |
|---|
| Median (38 companies) | 7.4% | 14.3% | 13.5% | 15.3% | 3.3% |
|---|
| Sino Biopharmaceutical Ltd ($1177) | | 29.7% | 32.1% | 25.0% | 17.5% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Luye Pharma Group Ltd ($2186) | 83.0% | 83.5% | 83.6% | 81.0% | 81.4% |
| Consun Pharmaceutical Group Ltd ($1681) | 75.5% | 75.7% | 79.1% | 78.3% | 80.7% |
| Jilin Province Huinan Changlong Bio-pharmacy Co Ltd ($8049) | 83.9% | 82.0% | 81.5% | 80.9% | 79.9% |
| China Health Group Inc ($8225) | 38.7% | 43.4% | 33.6% | 76.2% | 75.7% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 76.5% | 75.2% | 56.3% | 68.5% | 70.3% |
| |
|---|
| Median (37 companies) | 38.0% | 39.1% | 37.2% | 48.7% | 49.9% |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 78.5% | 78.5% | 77.5% | 76.4% | 77.7% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 132.2% | 193.8% | 205,840.0% | -15,344.8% | 49,650.0% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 48.4% | 38.8% | 65.4% | 70.9% | 93.3% |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 32.9% | 60.6% | 21.0% | 28.8% | 61.1% |
| U-Home Group Holdings Ltd ($2327) | 23.9% | 9.8% | -16.6% | -46.7% | 51.7% |
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | 29.7% | 41.3% | 45.4% | 47.5% | 49.1% |
| |
|---|
| Median (38 companies) | 17.0% | 18.7% | 19.7% | 21.4% | 20.0% |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 18.8% | 21.4% | 20.2% | 21.4% | 22.8% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hao Wen Holdings Ltd ($8019) | 6.4% | 30.0% | 2.3% | 38.2% | 44.8% |
| Hua Han Bio-Pharmaceutical Holdings Ltd ($587) | 3.8% | 0.9% | 1.4% | 7.6% | 40.5% |
| Lee's Pharmaceutical Holdings Ltd ($950) | 8.5% | 18.6% | 20.9% | 7.1% | 26.1% |
| Tianda Pharmaceuticals Ltd ($455) | 4.8% | 6.0% | 3.9% | 10.5% | 24.4% |
| Lijun International Pharmaceutical Holding Co Ltd ($2005) | 19.5% | 16.8% | 52.4% | 39.6% | 18.7% |
| |
|---|
| Median (37 companies) | 10.9% | 8.3% | 9.7% | 7.6% | 4.4% |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 4.9% | 4.4% | 5.7% | 4.9% | 5.2% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Beijing Tong Ren Tang Chinese Medicine Co Ltd ($8138) | | 25.3% | 27.5% | 23.8% | 25.9% |
| Sihuan Pharmaceutical Holdings Group Ltd ($460) | 14.3% | 13.7% | 18.3% | 22.0% | 25.4% |
| Dawnrays Pharmaceutical Holdings Ltd ($2348) | 17.7% | 12.6% | 14.0% | 17.8% | 23.5% |
| Lee's Pharmaceutical Holdings Ltd ($950) | 31.3% | 26.1% | 22.0% | 22.4% | 22.7% |
| CSPC Pharmaceutical Group Ltd ($1093) | 9.9% | 14.5% | 12.8% | 18.1% | 21.7% |
| |
|---|
| Median (39 companies) | 8.5% | 12.2% | 9.3% | 11.1% | 10.1% |
|---|
| Sino Biopharmaceutical Ltd ($1177) | 19.9% | 26.2% | 26.8% | 26.5% | 26.2% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Northeast Tiger Pharmaceutical Corp Ltd ($8197) | 2.2x | 2.3x | 3.7x | | 22.2x |
| U-Home Group Holdings Ltd ($2327) | 3.3x | 10.1x | | | 9.9x |
| Lansen Pharmaceutical Holdings Ltd ($503) | 0.9x | 1.7x | 2.8x | 3.4x | 4.7x |
| China Grand Pharmaceutical and Healthcare Holdings Ltd ($512) | 2.5x | 5.4x | 4.0x | 3.4x | 4.3x |
| United Laboratories International Holdings Ltd/The ($3933) | 4.4x | 6.5x | 4.6x | 4.2x | 4.0x |
| |
|---|
| Median (31 companies) | -0.4x | 0.0x | -0.2x | -0.6x | -0.4x |
|---|
| Sino Biopharmaceutical Ltd ($1177) | -1.8x | -1.5x | -1.4x | -0.5x | -0.2x |
