Looking for a profitable fast-growing stock? Look at Sam Woo Construction Group Ltd
04/07/2016 • About Sam Woo Construction Group Ltd (
$3822) • By InTwits
Sam Woo Construction Group Ltd is a growth stock in Engineering&Construction industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Sam Woo Construction Group Ltd showed fast growth in the last financial year. The company's revenue surged on 24.7% in FY2016. EBITDA also increased: -22.3% for the same period.
In the longer period Sam Woo Construction Group Ltd showed fast revenue growth of 41.4% from FY2013 to FY2016 annualy. EBITDA surged on 39.0% from FY2013 to FY2016 annualy.
Sam Woo Construction Group Ltd ($3822) financials for the last 5 years
| mln. HKD | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 98 | 375 | 493 | 851 | 1,061 |
|---|
| Revenue growth, % | | 281.1% | 31.3% | 72.8% | 24.7% |
|---|
| Gross margin, % | 33.2% | 27.3% | 33.6% | 36.0% | 19.8% |
|---|
| SG&A, % | | | | 6.50% | 3.45% |
|---|
| EBITDA | 17 | 78 | 147 | 269 | 209 |
|---|
| EBITDA growth, % | | 348.2% | 89.0% | 82.8% | -22.3% |
|---|
| EBITDA margin, % | 17.6% | 20.8% | 29.9% | 31.6% | 19.7% |
|---|
| Net Income | 24 | 56 | 127 | 219 | 153 |
|---|
| Net Income margin, % | 24.6% | 14.8% | 25.8% | 25.7% | 14.4% |
|---|
| |
| CAPEX | 12 | 59 | 86 | 65 | 53 |
|---|
| CAPEX/Revenue, % | 11.8% | 15.8% | 17.4% | 7.65% | 5.00% |
|---|
| Debt | 32 | 196 | 337 | 346 | 288 |
|---|
| Cash | 3 | 23 | 86 | 185 | 201 |
|---|
| Net Debt/EBITDA | 1.7x | 2.2x | 1.7x | 0.6x | 0.4x |
|---|
| |
| ROIC, % | | 28.2% | 28.7% | 33.5% | 18.3% |
|---|
| ROE, % | | 48.9% | 70.5% | 58.7% | 25.8% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period Sam Woo Construction Group Ltd's EBITDA margin decreased on 1.10 pp from 20.8% in FY2013 to 19.7% in FY2016.
We call Sam Woo Construction Group Ltd an attractive growth stock as together with the growth it delivers high ROIC at 18.3%. During the last three years it dropped - it was 28.2% in FY2013. For the last three years the average ROIC was 26.8%.
Net Income margin dropped on 11.3 pp from 25.7% to 14.4% in FY2016. If we look for the longer period Sam Woo Construction Group Ltd's Net Income margin decreased slightly on 0.400 pp from 14.8% in FY2013 to 14.4% in FY2016.
Sam Woo Construction Group Ltd operates at ROE of 25.8%. Average ROE for the last three years was 51.7%.
Capital expenditures (CAPEX)
To this fast growth Sam Woo Construction Group Ltd had to invest in CAPEX.In FY2016 Sam Woo Construction Group Ltd had CAPEX/Revenue of 5.00%. Sam Woo Construction Group Ltd's CAPEX/Revenue dropped on 10.8 pp from 15.8% in FY2013 to 5.00% in FY2016. For the last three years the average CAPEX/Revenue was 10.0%.
Leverage (Debt)
Having such a fast growth profile Sam Woo Construction Group Ltd keeps low debt level at 0.4x Net Debt/EBITDA. In the longer period leverage dropped on 1.81x from 2.23x in FY2013 to 0.42x in FY2016.
Valuation vs. comparable companies
The company trades at 3.8x EV/EBITDA which is 87.8% lower than 31.0x Engineering&Construction industry avearge calculated based on 55 companies. At the end of trading day today Sam Woo Construction Group Ltd traded at 4.6x P/E which is 35.5% lower than 7.2x Engineering&Construction peer group avearge calculated on the basis of 10 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 5.1x EV/(EBITDA-CAPEX) for Sam Woo Construction Group Ltd which is 69.7% lower than 16.8x Engineering&Construction peer group avearge calculated on the basis of 9 companies.
Peers in Engineering&Construction
Below we provide Sam Woo Construction Group Ltd benchmarking against other companies in Engineering&Construction 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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| CNQC International Holdings Ltd ($1240) | 21.6% | 91.0% | 103.7% | 807.4% | |
| China National Culture Group Ltd ($745) | | -76.8% | -55.8% | 592.3% | 86.7% |
| Vision Fame International Holding Ltd ($1315) | -9.9% | 45.9% | -10.5% | 105.6% | |
| Sino Credit Holdings Ltd ($628) | -13.8% | | | 97.4% | |
| Grand Ming Group Holdings Ltd ($1271) | | -26.9% | -37.4% | 74.8% | 14.3% |
| |
|---|
| Median (47 companies) | 7.6% | 22.2% | 16.3% | 9.8% | 8.4% |
|---|
| Sam Woo Construction Group Ltd ($3822) | | 281.1% | 31.3% | 72.8% | 24.7% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| HNA Infrastructure Company Ltd ($357) | 66.4% | 62.1% | 62.4% | 61.1% | |
| Huayu Expressway Group Ltd ($1823) | 43.6% | 65.6% | 64.0% | 58.9% | |
| Broad Greenstate International Co Ltd ($1253) | 20.1% | 28.7% | 35.8% | 36.7% | |
| China National Culture Group Ltd ($745) | 0.9% | 12.1% | 10.3% | 32.3% | 19.2% |
| Kingbo Strike Ltd ($1421) | 32.4% | 44.4% | 40.3% | 30.7% | |
| |
|---|
| Median (42 companies) | 13.4% | 14.8% | 14.1% | 14.2% | 14.1% |
|---|
| Sam Woo Construction Group Ltd ($3822) | 33.2% | 27.3% | 33.6% | 36.0% | 19.8% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Huayu Expressway Group Ltd ($1823) | 46.2% | 73.8% | 77.1% | 76.2% | |
| HNA Infrastructure Company Ltd ($357) | 62.8% | 63.7% | 62.8% | 61.7% | |
| Cheung Kong Infrastructure Holdings Ltd ($1038) | 31.2% | 20.6% | 36.2% | 60.9% | |
| Beijing Capital International Airport Co Ltd ($694) | 53.4% | 52.9% | 50.3% | 51.6% | |
| China National Culture Group Ltd ($745) | -30.4% | -72.7% | -279.2% | 45.3% | -14.6% |
| |
|---|
| Median (47 companies) | 9.8% | 9.4% | 8.4% | 7.6% | 3.1% |
|---|
| Sam Woo Construction Group Ltd ($3822) | 17.6% | 20.8% | 29.9% | 31.6% | 19.7% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| HNA Infrastructure Company Ltd ($357) | 36.8% | 5.7% | 85.4% | 155.4% | |
| Grand Ming Group Holdings Ltd ($1271) | 0.0% | 16.1% | 8.7% | 33.8% | 14.0% |
| Beijing Capital International Airport Co Ltd ($694) | 3.5% | 6.6% | 7.2% | 28.2% | |
| Louis XIII Holdings Ltd ($577) | 1.2% | 29.5% | 9.3% | 16.1% | 47.3% |
| PYI Corp Ltd ($498) | 3.7% | 4.2% | 24.5% | 13.1% | 19.7% |
| |
|---|
| Median (47 companies) | 2.2% | 2.4% | 1.7% | 2.0% | 2.4% |
|---|
| Sam Woo Construction Group Ltd ($3822) | 11.8% | 15.8% | 17.4% | 7.6% | 5.0% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| In Construction Holdings Ltd ($1500) | | 52.8% | 37.0% | 49.4% | 40.4% |
| Chun Sing Engineering Holdings Ltd ($2277) | | 98.3% | 54.9% | 43.7% | |
| Ngai Shun Holdings Ltd ($1246) | 68.8% | 77.2% | 45.2% | 31.0% | |
| Broad Greenstate International Co Ltd ($1253) | 33.2% | 85.1% | 51.2% | 26.0% | |
| China Saite Group Co Ltd ($153) | 64.0% | 53.2% | 35.3% | 24.5% | |
| |
|---|
| Median (49 companies) | 6.5% | 6.0% | 4.8% | 5.5% | 3.1% |
|---|
| Sam Woo Construction Group Ltd ($3822) | | 28.2% | 28.7% | 33.5% | 18.3% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Deson Development International Holdings ($262) | 3.8x | 4.9x | 13.7x | 47.0x | |
| Hsin Chong Construction Group Ltd ($404) | 1.8x | 8.0x | 10.2x | 41.7x | |
| China Resources and Transportation Group Ltd ($269) | | | 66.7x | 29.7x | |
| CNC Holdings Ltd ($8356) | | 22.0x | 21.9x | 24.3x | 2.7x |
| Louis XIII Holdings Ltd ($577) | 0.8x | -12.5x | -23.2x | 19.1x | |
| |
|---|
| Median (41 companies) | 1.0x | 0.7x | 1.3x | 2.3x | 0.3x |
|---|
| Sam Woo Construction Group Ltd ($3822) | 1.7x | 2.2x | 1.7x | 0.6x | 0.4x |
