Wonderful Sky Financial Group Holdings Ltd demonstrated healthy growth over the last few years
06/07/2016 • About Wonderful Sky Financial Group Holdings Ltd (
$1260) • By InTwits
Wonderful Sky Financial Group Holdings Ltd is an attractive growth stock in Commercial Services industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Wonderful Sky Financial Group Holdings Ltd showed fast growth in the last financial year. The company's revenue surged on 18.2% in FY2016. The growth also happened in EBITDA of 8.64% for the same period.
In the last 3 years Wonderful Sky Financial Group Holdings Ltd showed fast revenue growth of 21.7% from FY2013 to FY2016 annualy. EBITDA surged on 21.2% from FY2013 to FY2016 annualy.
Wonderful Sky Financial Group Holdings Ltd ($1260) financials for the last 5 years
| mln. HKD | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 329 | 344 | 459 | 524 | 619 |
|---|
| Revenue growth, % | | 4.5% | 33.5% | 14.2% | 18.2% |
|---|
| Gross margin, % | 55.4% | 53.4% | 49.5% | 54.2% | 52.7% |
|---|
| SG&A, % | | 14.8% | 11.8% | 11.9% | 14.4% |
|---|
| EBITDA | 152 | 138 | 176 | 226 | 246 |
|---|
| EBITDA growth, % | | -9.0% | 27.6% | 28.4% | 8.6% |
|---|
| EBITDA margin, % | 46.2% | 40.2% | 38.5% | 43.2% | 39.7% |
|---|
| Net Income | 120 | 124 | 154 | 199 | 240 |
|---|
| Net Income margin, % | 36.6% | 36.0% | 33.5% | 38.0% | 38.7% |
|---|
| |
| CAPEX | 1 | 2 | 2 | 6 | 33 |
|---|
| CAPEX/Revenue, % | 0.373% | 0.610% | 0.347% | 1.18% | 5.35% |
|---|
| Debt | 0 | 0 | 0 | 159 | 314 |
|---|
| Cash | 432 | 354 | 486 | 286 | 151 |
|---|
| Net Debt/EBITDA | -2.8x | -2.6x | -2.8x | -0.6x | 0.7x |
|---|
| |
| ROIC, % | 51.5% | 26.6% | 30.0% | 29.5% | 19.8% |
|---|
| ROE, % | 43.9% | 24.4% | 26.7% | 29.7% | 24.7% |
|---|
Profitability and return on investment
EBITDA margin declined slightly from 43.2% in FY2015 to 39.7% in FY2016. In the longer period EBITDA margin decreased slightly on 0.500 pp from 40.2% in FY2013 to 39.7% in FY2016.
We call Wonderful Sky Financial Group Holdings Ltd an attractive growth stock as together with the growth it delivers high ROIC at 19.8%. During the last three years it dropped - it was 26.6% in FY2013. For the last three years the average ROIC was 26.4%.
Wonderful Sky Financial Group Holdings Ltd's Net Income margin increased slightly on 0.700 pp from 38% to 38.7% in FY2016. In the last 3 years Wonderful Sky Financial Group Holdings Ltd showed Net Income margin growth of 2.70 pp from 36% in FY2013 to 38.7% in FY2016.
Wonderful Sky Financial Group Holdings Ltd operates at ROE of 24.7%. It's average ROE for the last three years was 27.0%.
Capital expenditures (CAPEX)
To fuel this fast growth Wonderful Sky Financial Group Holdings Ltd had to invest in CAPEX.In FY2016 Wonderful Sky Financial Group Holdings Ltd had CAPEX/Revenue of 5.35%. Wonderful Sky Financial Group Holdings Ltd showed fast CAPEX/Revenue growth of 4.74 pp from 0.610% in FY2013 to 5.35% in FY2016. For the last three years the average CAPEX/Revenue was 2.29%.
Leverage (Debt)
The company has low debt level at 0.7x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage surged on 3.22x from -2.56x in FY2013 to 0.66x in FY2016.
Valuation vs. comparable companies
The company trades at 10.2x EV/EBITDA which is 66.7% lower than 30.8x Commercial Services industry avearge calculated based on 74 companies. The company trades at 9.8x P/E which is 75.3% lower than 39.7x Commercial Services industry avearge calculated based on 7 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 11.8x EV/(EBITDA-CAPEX) for Wonderful Sky Financial Group Holdings Ltd which is higher vs. -0.8x Commercial Services peer group avearge calculated on the basis of 7 companies.
Peers in Commercial Services
Below we provide Wonderful Sky Financial Group Holdings Ltd benchmarking against other companies in Commercial Services 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 |
|---|
| Kai Yuan Holdings Ltd ($1215) | 99.1% | 14.9% | -88.3% | 271.8% | |
| China Seven Star Holdings Ltd ($245) | 6.7% | -81.8% | -39.3% | 195.3% | |
| China Smartpay Group Holdings Ltd ($8325) | | 274.7% | 75.6% | 124.5% | 79.5% |
| Celebrate International Holdings Ltd ($8212) | -90.1% | 1,437.6% | -6.3% | 117.0% | |
| Haier Healthwise Holdings Ltd ($348) | -22.0% | -50.1% | -7.5% | 101.1% | |
| |
|---|
| Median (65 companies) | 6.3% | 8.6% | 9.8% | 4.0% | 10.9% |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | | 4.5% | 33.5% | 14.2% | 18.2% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| HC International Inc ($2280) | 87.5% | 91.9% | 92.5% | 89.6% | |
| Winto Group Holdings Ltd ($8238) | 90.2% | 93.4% | 92.0% | 88.4% | |
| Dingyi Group Investment Ltd ($508) | 75.8% | | 64.5% | 86.0% | 89.6% |
| Fu Shou Yuan International Group Ltd ($1448) | 80.5% | 80.4% | 80.0% | 77.6% | |
| Nirvana Asia Ltd ($1438) | 68.3% | 69.6% | 70.5% | 75.7% | |
| |
|---|
| Median (60 companies) | 31.6% | 30.7% | 31.0% | 31.2% | 34.7% |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 55.4% | 53.4% | 49.5% | 54.2% | 52.7% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Zuoli Kechuang Micro-Finance Co Ltd ($6866) | 61.6% | 84.9% | 75.9% | 80.9% | |
| Shenzhen International Holdings Ltd ($152) | 60.2% | 65.8% | 97.1% | 73.6% | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 78.3% | 74.5% | 74.0% | 71.6% | |
| CAR Inc ($699) | 43.6% | 30.1% | 43.1% | 67.4% | |
| Jiangsu Expressway Co Ltd ($177) | 57.0% | 60.7% | 59.3% | 61.5% | |
| |
|---|
| Median (65 companies) | 17.5% | 14.9% | 11.2% | 9.8% | 2.0% |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 46.2% | 40.2% | 38.5% | 43.2% | 39.7% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Blue Sky Power Holdings Ltd ($6828) | 21.3% | 9.0% | 13.9% | 47.4% | |
| COSCO Pacific Ltd ($1199) | 96.6% | 66.6% | 43.3% | 45.8% | |
| Shenzhen International Holdings Ltd ($152) | 23.0% | 22.1% | 20.9% | 35.0% | |
| Celebrate International Holdings Ltd ($8212) | 211.7% | 12.0% | 6.2% | 34.2% | |
| China Maple Leaf Educational Systems Ltd ($1317) | 25.7% | 50.9% | 21.1% | 32.8% | |
| |
|---|
| Median (65 companies) | 3.1% | 4.0% | 3.2% | 3.9% | 1.7% |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 0.4% | 0.6% | 0.3% | 1.2% | 5.4% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 1010 Printing Group Ltd ($1127) | 13.5% | 20.8% | 17.8% | 19.9% | |
| China Packaging Holdings Development Ltd ($1439) | 52.0% | 46.6% | 34.1% | 19.8% | |
| iOne Holdings Ltd ($982) | 12.5% | 11.1% | 9.4% | 19.2% | |
| CAR Inc ($699) | 5.2% | 2.7% | 12.2% | 19.0% | |
| eprint Group Ltd ($1884) | 33.0% | 34.8% | 15.4% | 18.5% | 13.3% |
| |
|---|
| Median (65 companies) | 6.3% | 5.8% | 5.8% | 3.2% | 2.0% |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 51.5% | 26.6% | 30.0% | 29.5% | 19.8% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Celebrate International Holdings Ltd ($8212) | | | | 22.2x | |
| Kai Yuan Holdings Ltd ($1215) | -143.8x | -0.7x | | 18.8x | |
| Eagle Legend Asia Ltd ($936) | 4.0x | 4.0x | 3.3x | 6.2x | |
| Sichuan Expressway Co Ltd ($107) | 2.7x | 3.8x | 4.3x | 5.5x | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 4.5x | 3.1x | 2.7x | 5.3x | |
| |
|---|
| Median (42 companies) | 0.0x | -0.7x | -0.5x | -0.5x | -2.3x |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | -2.8x | -2.6x | -2.8x | -0.6x | 0.7x |
