Looking for fundamental growth story? Pay attention to Neo Corp International

10-06-2014 • About Neo Corp International ($NEOCORP) • By InTwits

Have you thought about Neo Corp International as a growth stock? Its revenue performance, profitability and financial model stands it out vs. other public companies on the market.

Growth story

Neo Corp International showed growth in the last financial year. The company's revenue surged on 56.4% in FY2014. In addition to revenue Neo Corp International also keeps delivering EBITDA growth. It was 42.4% in FY2014

In the last 3 years the company showed fast revenue growth of 45.9% from FY2011 to FY2014 annually. EBITDA surged on 41.4% from FY2011 to FY2014 annually.

Neo Corp International ($NEOCORP) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	8,570	3,153	4,311	6,261	9,793
Revenue growth, %		-63.2%	36.7%	45.2%	56.4%
SG&A, %
EBITDA	223	360	557	715	1,018
EBITDA growth, %		61.7%	54.7%	28.3%	42.4%
EBITDA margin, %	2.60%	11.4%	12.9%	11.4%	10.4%
Net Income	100	159	212	211	300
Net Income margin, %	1.17%	5.05%	4.92%	3.38%	3.06%

CAPEX	0	0	0	0	0
CAPEX/Revenue, %	0%	0%	0%	0%	0%
Debt	771	1,410	2,057	2,470	3,677
Cash	61	122	127	183	483
Net Debt/EBITDA	3.2x	3.6x	3.5x	3.2x	3.1x

ROIC, %	16.2%	17.4%	14.9%	13.7%	15.7%
ROE, %	19.0%	20.1%	13.0%	8.8%	11.2%

Profitability and return on investment

EBITDA growth was partly attributed to margin expansion. In the longer period EBITDA margin decreased on 1 pp from 11.4% in FY2011 to 10.4% in FY2014.

We call Neo Corp International an attractive growth stock as together with the growth it delivers high ROIC at 15.7%. During the last three years it decreased - it was 17.4% in FY2011. For the last three years the average ROIC was 14.7%.

Net Income margin decreased on 0.300 pp from 3.40% to 3.10% in FY2014. If we look for the longer period the company showed big decline in Net Income margin of 2 pp from 5.10% in FY2011 to 3.10% in FY2014.

Neo Corp International operates at ROE of 11.2%. Average ROE for the last three years was 11.0%.

Capital expenditures (CAPEX)

In FY2014 the company had CAPEX/Revenue of 0%. The company's CAPEX/Revenue didn't change on 0 pp from 0% in FY2011 to 0% in FY2014.

Leverage (Debt)

Neo Corp International has medium debt level at 3.1x Net Debt/EBITDA to maintain high growth. In the last 3 years leverage dropped on 0.44x from 3.57x in FY2011 to 3.14x in FY2014.

Valuation vs. comparable companies

The company trades at 3.8x EV/EBITDA which is 76.1% lower than 16.0x Containers & Packaging industry avearge calculated based on 86 companies. The market closed today at 2.3x P/E for Neo Corp International which is 82.3% lower than 13.2x Containers & Packaging peer group avearge calculated on the basis of 13 companies.

Peers in Containers & Packaging

Below you can find Neo Corp International benchmarking vs. other companies in Containers & Packaging industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Gopala Polyplast ($GOPALA)		-42.9%	-1.7%	17.0%	29.6%
Shree Rama Multi-Tech ($SHREERAMA)		-18.3%	-25.0%	18.2%	23.3%
Shri Jagdamba Polymers ($SHRJAGP)		-66.8%	35.5%	38.3%	21.7%
Time Technoplast ($TIMETECHNO)		-58.8%	19.8%	17.6%	21.6%
Kanpur Plastipack ($KANPRPLA)		-59.3%	57.2%	-4.6%	21.1%

Median (19 companies)		-46.5%	14.8%	15.3%	13.9%
Neo Corp International ($NEOCORP)		-63.2%	36.7%	45.2%	56.4%

Top companies by EBITDA margin, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Control Print ($CONTROLPR)			13.9%	19.2%	22.5%
Piramal Glass ($PIRAMGLAS)	10.0%	24.4%	23.7%	18.9%	15.5%
Essel Propack ($ESSELPRO)		17.8%	17.0%	17.4%	16.9%
Manaksia ($MANAKSIA)	19.2%	16.5%	14.4%	17.4%	20.3%
Time Technoplast ($TIMETECHNO)	6.3%	18.5%	15.9%	16.2%	14.1%

Median (19 companies)	3.8%	12.6%	12.9%	10.6%	12.2%
Neo Corp International ($NEOCORP)	2.6%	11.4%	12.9%	11.4%	10.4%

Top companies by CAPEX/Revenue, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Essel Propack ($ESSELPRO)		7.9%	10.0%	6.7%	8.5%
Piramal Glass ($PIRAMGLAS)	1.0%	12.6%	20.7%	6.0%	7.7%
Control Print ($CONTROLPR)			3.0%	5.0%	7.5%
Hindusthan National Glass & Industries ($HINDNATGLS)	8.6%	21.7%	75.5%	25.0%	6.7%
Time Technoplast ($TIMETECHNO)	5.0%	18.5%	17.9%	11.1%	6.2%

Median (7 companies)	3.3%	10.7%	8.9%	6.7%	6.7%

Top companies by ROIC, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Control Print ($CONTROLPR)				19.7%	22.2%
Manaksia ($MANAKSIA)	15.0%	12.7%	12.9%	15.5%	16.0%
Kg Petrochem ($KGPETRO)	6.5%	5.0%	10.8%	10.1%	14.3%
Hitech Plast ($HITECHPLAS)	21.1%	18.1%	13.8%	12.6%	14.0%
Essel Propack ($ESSELPRO)			8.6%	9.9%	12.5%

Median (30 companies)	8.5%	8.5%	9.3%	9.9%	11.2%
Neo Corp International ($NEOCORP)	16.2%	17.4%	14.9%	13.7%	15.7%

Top companies by Net Debt / EBITDA

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Hindusthan National Glass & Industries ($HINDNATGLS)	2.0x	2.1x	7.4x	15.8x	11.2x
Shree Rama Multi-Tech ($SHREERAMA)	66.8x	23.2x	117.6x	15.7x
Union Quality Plastics ($UNQTYMI)				14.9x	12.9x
Salguti Industries ($SALGUTI)	6.0x		6.0x	6.0x
Rishi Techtex ($RISHITECH)	5.4x	3.3x	0.0x	5.9x	2.6x

Median (26 companies)	3.5x	3.0x	3.1x	3.5x	0.9x
Neo Corp International ($NEOCORP)	3.2x	3.6x	3.5x	3.2x	3.1x

Neo Corp International stock price chart

Neo Corp International financials

mln.	FY2010	FY2011	FY2012

Revenue	8,570	3,153	4,311
EBITDA	222.8	360.3	557.2
Net income	100.4	159.2	212.1
CAPEX	0.000	0.000	0.000
Debt	770.9	1,410	2,057
Cash	61.451	121.9	127.4

About Neo Corp International

Neo Corp International Limited manufactures and sells technical textiles worldwide. It offers Packtech products, such as heavyweight woven fabrics used for bags, sacks, and FIBCs; wrappings for textile bales, carpets, etc.; lightweight woven used as Leno bags; and other food and industrial product wrappings for the temporary containment, carriage, storage, and protection of industrial, agricultural, and other goods. The company also provides Agrotech products comprising Agro Net for the protection of food produce, animals, and land, as well as for crop production, forestry, horticulture, animal and poultry rearing, and fishing; woven ground covers that are used in various applications, such as landscaping, green houses, nurseries, shade structures, etc.; HDPE/PP monofilament/tape 3 strand ropes for baling agricultural yield, livestock security, submersible pumps, bird protection nets, and khat dori applications; mulch films used for the growth of plants; and Vermibed used to produce organic fertilizers. In addition, it offers geotextile woven fabrics for use in various civil engineering projects, including pavements/roads/railroad beds/airfields, retaining wall earth embankment, concrete revetment, drain construction waterways, coastal engineering/defense, landfill, and industrial and contaminated land reclamation projects. Further, the company provides Buildtech products comprising Safety Nets for the building and construction safety purposes; Hometech products, such as Carpet Backing fabrics for making of carpets; Vermi Compost; and Rooftop farming, which is the cultivation of produce for food on the roof of a building. In addition, it is involved in the wind power generation activities; and operation of consignment stockist and agency of Indian Oil Corporation Limited for polymer. The company was founded in 1985 and is based in Dhar, India.