Is Zhejiang Expressway Co a solid growth stock? - The numbers tells it is
25 Mar 2015 • About Zhejiang Expressway Co (
$ZHEH) • By InTwits
Have you thought about Zhejiang Expressway Co as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Zhejiang Expressway Co showed fast growth in the last financial year. Zhejiang Expressway Co's revenue surged on 20.5% in FY2014. Together with revenue growth Zhejiang Expressway Co also managed to keep EBITDA growth. EBITDA grew 26.3% for the same period.
In the last 3 years the company showed fast revenue growth of 11.7% from 2011 to 2014 annually. EBITDA surged on 12.2% from 2011 to 2014 annually.
Zhejiang Expressway Co ($ZHEH) financials for the last 5 years
| mln. CNY | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 6,769 | 6,781 | 6,927 | 7,851 | 9,460 |
|---|
| Revenue growth, % | | 0.2% | 2.2% | 13.3% | 20.5% |
|---|
| Gross margin, % | 44.4% | 39.9% | 34.0% | 36.9% | 37.7% |
|---|
| SG&A, % | 1.23% | 1.24% | 1.25% | 1.08% | 1.12% |
|---|
| EBITDA | 3,999 | 3,583 | 3,435 | 4,009 | 5,064 |
|---|
| EBITDA growth, % | | -10.4% | -4.1% | 16.7% | 26.3% |
|---|
| EBITDA margin, % | 59.1% | 52.8% | 49.6% | 51.1% | 53.5% |
|---|
| Net Income | 1,872 | 1,805 | 1,649 | 1,907 | 2,265 |
|---|
| Net Income margin, % | 27.6% | 26.6% | 23.8% | 24.3% | 23.9% |
|---|
| |
| CAPEX | 302 | 449 | 365 | 252 | 1,270 |
|---|
| CAPEX/Revenue, % | 4.46% | 6.62% | 5.27% | 3.21% | 13.4% |
|---|
| Debt | 1,822 | 1,463 | 2,340 | 2,150 | 13,973 |
|---|
| Cash | 5,682 | 3,120 | 3,392 | 1,807 | 3,357 |
|---|
| Net Debt/EBITDA | -1.0x | -0.5x | -0.3x | 0.1x | 2.1x |
|---|
| |
| ROIC, % | 15.9% | 13.3% | 11.2% | 13.3% | 13.2% |
|---|
| ROE, % | 12.9% | 12.1% | 10.6% | 11.9% | 13.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. Zhejiang Expressway Co's EBITDA margin increased slightly on 2.40 pp from 51.1% to 53.5% in 2014. In the last 3 years Zhejiang Expressway Co showed small growth in EBITDA margin of 0.700 pp from 52.8% in 2011 to 53.5% in 2014.
We call Zhejiang Expressway Co an attractive growth stock as together with the growth it delivers high ROIC at 13.2%. During the last three years it showed almost no change - it was 13.3% in FY2011. Average ROIC for the last three years was 12.6%.
Zhejiang Expressway Co's Net Income margin decreased slightly on 0.400 pp from 24.3% to 23.9% in 2014. If we look for the longer period Net Income margin dropped on 2.70 pp from 26.6% in 2011 to 23.9% in 2014.
Zhejiang Expressway Co operates at ROE of 13.7%. It's average ROE for the last three years was 12.1%.
Capital expenditures (CAPEX)
To this fast growth Zhejiang Expressway Co had to invest in CAPEX.In FY2014 Zhejiang Expressway Co had CAPEX/Revenue of 13.4%. CAPEX/Revenue surged on 6.81 pp from 6.62% in 2011 to 13.4% in 2014. Average CAPEX/Revenue for the last three years was 7.30%.
Leverage (Debt)
Zhejiang Expressway Co has medium debt level at 2.1x Net Debt/EBITDA to maintain high growth. If we look for the longer period leverage surged on 2.56x from -0.46x in 2011 to 2.10x in 2014.
Peers in Industrial Transportation
Below you can find Zhejiang Expressway Co benchmarking vs. other companies in Industrial Transportation 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, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Global Ports Investments ($GLPR) | | 31.1% | 0.1% | -33.8% | 69.3% |
| Wisdom Marine Lines Co Limited ($WML) | | 25.1% | 11.2% | -0.8% | 8.8% |
| Capital Lease Aviation ($CLA) | | -31.4% | 1.0% | -4.5% | 8.0% |
| Evergreen Marine Corp(Taiwan) ($EGMD) | | | | -1.3% | 3.6% |
| Bba Aviation ($BBA) | | | | 1.8% | 3.2% |
| |
|---|
| Median (8 companies) | | 4.7% | 0.5% | -2.2% | 3.4% |
|---|
| Zhejiang Expressway Co ($ZHEH) | | 0.2% | 2.2% | 13.3% | 20.5% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Global Ports Investments ($GLPR) | 48.1% | 52.6% | 40.3% | 58.8% | 58.8% |
| Wisdom Marine Lines Co Limited ($WML) | 34.9% | 37.4% | 30.3% | 20.3% | 20.7% |
| Bba Aviation ($BBA) | | | 18.9% | 18.9% | 18.6% |
| Interbulk Group ($INB) | 14.3% | 13.8% | 13.9% | 12.8% | 13.0% |
| Evergreen Marine Corp(Taiwan) ($EGMD) | | | 3.0% | 0.3% | 5.1% |
| |
|---|
| Median (5 companies) | 34.9% | 37.4% | 18.9% | 18.9% | 18.6% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 44.4% | 39.9% | 34.0% | 36.9% | 37.7% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Capital Lease Aviation ($CLA) | 84.4% | 105.0% | 101.2% | 88.5% | 89.2% |
| Global Ports Investments ($GLPR) | 53.0% | 55.1% | 57.1% | 60.3% | 69.6% |
| Frontline Ltd ($FRO) | 42.2% | 13.7% | 17.2% | -4.6% | 64.5% |
| Wisdom Marine Lines Co Limited ($WML) | 55.6% | 60.1% | 56.9% | 52.0% | 52.8% |
| Dx ($DX.) | 16.9% | 17.6% | 15.5% | 11.3% | 11.0% |
| |
|---|
| Median (8 companies) | 47.6% | 36.3% | 16.4% | 11.0% | 31.9% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 59.1% | 52.8% | 49.6% | 51.1% | 53.5% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Frontline Ltd ($FRO) | 47.1% | 10.2% | 2.5% | 0.5% | 83.6% |
| Global Ports Investments ($GLPR) | 13.7% | 26.3% | 15.9% | 18.9% | 4.2% |
| Wisdom Marine Lines Co Limited ($WML) | 260.6% | 160.8% | 163.8% | 108.4% | 4.2% |
| Bba Aviation ($BBA) | | | 2.3% | 3.2% | 3.7% |
| Evergreen Marine Corp(Taiwan) ($EGMD) | | | 10.6% | 7.2% | 2.8% |
| |
|---|
| Median (8 companies) | 7.5% | 6.2% | 2.4% | 5.2% | 3.3% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 4.5% | 6.6% | 5.3% | 3.2% | 13.4% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Dx ($DX.) | | 8.2% | 9.3% | 9.6% | 14.5% |
| Global Ports Investments ($GLPR) | 13.7% | 18.5% | 17.0% | 7.1% | 12.1% |
| Bba Aviation ($BBA) | | | 9.6% | 9.6% | 8.1% |
| Frontline Ltd ($FRO) | 7.8% | -3.4% | -1.0% | -8.9% | 7.6% |
| Capital Lease Aviation ($CLA) | 8.9% | 6.7% | 7.1% | 7.2% | 6.6% |
| |
|---|
| Median (8 companies) | 8.5% | 7.6% | 7.3% | 6.2% | 7.1% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 15.9% | 13.3% | 11.2% | 13.3% | 13.2% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Wisdom Marine Lines Co Limited ($WML) | 7.7x | 7.9x | 8.5x | 9.0x | 9.1x |
| Evergreen Marine Corp(Taiwan) ($EGMD) | | | 7.9x | 33.6x | 6.7x |
| Interbulk Group ($INB) | 4.5x | 3.5x | 3.3x | 4.1x | 3.5x |
| Capital Lease Aviation ($CLA) | 3.9x | 3.9x | 2.8x | 4.0x | 3.4x |
| Global Ports Investments ($GLPR) | 0.8x | 0.3x | 0.8x | 6.6x | 2.8x |
| |
|---|
| Median (8 companies) | 5.0x | 5.9x | 5.6x | 6.6x | 3.1x |
|---|
| Zhejiang Expressway Co ($ZHEH) | -1.0x | -0.5x | -0.3x | 0.1x | 2.1x |
