The growth of Centralnic Group is hard to miss
05 May 2015 • About Centralnic Group (
$CNIC) • By InTwits
Centralnic Group is an attractive growth stock in Software & Computer Services industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Centralnic Group showed growth in the last financial year. The company's revenue surged on 98.9% in FY2014. The growth also happened in EBITDA of 58.3% for the same period.
In the longer period Centralnic Group showed fast revenue growth of 33.8% from 2011 to 2014 annually. EBITDA surged on 21.7% from 2011 to 2014 annually.
Centralnic Group ($CNIC) financials for the last 5 years
| mln. £ | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 2 | 3 | 3 | 3 | 6 |
|---|
| Revenue growth, % | | 36.3% | 15.9% | 4.0% | 98.9% |
|---|
| Gross margin, % | 55.6% | 61.0% | 73.4% | 76.6% | 58.9% |
|---|
| SG&A, % | | | 44.9% | 51.7% | 47.0% |
|---|
| EBITDA | 1 | 1 | 1 | 1 | 2 |
|---|
| EBITDA growth, % | | 40.0% | 36.1% | -16.3% | 58.3% |
|---|
| EBITDA margin, % | 32.0% | 32.9% | 38.7% | 31.1% | 24.8% |
|---|
| Net Income | 0 | 0 | 1 | 1 | 0 |
|---|
| Net Income margin, % | 9.91% | 15.9% | 20.2% | 17.4% | 6.00% |
|---|
| |
| CAPEX | 0 | 0 | 0 | 0 | 0 |
|---|
| CAPEX/Revenue, % | 2.26% | 0.514% | 0.682% | 1.64% | 2.08% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 0 | 0 | 0 | 5 | 3 |
|---|
| Net Debt/EBITDA | -0.4x | -0.0x | -0.1x | -5.2x | -2.0x |
|---|
| |
| ROIC, % | | 121.9% | 127.8% | 24.5% | 16.4% |
|---|
| ROE, % | | 107.1% | 102.7% | 19.3% | 6.2% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period the company showed big decline in EBITDA margin of 8.10 pp from 32.9% in 2011 to 24.8% in 2014.
Centralnic Group shows attractive ROIC at 16.4% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 122% in FY2011. Average ROIC for the last three years was 56.2%.
Net Income margin dropped on 11.4 pp from 17.4% to 6% in 2014. In the longer period Net Income margin dropped on 9.90 pp from 15.9% in 2011 to 6% in 2014.
Centralnic Group operates at ROE of 6.22%. For the last three years the average ROE was 42.7%.
Capital expenditures (CAPEX)
Centralnic Group's CAPEX/Revenue was 2.08% in FY2014. Centralnic Group's CAPEX/Revenue surged on 1.56 pp from 0.514% in 2011 to 2.08% in 2014. Average CAPEX/Revenue for the last three years was 1.47%.
Leverage (Debt)
Having such a fast growth profile the company keeps negative net debt at -2.0x Net Debt/EBITDA. In the last 3 years the company showed fast leverage growth of 2.01x from -0.02x in 2011 to -2.03x in 2014.
Valuation vs. comparable companies
The market closed today at 11.6x EV/EBITDA for Centralnic Group which is 27.6% lower than 16.0x Software & Computer Services peer group avearge calculated on the basis of 126 companies. The company trades at 56.1x P/E which is 5.55% higher than 53.2x Software & Computer Services industry avearge calculated based on 13 companies.
Peers in Software & Computer Services
Below we provide Centralnic Group benchmarking against other companies in Software & Computer 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, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Coms ($COMS) | | 8.4% | -68.6% | 46.8% | 763.3% |
| Netdimensions(Hldgs)Ltd ($NETD) | | 48.5% | 12.5% | 17.5% | 40.1% |
| Wandisco ($WAND) | | 30.0% | 55.5% | 32.8% | 40.0% |
| Ubisense Group ($UBI) | | 34.4% | 2.1% | 11.2% | 29.8% |
| Proactis Hldgs ($PHD) | | -15.5% | 20.4% | 7.0% | 26.2% |
| |
|---|
| Median (32 companies) | | 7.5% | 5.4% | 6.1% | 0.2% |
|---|
| Centralnic Group ($CNIC) | | 36.3% | 15.9% | 4.0% | 98.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Lombard Risk Management ($LRM) | 98.1% | 99.3% | 99.0% | 98.8% | 99.2% |
| Phoenix It Group ($PNX) | 97.4% | 97.1% | 97.0% | 97.2% | 97.6% |
| Netcall ($NET) | 91.3% | 86.9% | 88.2% | 89.7% | 91.0% |
| Sanderson Group ($SND) | 69.0% | 82.3% | 83.6% | 87.6% | 84.9% |
| Netdimensions(Hldgs)Ltd ($NETD) | 92.3% | 90.0% | 91.3% | 90.2% | 82.4% |
| |
|---|
| Median (28 companies) | 59.9% | 55.8% | 59.1% | 61.7% | 59.4% |
|---|
| Centralnic Group ($CNIC) | 55.6% | 61.0% | 73.4% | 76.6% | 58.9% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Eservglobal ($ESG) | -26.4% | 112.6% | -32.2% | -2.6% | 100.2% |
| Mail.Ru Group Ltd ($61HE) | 16.6% | 39.9% | 43.1% | 47.4% | 50.5% |
| Lombard Risk Management ($LRM) | -14.5% | 6.2% | 23.9% | 30.8% | 29.3% |
| Netcall ($NET) | 24.9% | 19.3% | 21.7% | 23.2% | 25.5% |
| Statpro Group ($SOG) | 32.5% | 26.5% | 30.5% | 28.8% | 24.7% |
| |
|---|
| Median (34 companies) | 11.0% | 13.8% | 13.2% | 10.7% | 9.7% |
|---|
| Centralnic Group ($CNIC) | 32.0% | 32.9% | 38.7% | 31.1% | 24.8% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Anite ($AIE) | 2.7% | 3.0% | 4.0% | 3.9% | 5.8% |
| Statpro Group ($SOG) | 2.8% | 3.1% | 2.0% | 2.9% | 5.8% |
| Wandisco ($WAND) | 1.0% | 0.2% | 2.3% | 4.0% | 4.2% |
| Unisys Corp ($USY) | 3.7% | 2.1% | 2.1% | 2.5% | 4.1% |
| International Bus Mach Corp ($IBM) | 4.2% | 3.8% | 3.9% | 3.7% | 4.0% |
| |
|---|
| Median (34 companies) | 1.4% | 1.4% | 1.5% | 1.6% | 1.9% |
|---|
| Centralnic Group ($CNIC) | 2.3% | 0.5% | 0.7% | 1.6% | 2.1% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Eservglobal ($ESG) | -36.0% | 50.0% | -24.8% | -13.0% | 67.9% |
| Lombard Risk Management ($LRM) | -176.4% | 37.7% | 51.4% | 39.2% | 30.2% |
| Progility ($PGY) | 5.6% | 12.7% | 10.3% | 0.0% | 29.2% |
| International Bus Mach Corp ($IBM) | 33.0% | 36.2% | 36.1% | 31.0% | 28.1% |
| Pennant International Group ($PEN) | 12.6% | 15.3% | 32.3% | 39.1% | 27.3% |
| |
|---|
| Median (34 companies) | 8.7% | 11.6% | 10.1% | 5.3% | 7.7% |
|---|
| Centralnic Group ($CNIC) | | 121.9% | 127.8% | 24.5% | 16.4% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Parity Group ($PTY) | | 6.9x | 4.7x | | 4.9x |
| Escher Group Hldgs ($ESCH) | 5.9x | 2.1x | 0.3x | 0.4x | 2.4x |
| Ubisense Group ($UBI) | -3.7x | -4.2x | -2.2x | -0.4x | 1.8x |
| Progility ($PGY) | 2.3x | 1.0x | 2.0x | | 1.8x |
| International Bus Mach Corp ($IBM) | 0.8x | 0.8x | 0.9x | 1.2x | 1.4x |
| |
|---|
| Median (27 companies) | -1.3x | -1.3x | -0.9x | -0.5x | -0.3x |
|---|
| Centralnic Group ($CNIC) | -0.4x | -0.0x | -0.1x | -5.2x | -2.0x |
