Zhejiang Expressway Co is a powerful growth stock
24 Mar 2016 • About Zhejiang Expressway Co (
$ZHEH) • By InTwits
Zhejiang Expressway Co is an attractive growth stock in Industrial Transportation industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Zhejiang Expressway Co showed growth in the last financial year. The company's revenue surged on 32.2% in FY2015. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 43.3% for the same period.
If we look for the longer period Zhejiang Expressway Co showed fast revenue growth of 21.8% from 2012 to 2015 annually. EBITDA surged on 28.3% from 2012 to 2015 annually.
Zhejiang Expressway Co ($ZHEH) financials for the last 5 years
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 6,781 | 6,927 | 7,851 | 9,460 | 12,507 |
|---|
| Revenue growth, % | | 2.2% | 13.3% | 20.5% | 32.2% |
|---|
| Gross margin, % | 39.9% | 34.0% | 36.9% | 37.7% | 43.6% |
|---|
| SG&A, % | 1.24% | 1.25% | 1.08% | 1.12% | 0.869% |
|---|
| EBITDA | 3,583 | 3,435 | 4,009 | 5,064 | 7,258 |
|---|
| EBITDA growth, % | | -4.1% | 16.7% | 26.3% | 43.3% |
|---|
| EBITDA margin, % | 52.8% | 49.6% | 51.1% | 53.5% | 58.0% |
|---|
| Net Income | 1,805 | 1,649 | 1,907 | 2,265 | 2,990 |
|---|
| Net Income margin, % | 26.6% | 23.8% | 24.3% | 23.9% | 23.9% |
|---|
| |
| CAPEX | 449 | 365 | 252 | 1,270 | 327 |
|---|
| CAPEX/Revenue, % | 6.62% | 5.27% | 3.21% | 13.4% | 2.61% |
|---|
| Debt | 1,463 | 2,340 | 2,150 | 13,973 | 20,169 |
|---|
| Cash | 3,120 | 3,392 | 1,807 | 3,357 | 4,983 |
|---|
| Net Debt/EBITDA | -0.5x | -0.3x | 0.1x | 2.1x | 2.1x |
|---|
| |
| ROIC, % | 13.3% | 11.2% | 13.3% | 13.2% | 15.3% |
|---|
| ROE, % | 12.1% | 10.6% | 11.9% | 13.7% | 17.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. EBITDA margin increased on 4.50 pp from 53.5% to 58% in 2015. In the longer period EBITDA margin surged on 8.40 pp from 49.6% in 2012 to 58% in 2015.
We call Zhejiang Expressway Co an attractive growth stock as together with the growth it delivers high ROIC at 15.3%. During the last three years it surged - it was 11.2% in FY2012. For the last three years the average ROIC was 14.0%.
Net Income margin didn't change on 0 pp from 23.9% to 23.9% in 2015. In the last 3 years the company showed almost no change in Net Income margin of 0.100 pp from 23.8% in 2012 to 23.9% in 2015.
Zhejiang Expressway Co operates at ROE of 17.7%. For the last three years the average ROE was 14.5%.
Capital expenditures (CAPEX)
In FY2015 the company had CAPEX/Revenue of 2.61%. CAPEX/Revenue dropped on 2.66 pp from 5.27% in 2012 to 2.61% in 2015. It's average CAPEX/Revenue for the last three years was 6.42%.
Leverage (Debt)
Having such a fast growth profile Zhejiang Expressway Co keeps medium debt level at 2.1x Net Debt/EBITDA. In the last 3 years the company showed fast leverage growth of 2.40x from -0.31x in 2012 to 2.09x in 2015.
Peers in Industrial Transportation
Below we provide Zhejiang Expressway Co benchmarking against other companies in Industrial Transportation 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hellenic Carriers Ltd ($HCL) | | -60.3% | -17.0% | 88.5% | -36.7% |
| Global Ports Investments ($GLPR) | | 0.1% | -33.8% | 69.3% | -27.9% |
| Yangming Marine Transport Corp ($YMTD) | -9.2% | 10.9% | -9.5% | 13.4% | |
| Dp World Ltd ($0P5M) | | 4.8% | -1.5% | 12.7% | 16.7% |
| Wisdom Marine Lines Co Limited ($WML) | | 11.2% | -0.8% | 8.8% | 21.6% |
| |
|---|
| Median (14 companies) | 28.3% | 2.9% | -2.3% | 3.4% | -7.1% |
|---|
| Zhejiang Expressway Co ($ZHEH) | | 2.2% | 13.3% | 20.5% | 32.2% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Novorossiysk Commercial Sea Port ($NCSP) | 52.8% | 57.9% | 54.3% | 61.0% | |
| Global Ports Investments ($GLPR) | 52.6% | 40.3% | 58.8% | 58.8% | 68.0% |
| Dp World Ltd ($0P5M) | 32.7% | 35.8% | 39.8% | 41.9% | 48.4% |
| Globaltrans Investment ($GLTR) | 30.1% | 31.4% | 25.8% | 23.2% | |
| Wisdom Marine Lines Co Limited ($WML) | 37.4% | 30.3% | 20.3% | 20.7% | 24.1% |
| |
|---|
| Median (9 companies) | 32.7% | 30.3% | 20.3% | 20.7% | 21.3% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 39.9% | 34.0% | 36.9% | 37.7% | 43.6% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Capital Lease Aviation ($CLA) | 105.0% | 101.2% | 88.5% | 89.2% | 80.5% |
| Global Ports Investments ($GLPR) | 55.1% | 57.1% | 60.3% | 69.6% | 71.2% |
| Frontline Ltd ($FRO) | 13.7% | 17.2% | -4.6% | 64.5% | 74.6% |
| Novorossiysk Commercial Sea Port ($NCSP) | 52.7% | 48.4% | 26.8% | 58.3% | |
| Wisdom Marine Lines Co Limited ($WML) | 60.1% | 56.9% | 52.0% | 52.8% | 55.2% |
| |
|---|
| Median (14 companies) | 33.8% | 22.6% | 17.1% | 17.0% | 28.5% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 52.8% | 49.6% | 51.1% | 53.5% | 58.0% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Frontline Ltd ($FRO) | 10.2% | 2.5% | 0.5% | 83.6% | 171.4% |
| Hellenic Carriers Ltd ($HCL) | 1.3% | 11.7% | 246.3% | 75.1% | 0.7% |
| Dp World Ltd ($0P5M) | 15.1% | 20.6% | 33.4% | 20.7% | 28.9% |
| Center Fr Cargo Cont Trf Trcnt PJSC ($TRCN) | 13.7% | 15.6% | 16.9% | 11.5% | |
| Novorossiysk Commercial Sea Port ($NCSP) | 9.1% | 5.4% | 10.4% | 9.9% | |
| |
|---|
| Median (14 companies) | 10.1% | 11.2% | 9.3% | 4.2% | 2.4% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 6.6% | 5.3% | 3.2% | 13.4% | 2.6% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Novorossiysk Commercial Sea Port ($NCSP) | 18.7% | 11.0% | 4.5% | 17.1% | |
| Dx ($DX.) | 8.2% | 9.3% | 9.6% | 14.5% | 12.8% |
| Global Ports Investments ($GLPR) | 18.5% | 17.0% | 7.1% | 12.1% | 14.6% |
| Center Fr Cargo Cont Trf Trcnt PJSC ($TRCN) | 18.2% | 20.2% | 17.6% | 8.8% | |
| Bba Aviation ($BBA) | | 9.6% | 9.6% | 8.1% | 5.1% |
| |
|---|
| Median (14 companies) | 7.6% | 7.3% | 5.4% | 6.7% | 5.9% |
|---|
| Zhejiang Expressway Co ($ZHEH) | 13.3% | 11.2% | 13.3% | 13.2% | 15.3% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Hellenic Carriers Ltd ($HCL) | 2.5x | 533.2x | 291.0x | 39.1x | |
| Yangming Marine Transport Corp ($YMTD) | | 19.7x | | 9.8x | |
| Wisdom Marine Lines Co Limited ($WML) | 7.9x | 8.5x | 9.0x | 9.1x | 8.4x |
| Evergreen Marine Corp(Taiwan) ($EGMD) | | 7.9x | 33.6x | 6.7x | 18.3x |
| Interbulk Group ($INB) | 3.5x | 3.3x | 4.1x | 3.5x | 3.6x |
| |
|---|
| Median (14 companies) | 3.5x | 3.7x | 5.4x | 2.8x | 3.4x |
|---|
| Zhejiang Expressway Co ($ZHEH) | -0.5x | -0.3x | 0.1x | 2.1x | 2.1x |
