Bank of East Asia Ltd/The reports 17.1% Net Income decline and 6.6% Revenue decline
15/02/2016 • About Bank of East Asia Ltd/The (
$23) • By InTwits
Bank of East Asia Ltd/The reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bank of East Asia Ltd/The has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 11.0%.
- CAPEX is quite volatile: 466 in 2015, 349 in 2014, 904 in 2013, 474 in 2012, 585 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.7%
- It operates with high leverage: Net Debt/EBITDA is 4.7x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bank of East Asia Ltd/The ($23) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 25,085 | 28,865 | 31,063 | 31,979 | 29,876 | -6.6% |
| Net Income | 4,358 | 6,056 | 6,613 | 6,661 | 5,522 | -17.1% |
Balance Sheet
|
|---|
| Cash | 71,761 | 85,512 | 68,777 | 70,358 | 69,122 | -1.8% |
| Short Term Debt | 15,319 | 30,477 | 27,861 | 32,081 | 31,548 | -1.7% |
| Long Term Debt | 23,748 | 23,061 | 19,433 | 41,022 | 32,060 | -21.8% |
Cash flow
|
|---|
| Capex | 585 | 474 | 904 | 349 | 466 | 33.5% |
Ratios
|
|---|
| Revenue growth | 38.4% | 15.1% | 7.6% | 2.9% | -6.6% | |
| Net Income Margin | 17.4% | 21.0% | 21.3% | 20.8% | 18.5% | -2.3% |
| CAPEX, % of revenue | 2.3% | 1.6% | 2.9% | 1.1% | 1.6% | 0.5% |
| ROIC | 5.5% | 6.0% | 6.2% | 5.6% | 3.7% | -2.0% |
| ROE | 9.5% | 11.6% | 10.9% | 10.0% | 7.5% | -2.5% |
Revenue and profitability
Bank of East Asia Ltd/The's Revenue decreased on 6.6% in 2015.
Net Income marign decreased on 2.3 pp from 20.8% to 18.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Bank of East Asia Ltd/The had CAPEX/Revenue of 1.6%. Bank of East Asia Ltd/The showed almost no change in CAPEX/Revenue from 2012 to 2015. Average CAPEX/Revenue for the last three years was 1.9%.
Return on investment
The company operates at low ROIC (3.68%) and ROE (7.55%). ROIC decreased slightly on 2.0 pp from 5.6% to 3.7% in 2015. ROE decreased on 2.5 pp from 10.0% to 7.5% in 2015.
Leverage (Debt)
Debt dropped on 13.0% in 2015 while cash decreased slightly on 1.8% in 2015.
Management team
The company's CEO Li Kwok Po "David" has spent 37 years at the company.
Appendix 1: Peers in Banks
Below we provide Bank of East Asia Ltd/The benchmarking against other companies in Banks 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, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chong Hing Bank Ltd ($1111) | 14.2% | 10.0% | -1.2% | 121.1% | |
| China Merchants Bank Co Ltd ($3968) | 42.3% | 24.0% | 18.6% | 33.9% | |
| Harbin Bank Co Ltd ($6138) | 104.6% | 58.3% | 12.1% | 29.2% | |
| Dah Sing Financial Holdings Ltd ($440) | 15.3% | 9.9% | -0.1% | 29.0% | |
| China CITIC Bank Corp Ltd ($998) | 46.7% | 30.5% | 19.5% | 29.0% | |
| |
|---|
| Median (20 companies) | 31.3% | 21.6% | 10.4% | 14.8% | |
|---|
| Bank of East Asia Ltd/The ($23) | | 15.1% | 7.6% | 2.9% | -6.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Minsheng Banking Corp Ltd ($1988) | 5.0% | 5.2% | 6.8% | 7.6% | |
| Harbin Bank Co Ltd ($6138) | 20.0% | 19.8% | 9.9% | 6.5% | |
| Industrial & Commercial Bank of China Ltd ($1398) | 3.2% | 3.8% | 4.9% | 5.4% | |
| Bank of Communications Co Ltd ($3328) | 3.1% | 3.6% | 5.1% | 5.3% | |
| China CITIC Bank Corp Ltd ($998) | 1.7% | 2.3% | 2.9% | 4.8% | |
| |
|---|
| Median (20 companies) | 3.6% | 3.6% | 4.1% | 3.1% | |
|---|
| Bank of East Asia Ltd/The ($23) | 2.3% | 1.6% | 2.9% | 1.1% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Chong Hing Bank Ltd ($1111) | 6.3% | 5.5% | 5.2% | 16.4% | |
| China Construction Bank Corp ($939) | 11.6% | 11.1% | 11.7% | 10.8% | |
| Industrial & Commercial Bank of China Ltd ($1398) | 10.6% | 9.9% | 10.2% | 9.9% | |
| Agricultural Bank of China Ltd ($1288) | 10.3% | 9.9% | 10.0% | 9.3% | |
| Hang Seng Bank Ltd ($11) | 9.0% | 8.6% | 9.5% | 9.0% | |
| |
|---|
| Median (20 companies) | 6.4% | 6.1% | 6.0% | 5.3% | |
|---|
| Bank of East Asia Ltd/The ($23) | 5.5% | 6.0% | 6.2% | 5.6% | 3.7% |
