PCCW Ltd Net Income dropped on 30.7% in 2015 and EBITDA Margin decreased on 8.6 pp from 39.2% to 30.6%
26/02/2016 • About PCCW Ltd (
$8) • By InTwits
PCCW Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- PCCW Ltd is a growth stock: 2015 revenue growth was 18.1%, 5 year revenue CAGR was 11.4% at 2015 ROIC 10.3%
- PCCW Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.6%. At the same time it's in pair with industry average of 3.2%.
- CAPEX is quite volatile: 1,161 in FY2015, 1,939 in FY2014, 1,111 in FY2013, 839 in FY2012, 533 in FY2011
- The company has business model with average profitability: ROIC is at 10.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.9x while industry average is 2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
PCCW Ltd ($8) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 24,638 | 25,318 | 27,317 | 33,277 | 39,314 | 18.1% |
| Gross Profit | 13,241 | 13,502 | 14,206 | 18,126 | 20,349 | 12.3% |
| SG&A | 5,655 | 5,729 | 6,164 | 7,788 | 8,474 | 8.8% |
| EBITDA | 7,742 | 8,112 | 8,715 | 13,048 | 12,025 | -7.8% |
| Net Income | 1,607 | 1,661 | 1,885 | 3,310 | 2,295 | -30.7% |
Balance Sheet
|
|---|
| Cash | 5,365 | 4,553 | 5,519 | 7,943 | 7,504 | -5.5% |
| Short Term Debt | 40 | 8,540 | 1 | 4,823 | 3,879 | -19.6% |
| Long Term Debt | 23,470 | 17,926 | 29,074 | 36,494 | 38,090 | 4.4% |
Cash flow
|
|---|
| Capex | 1,987 | 2,255 | 3,996 | 3,776 | 4,033 | 6.8% |
Ratios
|
|---|
| Revenue growth | 7.3% | 2.8% | 7.9% | 21.8% | 18.1% | |
| EBITDA growth | -9.7% | 4.8% | 7.4% | 49.7% | -7.8% | |
| Gross Margin | 53.7% | 53.3% | 52.0% | 54.5% | 51.8% | -2.7% |
| EBITDA Margin | 31.4% | 32.0% | 31.9% | 39.2% | 30.6% | -8.6% |
| Net Income Margin | 6.5% | 6.6% | 6.9% | 9.9% | 5.8% | -4.1% |
| SG&A, % of revenue | 23.0% | 22.6% | 22.6% | 23.4% | 21.6% | -1.8% |
| CAPEX, % of revenue | 8.1% | 8.9% | 14.6% | 11.3% | 10.3% | -1.1% |
| ROIC | 10.7% | 10.3% | 10.6% | 13.8% | 10.3% | -3.5% |
| ROE | | 22.3% | 21.0% | 34.2% | 21.7% | -12.6% |
| Net Debt/EBITDA | 2.3x | 2.7x | 2.7x | 2.6x | 2.9x | 0.3x |
Revenue and profitability
PCCW Ltd's Revenue surged on 18.1% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.6 pp from 2.3% to 0.72% in 2015.
Gross Margin decreased on 2.7 pp from 54.5% to 51.8% in 2015. SG&A as a % of Revenue decreased slightly on 1.8 pp from 23.4% to 21.6% in 2015.
Net Income marign decreased on 4.1 pp from 9.9% to 5.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 10.3%. PCCW Ltd's CAPEX/Revenue increased slightly on 1.4 pp from 8.9% in 2012 to 10.3% in 2015. It's average CAPEX/Revenue for the last three years was 12.1%.
Return on investment
The company operates at good ROE (21.67%) while ROIC is low (10.30%). ROIC decreased on 3.5 pp from 13.8% to 10.3% in 2015. ROE dropped on 12.6 pp from 34.2% to 21.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 3.5x. Net Debt / EBITDA surged on 0.3x from 2.6x to 2.9x in 2015. Debt increased slightly on 1.6% in 2015 while cash decreased on 5.5% in 2015.
Appendix 1: Peers in Telecommunications
Below you can find PCCW Ltd benchmarking vs. other companies in Telecommunications 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Energine International Holdings Ltd ($1185) | -41.8% | 143.6% | 34.3% | 103.1% | |
| MOBI Development Co Ltd ($947) | -23.4% | -13.8% | 29.1% | 85.6% | |
| Vodatel Networks Holdings Ltd ($8033) | 34.4% | -5.9% | -4.6% | 81.7% | |
| Gold Tat Group International Ltd ($8266) | | 29.4% | 1,582.2% | 77.0% | 26.5% |
| Great World Co Holdings Ltd ($8003) | | 1,651.8% | -81.7% | 61.9% | -3.7% |
| |
|---|
| Median (51 companies) | 12.9% | 9.1% | 8.3% | 6.9% | 9.8% |
|---|
| PCCW Ltd ($8) | | 2.8% | 7.9% | 21.8% | 18.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HKBN Ltd ($1310) | | | 84.3% | 86.5% | 86.9% |
| Synertone Communication Corp ($1613) | 65.4% | 68.1% | 64.1% | 70.5% | 50.3% |
| Zhi Cheng Holdings Ltd ($8130) | 61.6% | 45.9% | 41.0% | 64.0% | 19.6% |
| APT Satellite Holdings Ltd ($1045) | 52.3% | 58.7% | 64.1% | 62.5% | |
| Hong Kong Television Network Ltd ($1137) | | -59.6% | -101.3% | 59.7% | |
| |
|---|
| Median (45 companies) | 28.1% | 25.5% | 28.1% | 27.1% | 46.8% |
|---|
| PCCW Ltd ($8) | 53.7% | 53.3% | 52.0% | 54.5% | 51.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 83.5% | 86.5% | 85.8% | 81.6% | |
| APT Satellite Holdings Ltd ($1045) | 76.7% | 81.0% | 78.9% | 77.5% | |
| Synertone Communication Corp ($1613) | 49.5% | 44.9% | 48.5% | 49.4% | 51.5% |
| HKBN Ltd ($1310) | | | 39.2% | 40.1% | 39.0% |
| China Mobile Ltd ($941) | 47.1% | 43.7% | 38.2% | 36.9% | |
| |
|---|
| Median (51 companies) | 14.0% | 9.5% | 6.7% | 7.9% | 15.7% |
|---|
| PCCW Ltd ($8) | 31.4% | 32.0% | 31.9% | 39.2% | 30.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 12,435.9% | 504.9% | 1,283.5% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 61.8% | 93.8% | 71.7% | 75.0% | |
| Hanny Holdings Ltd ($275) | 80.8% | 19.8% | 11.6% | 28.3% | 0.2% |
| APT Satellite Holdings Ltd ($1045) | 155.2% | 74.3% | 2.5% | 27.2% | |
| China Electronics Corp Holdings Co Ltd ($85) | 1.5% | 1.8% | 8.3% | 27.1% | |
| |
|---|
| Median (50 companies) | 3.0% | 2.5% | 3.7% | 4.1% | 2.5% |
|---|
| PCCW Ltd ($8) | 8.1% | 8.9% | 14.6% | 11.3% | 10.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
| Telecom Service One Holdings Ltd ($8145) | | 95.0% | 5.4% | 26.7% | 39.8% |
| TCL Communication Technology Holdings Ltd ($2618) | 6.4% | -1.6% | 6.0% | 17.2% | |
| China Fiber Optic Network System Group Ltd ($3777) | 23.1% | 18.8% | 17.6% | 16.6% | |
| China U-Ton Holdings Ltd ($6168) | 69.5% | 35.7% | 25.0% | 16.2% | |
| |
|---|
| Median (51 companies) | 7.1% | 5.2% | 5.4% | 5.7% | 4.3% |
|---|
| PCCW Ltd ($8) | 10.7% | 10.3% | 10.6% | 13.8% | 10.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CCT Land Holdings Ltd ($261) | | 10.1x | 23.8x | 48.4x | |
| China Energine International Holdings Ltd ($1185) | | | | 13.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.1x | -2.0x | -1.3x | 12.5x | |
| China All Access Holdings Ltd ($633) | -1.0x | 0.9x | 1.8x | 5.2x | |
| Synertone Communication Corp ($1613) | -0.3x | -0.4x | -2.2x | 4.8x | 2.5x |
| |
|---|
| Median (36 companies) | -0.2x | -0.2x | 0.6x | 0.7x | 1.4x |
|---|
| PCCW Ltd ($8) | 2.3x | 2.7x | 2.7x | 2.6x | 2.9x |
