Cathay Pacific Airways Ltd reports 90.5% Net Income growth while 3.4% Revenue decline
09/03/2016 • About Cathay Pacific Airways Ltd (
$293) • By InTwits
Cathay Pacific Airways Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 15.0% in 2015 vs. 12.3% in 2014 vs. 11.4% in 2011
- Cathay Pacific Airways Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.3%. At the same time it's a lot of higher than industry average of 9.1%.
- CAPEX is quite volatile: 8,485 in 2015, 4,319 in 2014, 4,881 in 2013, 3,970 in 2012, 4,052 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cathay Pacific Airways Ltd ($293) key annual financial indicators
| mln. HKD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 98,406 | 99,376 | 100,484 | 105,991 | 102,342 | -3.4% |
| EBITDA | 11,212 | 8,117 | 11,252 | 13,070 | 15,354 | 17.5% |
| Net Income | 5,501 | 862 | 2,620 | 3,150 | 6,000 | 90.5% |
Balance Sheet
|
|---|
| Cash | 19,369 | 24,175 | 21,387 | 18,922 | 12,932 | -31.7% |
| Short Term Debt | 8,562 | 8,157 | 10,218 | 9,781 | 13,238 | 35.3% |
| Long Term Debt | 34,773 | 51,389 | 56,834 | 55,315 | 49,867 | -9.8% |
Cash flow
|
|---|
| Capex | 17,610 | 20,975 | 20,534 | 14,818 | 13,179 | -11.1% |
Ratios
|
|---|
| Revenue growth | 9.9% | 1.0% | 1.1% | 5.5% | -3.4% | |
| EBITDA growth | -44.4% | -27.6% | 38.6% | 16.2% | 17.5% | |
| EBITDA Margin | 11.4% | 8.2% | 11.2% | 12.3% | 15.0% | 2.7% |
| Net Income Margin | 5.6% | 0.9% | 2.6% | 3.0% | 5.9% | 2.9% |
| CAPEX, % of revenue | 17.9% | 21.1% | 20.4% | 14.0% | 12.9% | -1.1% |
| ROIC | 4.8% | 1.2% | 2.9% | 3.5% | 5.3% | 1.7% |
| ROE | 10.0% | 1.5% | 4.4% | 5.5% | 12.0% | 6.5% |
| Net Debt/EBITDA | 2.1x | 4.4x | 4.1x | 3.5x | 3.3x | -0.3x |
Revenue and profitability
Cathay Pacific Airways Ltd's Revenue decreased on 3.4% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.7 pp from 12.3% to 15.0% in 2015.
Net Income marign increased on 2.9 pp from 3.0% to 5.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Cathay Pacific Airways Ltd had CAPEX/Revenue of 12.9%. The company showed decline in CAPEX/Revenue of 8.2 pp from 21.1% in 2012 to 12.9% in 2015. It's average CAPEX/Revenue for the last three years was 15.8%.The company invested a big chunk of EBITDA (85.8%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (12.04%) while ROIC is low (5.26%). ROIC increased slightly on 1.7 pp from 3.5% to 5.3% in 2015. ROE increased on 6.5 pp from 5.5% to 12.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 4.1x. Net Debt / EBITDA dropped on 0.3x from 3.5x to 3.3x in 2015. Debt decreased on 3.1% in 2015 while cash dropped on 31.7% in 2015.
Management team
The company's CEO is Chu Kwok Leung "Ivan". Chu Kwok Leung "Ivan" has 4 years tenure at the company.
Appendix 1: Peers in Airlines
Below we provide Cathay Pacific Airways Ltd benchmarking against other companies in Airlines 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Southern Airlines Co Ltd ($1055) | 18.2% | 10.1% | -1.0% | 10.2% | |
| China Eastern Airlines Corp Ltd ($670) | 11.7% | 3.5% | 3.5% | 2.2% | |
| |
|---|
| Median (2 companies) | 14.9% | 6.8% | 1.3% | 6.2% | |
|---|
| Cathay Pacific Airways Ltd ($293) | | 1.0% | 1.1% | 5.5% | -3.4% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Eastern Airlines Corp Ltd ($670) | 13.5% | 14.0% | 11.1% | 16.9% | |
| China Southern Airlines Co Ltd ($1055) | 13.4% | 13.5% | 11.1% | 14.5% | |
| |
|---|
| Median (2 companies) | 13.5% | 13.7% | 11.1% | 15.7% | |
|---|
| Cathay Pacific Airways Ltd ($293) | 11.4% | 8.2% | 11.2% | 12.3% | 15.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Southern Airlines Co Ltd ($1055) | 22.2% | 15.8% | 12.5% | 8.0% | |
| China Eastern Airlines Corp Ltd ($670) | 6.5% | 7.2% | 2.1% | 6.5% | |
| |
|---|
| Median (2 companies) | 14.3% | 11.5% | 7.3% | 7.2% | |
|---|
| Cathay Pacific Airways Ltd ($293) | 17.9% | 21.1% | 20.4% | 14.0% | 12.9% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Eastern Airlines Corp Ltd ($670) | 5.3% | 5.0% | 1.6% | 5.2% | |
| China Southern Airlines Co Ltd ($1055) | 4.6% | 4.7% | 1.2% | 3.2% | |
| |
|---|
| Median (2 companies) | 4.9% | 4.9% | 1.4% | 4.2% | |
|---|
| Cathay Pacific Airways Ltd ($293) | 4.8% | 1.2% | 2.9% | 3.5% | 5.3% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Eastern Airlines Corp Ltd ($670) | 5.2x | 5.5x | 7.3x | 6.3x | |
| China Southern Airlines Co Ltd ($1055) | 4.4x | 4.8x | 7.4x | 6.2x | |
| |
|---|
| Median (2 companies) | 4.8x | 5.1x | 7.4x | 6.3x | |
|---|
| Cathay Pacific Airways Ltd ($293) | 2.1x | 4.4x | 4.1x | 3.5x | 3.3x |
