China Unicom Hong Kong Ltd CAPEX surged on 27.1% in 2015 while Revenue decreased on 2.7%
16/03/2016 • About China Unicom Hong Kong Ltd (
$762) • By InTwits
China Unicom Hong Kong Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Unicom Hong Kong Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 30.6%. At the same time it's in pair with industry average of 31.4%.
- CAPEX is quite volatile: 25,711 in 2015, 17,793 in 2014, 15,105 in 2013, 9,763 in 2012, 6,846 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Unicom Hong Kong Ltd ($762) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 209,167 | 248,926 | 295,038 | 284,681 | 277,049 | -2.7% |
| SG&A | 32,305 | 38,594 | 45,745 | 42,480 | 2,134 | -95.0% |
| EBITDA | 63,412 | 72,659 | 83,963 | 92,771 | 87,502 | -5.7% |
| Net Income | 4,227 | 7,096 | 10,408 | 12,055 | 10,562 | -12.4% |
Balance Sheet
|
|---|
| Cash | 15,106 | 18,250 | 21,506 | 25,308 | 21,755 | -14.0% |
| Short Term Debt | 70,450 | 139,367 | 129,631 | 112,862 | 106,654 | -5.5% |
| Long Term Debt | 34,502 | 2,753 | 13,639 | 23,998 | 40,944 | 70.6% |
Cash flow
|
|---|
| Capex | 77,861 | 86,783 | 72,758 | 69,586 | 88,465 | 27.1% |
Ratios
|
|---|
| Revenue growth | 22.1% | 19.0% | 18.5% | -3.5% | -2.7% | |
| EBITDA growth | 6.4% | 14.6% | 15.6% | 10.5% | -5.7% | |
| EBITDA Margin | 30.3% | 29.2% | 28.5% | 32.6% | 31.6% | -1.0% |
| Net Income Margin | 2.0% | 2.9% | 3.5% | 4.2% | 3.8% | -0.4% |
| SG&A, % of revenue | 15.4% | 15.5% | 15.5% | 14.9% | 0.8% | -14.2% |
| CAPEX, % of revenue | 37.2% | 34.9% | 24.7% | 24.4% | 31.9% | 7.5% |
| ROIC | 1.8% | 3.5% | 4.4% | 5.2% | 2.9% | -2.3% |
| ROE | 2.1% | 3.4% | 4.9% | 5.4% | 4.6% | -0.8% |
| Net Debt/EBITDA | 1.4x | 1.7x | 1.5x | 1.2x | 1.4x | 0.2x |
Revenue and profitability
China Unicom Hong Kong Ltd's Revenue decreased on 2.7% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 15.2% to 16.3% in 2015.
SG&A as a % of Revenue dropped on 14.2 pp from 14.9% to 0.77% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
China Unicom Hong Kong Ltd's CAPEX/Revenue was 31.9% in 2015. CAPEX/Revenue decreased on 2.9 pp from 34.9% in 2012 to 31.9% in 2015. Average CAPEX/Revenue for the last three years was 27.0%.Battling declining revenue the company made large investments to CAPEX (101% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.89%) and ROE (4.60%). ROIC decreased on 2.3 pp from 5.2% to 2.9% in 2015. ROE decreased slightly on 0.80 pp from 5.4% to 4.6% in 2015.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from 1.2x to 1.4x in 2015. Debt increased on 7.8% in 2015 while cash dropped on 14.0% in 2015.
Management team
Wang Xiaochu is a the company's CEO. Wang Xiaochu has spent 3 years at the company.
Appendix 1: Peers in Telecommunications
Below we provide China Unicom Hong Kong Ltd benchmarking against other companies in Telecommunications 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 |
|---|
| 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 (53 companies) | 11.5% | 8.7% | 8.1% | 7.5% | 9.5% |
|---|
| China Unicom Hong Kong Ltd ($762) | | 19.0% | 18.5% | -3.5% | -2.7% |
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 (48 companies) | 28.1% | 23.8% | 27.2% | 26.6% | 38.5% |
|---|
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% | 82.4% |
| 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% |
| PCCW Ltd ($8) | 31.4% | 32.0% | 31.9% | 39.2% | 30.6% |
| |
|---|
| Median (53 companies) | 9.8% | 8.3% | 6.1% | 7.5% | 13.0% |
|---|
| China Unicom Hong Kong Ltd ($762) | 30.3% | 29.2% | 28.5% | 32.6% | 31.6% |
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% | 52.8% |
| 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 (52 companies) | 3.0% | 2.3% | 3.6% | 3.4% | 2.4% |
|---|
| China Unicom Hong Kong Ltd ($762) | 37.2% | 34.9% | 24.7% | 24.4% | 31.9% |
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 (53 companies) | 7.4% | 6.3% | 5.8% | 6.6% | 7.1% |
|---|
| China Unicom Hong Kong Ltd ($762) | 1.8% | 3.5% | 4.4% | 5.2% | 2.9% |
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 (38 companies) | -0.2x | -0.2x | 0.6x | 0.4x | 1.1x |
|---|
| China Unicom Hong Kong Ltd ($762) | 1.4x | 1.7x | 1.5x | 1.2x | 1.4x |
