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China Mobile Ltd ROIC decreased on 2.6 pp from 14.0% to 11.4% in 2015 while Revenue increased on 2.6%

17/03/2016 • About China Mobile Ltd ($941) • By InTwits

China Mobile Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • China Mobile Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.0%. At the same time it's in pair with industry average of 31.4%.
  • CAPEX is quite volatile: 16,529 in 2015, 13,530 in 2014, 10,083 in 2013, 8,362 in 2012, 5,393 in 2011
  • The company has business model with average profitability: ROIC is at 11.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

China Mobile Ltd ($941) key annual financial indicators

mln. CNY201120122013201420152015/2014
P&L
Revenue527,999581,835630,177651,509668,3352.6%
SG&A96,83080,23291,83475,65559,850-20.9%
EBITDA248,791253,992240,811240,644240,454-0.1%
Net Income125,870129,274121,692109,218108,539-0.6%
Balance Sheet
Cash86,25970,90644,93173,07679,8429.3%
Short Term Debt6868685,2497,27438.6%
Long Term Debt28,61728,6194,9894,9924,9950.1%
Cash flow
Capex124,414125,024140,041175,701173,693-1.1%
Ratios
Revenue growth8.8%10.2%8.3%3.4%2.6%
EBITDA growth4.8%2.1%-5.2%-0.1%-0.1%
EBITDA Margin47.1%43.7%38.2%36.9%36.0%-1.0%
Net Income Margin23.8%22.2%19.3%16.8%16.2%-0.5%
SG&A, % of revenue18.3%13.8%14.6%11.6%9.0%-2.7%
CAPEX, % of revenue23.6%21.5%22.2%27.0%26.0%-1.0%
ROIC23.5%21.4%17.6%14.0%11.4%-2.6%
ROE20.5%18.8%16.1%13.0%12.0%-1.0%
Net Debt/EBITDA-0.2x-0.2x-0.2x-0.3x-0.3x-0.0x

Revenue and profitability


The company's Revenue increased on 2.6% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.1 pp from 15.2% to 16.3% in 2015.

SG&A as a % of Revenue decreased on 2.7 pp from 11.6% to 9.0% in 2015.

Net Income marign decreased slightly on 0.52 pp from 16.8% to 16.2% in 2015.

Capital expenditures (CAPEX) and working capital investments


In 2015 China Mobile Ltd had CAPEX/Revenue of 26.0%. China Mobile Ltd's CAPEX/Revenue increased on 4.5 pp from 21.5% in 2012 to 26.0% in 2015. For the last three years the average CAPEX/Revenue was 25.1%.The company invested a large share of EBITDA (72.2%) to CAPEX.

Return on investment


The company operates at good ROE (12.03%) while ROIC is low (11.43%). ROIC decreased on 2.6 pp from 14.0% to 11.4% in 2015. ROE decreased slightly on 1.0 pp from 13.0% to 12.0% in 2015.

Leverage (Debt)


Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is 0.1x. Net Debt / EBITDA decreased slightly on 0.020x from -0.3x to -0.3x in 2015. Debt surged on 19.8% in 2015 while cash increased on 9.3% in 2015.

Management team


The company's CEO is Li Yue. Li Yue has 8 years tenure at the company.

Appendix 1: Peers in Telecommunications


Below we provide China Mobile 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)12.9%8.7%8.1%7.5%9.1%
China Mobile Ltd ($941)10.2%8.3%3.4%2.6%


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%13.4%
China Mobile Ltd ($941)47.1%43.7%38.2%36.9%36.0%


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%2.5%
China Mobile Ltd ($941)23.6%21.5%22.2%27.0%26.0%


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)7.1%6.0%5.6%5.8%6.2%
China Mobile Ltd ($941)23.5%21.4%17.6%14.0%11.4%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
CCT Land Holdings Ltd ($261)10.1x23.8x48.4x
China Energine International Holdings Ltd ($1185)13.3x
China Electronics Corp Holdings Co Ltd ($85)-2.1x-2.0x-1.3x12.5x
China All Access Holdings Ltd ($633)-1.0x0.9x1.8x5.2x
Synertone Communication Corp ($1613)-0.3x-0.4x-2.2x4.8x2.5x
 
Median (38 companies)-0.2x-0.2x0.6x0.7x1.2x
China Mobile Ltd ($941)-0.2x-0.2x-0.2x-0.3x-0.3x