China Telecom Corp Ltd reports 26.8% CAPEX growth and 2.1% Revenue growth
23/03/2016 • About China Telecom Corp Ltd (
$728) • By InTwits
China Telecom Corp Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Telecom Corp Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 23.0%. At the same time it's a lot of higher than industry average of 3.6%.
- 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 6.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Telecom Corp Ltd ($728) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 245,068 | 283,176 | 321,584 | 324,394 | 331,202 | 2.1% |
| SG&A | 48,746 | 63,099 | 70,448 | 62,719 | 54,472 | -13.1% |
| EBITDA | 75,360 | 70,874 | 96,551 | 94,853 | 94,106 | -0.8% |
| Net Income | 16,500 | 14,949 | 17,545 | 17,680 | 20,054 | 13.4% |
Balance Sheet
|
|---|
| Cash | 27,372 | 30,099 | 16,070 | 20,436 | 31,869 | 55.9% |
| Short Term Debt | 20,953 | 16,735 | 47,760 | 44,058 | 51,758 | 17.5% |
| Long Term Debt | 31,150 | 83,073 | 62,617 | 62,918 | 64,911 | 3.2% |
Cash flow
|
|---|
| Capex | 48,555 | 50,204 | 71,032 | 80,457 | 102,022 | 26.8% |
Ratios
|
|---|
| Revenue growth | 11.5% | 15.5% | 13.6% | 0.9% | 2.1% | |
| EBITDA growth | -0.4% | -6.0% | 36.2% | -1.8% | -0.8% | |
| EBITDA Margin | 30.8% | 25.0% | 30.0% | 29.2% | 28.4% | -0.8% |
| Net Income Margin | 6.7% | 5.3% | 5.5% | 5.5% | 6.1% | 0.6% |
| SG&A, % of revenue | 19.9% | 22.3% | 21.9% | 19.3% | 16.4% | -2.9% |
| CAPEX, % of revenue | 19.8% | 17.7% | 22.1% | 24.8% | 30.8% | 6.0% |
| ROIC | 7.7% | 6.3% | 7.3% | 7.2% | 6.4% | -0.8% |
| ROE | 6.6% | 5.7% | 6.5% | 6.2% | 6.8% | 0.5% |
| Net Debt/EBITDA | 0.3x | 1.0x | 1.0x | 0.9x | 0.9x | -0.0x |
Revenue and profitability
The company's Revenue increased on 2.1% 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 decreased on 2.9 pp from 19.3% to 16.4% in 2015.
Net Income marign increased slightly on 0.60 pp from 5.5% to 6.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 30.8%. China Telecom Corp Ltd's CAPEX/Revenue surged on 13.1 pp from 17.7% in 2012 to 30.8% in 2015. It's average CAPEX/Revenue for the last three years was 25.9%.The company investments to CAPEX were large: 108% of EBITDA.
Return on investment
The company operates at low ROIC (6.44%) and ROE (6.76%). ROIC decreased slightly on 0.80 pp from 7.2% to 6.4% in 2015. ROE increased slightly on 0.53 pp from 6.2% to 6.8% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 1.2x. Net Debt / EBITDA decreased slightly on 0.011x from 0.9x to 0.9x in 2015. Debt increased on 9.1% in 2015 while cash surged on 55.9% in 2015.
Management team
Yang Jie is a China Telecom Corp Ltd's CEO. Yang Jie has spent 2 years at the company.
Appendix 1: Peers in Telecommunications
Below you can find China Telecom Corp 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) | | 143.6% | 34.3% | 103.1% | -3.1% |
| MOBI Development Co Ltd ($947) | | -13.8% | 29.1% | 85.6% | -3.8% |
| Vodatel Networks Holdings Ltd ($8033) | | -5.9% | -4.6% | 81.7% | -25.8% |
| 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) | 18.4% | 8.7% | 8.1% | 7.5% | 3.0% |
|---|
| China Telecom Corp Ltd ($728) | | 15.5% | 13.6% | 0.9% | 2.1% |
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% | 61.0% |
| Hong Kong Television Network Ltd ($1137) | | -59.6% | -101.3% | 59.7% | |
| |
|---|
| Median (48 companies) | 28.1% | 23.8% | 27.2% | 26.6% | 24.9% |
|---|
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% | 78.8% |
| 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% | 9.7% |
|---|
| China Telecom Corp Ltd ($728) | 30.8% | 25.0% | 30.0% | 29.2% | 28.4% |
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% | 115.8% |
| 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 Telecom Corp Ltd ($728) | 19.8% | 17.7% | 22.1% | 24.8% | 30.8% |
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% | 13.4% |
| 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% | 7.1% |
|---|
| China Telecom Corp Ltd ($728) | 7.7% | 6.3% | 7.3% | 7.2% | 6.4% |
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 | 31.7x |
| 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 | 0.2x |
|---|
| China Telecom Corp Ltd ($728) | 0.3x | 1.0x | 1.0x | 0.9x | 0.9x |
