Air China Net Income surged on 83.3% in 2015 and EBITDA Margin increased on 9.0 pp from 18.4% to 27.3%
30/03/2016 • About Air China (
$753) • By InTwits
Air China reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Air China has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.9%. At the same time it's a lot of higher than industry average of 10.8%.
- CAPEX is quite volatile: 1,720 in 2015, 1,291 in 2014, 905 in 2013, 709 in 2012, 414 in 2011
- The company has business model with low profitability: ROIC is at 9.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.4x while industry average is 3.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Air China ($753) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 93,343 | 95,319 | 94,603 | 101,385 | 104,368 | 2.9% |
| SG&A | 7,742 | 6,320 | 6,982 | 6,483 | 5,974 | -7.9% |
| EBITDA | 15,873 | 18,804 | 15,109 | 18,638 | 28,535 | 53.1% |
| Net Income | 7,082 | 4,816 | 3,264 | 3,852 | 7,063 | 83.3% |
Balance Sheet
|
|---|
| Cash | 15,457 | 11,788 | 14,762 | 8,640 | 7,138 | -17.4% |
| Short Term Debt | 30,825 | 31,690 | 43,362 | 32,669 | 17,266 | -47.1% |
| Long Term Debt | 58,590 | 67,731 | 68,239 | 80,263 | 86,791 | 8.1% |
Cash flow
|
|---|
| Capex | 22,330 | 16,019 | 18,054 | 18,947 | 11,297 | -40.4% |
Ratios
|
|---|
| Revenue growth | 19.4% | 2.1% | -0.8% | 7.2% | 2.9% | |
| EBITDA growth | -18.9% | 18.5% | -19.7% | 23.4% | 53.1% | |
| EBITDA Margin | 17.0% | 19.7% | 16.0% | 18.4% | 27.3% | 9.0% |
| Net Income Margin | 7.6% | 5.1% | 3.4% | 3.8% | 6.8% | 3.0% |
| SG&A, % of revenue | 8.3% | 6.6% | 7.4% | 6.4% | 5.7% | -0.7% |
| CAPEX, % of revenue | 23.9% | 16.8% | 19.1% | 18.7% | 10.8% | -7.9% |
| ROIC | 4.6% | 5.7% | 2.5% | 4.2% | 9.1% | 4.8% |
| ROE | 16.2% | 10.0% | 6.3% | 7.1% | 12.4% | 5.3% |
| Net Debt/EBITDA | 4.7x | 4.7x | 6.4x | 5.6x | 3.4x | -2.2x |
Revenue and profitability
Air China's Revenue increased on 2.9% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.7 pp from -2.4% to 4.4% in 2015.
SG&A as a % of Revenue decreased slightly on 0.67 pp from 6.4% to 5.7% in 2015.
Net Income marign increased on 3.0 pp from 3.8% to 6.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 10.8% in 2015. Air China's CAPEX/Revenue decreased on 6.0 pp from 16.8% in 2012 to 10.8% in 2015. Average CAPEX/Revenue for the last three years was 16.2%.
Return on investment
The company operates at good ROE (12.39%) while ROIC is low (9.07%). ROIC increased on 4.8 pp from 4.2% to 9.1% in 2015. ROE increased on 5.3 pp from 7.1% to 12.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 3.6x. Net Debt / EBITDA dropped on 2.2x from 5.6x to 3.4x in 2015. Debt decreased on 7.9% in 2015 while cash dropped on 17.4% in 2015.
Appendix 1: Peers in Travel & Leisure
Below we provide Air China benchmarking against other companies in Travel & Leisure 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.
