China Eastern Airlines Corp Ltd reports 54.0% EBITDA growth and 8.1 pp EBITDA Margin growth from 16.9% to 25.0%
30/03/2016 • About China Eastern Airlines Corp Ltd (
$670) • By InTwits
China Eastern Airlines Corp Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Eastern Airlines Corp Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.3%. At the same time it's in pair with industry average of 6.7%.
- CAPEX is quite volatile: 8,691 in 2015, 5,828 in 2014, 1,822 in 2013, 6,148 in 2012, 5,368 in 2011
- The company has business model with low profitability: ROIC is at 8.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.7x while industry average is 3.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Eastern Airlines Corp Ltd ($670) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 82,403 | 85,253 | 88,245 | 90,185 | 93,969 | 4.2% |
| SG&A | 12,593 | 3,727 | | 4,120 | 3,651 | -11.4% |
| EBITDA | 11,126 | 11,909 | 9,803 | 15,241 | 23,467 | 54.0% |
| Net Income | 4,576 | 3,072 | 2,373 | 3,410 | 4,537 | 33.0% |
Balance Sheet
|
|---|
| Cash | 3,861 | 2,512 | 1,995 | 1,355 | 9,080 | 570.1% |
| Short Term Debt | 20,630 | 25,245 | 26,266 | 33,272 | 44,323 | 33.2% |
| Long Term Debt | 41,405 | 42,349 | 47,470 | 64,612 | 74,788 | 15.7% |
Cash flow
|
|---|
| Capex | 5,368 | 6,148 | 1,822 | 5,828 | 8,691 | 49.1% |
Ratios
|
|---|
| Revenue growth | 11.7% | 3.5% | 3.5% | 2.2% | 4.2% | |
| EBITDA growth | -10.7% | 7.0% | -17.7% | 55.5% | 54.0% | |
| EBITDA Margin | 13.5% | 14.0% | 11.1% | 16.9% | 25.0% | 8.1% |
| Net Income Margin | 5.6% | 3.6% | 2.7% | 3.8% | 4.8% | 1.0% |
| SG&A, % of revenue | 15.3% | 4.4% | | 4.6% | 3.9% | -0.7% |
| CAPEX, % of revenue | 6.5% | 7.2% | 2.1% | 6.5% | 9.2% | 2.8% |
| ROIC | 5.3% | 5.0% | 1.6% | 5.2% | 8.7% | 3.5% |
| ROE | 25.9% | 15.2% | 10.1% | 12.0% | 13.5% | 1.5% |
| Net Debt/EBITDA | 5.2x | 5.5x | 7.3x | 6.3x | 4.7x | -1.6x |
Revenue and profitability
China Eastern Airlines Corp Ltd's Revenue increased on 4.2% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 8.1 pp from 16.9% to 25.0% in 2015.
SG&A as a % of Revenue decreased slightly on 0.68 pp from 4.6% to 3.9% in 2015.
Net Income marign increased slightly on 1.0 pp from 3.8% to 4.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 9.2%. China Eastern Airlines Corp Ltd's CAPEX/Revenue increased on 2.0 pp from 7.2% in 2012 to 9.2% in 2015. For the last three years the average CAPEX/Revenue was 5.9%.
Return on investment
The company operates at good ROE (13.47%) while ROIC is low (8.72%). ROIC increased on 3.5 pp from 5.2% to 8.7% in 2015. ROE increased slightly on 1.5 pp from 12.0% to 13.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.7x and Debt / EBITDA is 5.1x. Net Debt / EBITDA dropped on 1.6x from 6.3x to 4.7x in 2015. Debt surged on 21.7% in 2015 while cash surged on 570% in 2015.
Appendix 1: Peers in Airlines
Below we provide China Eastern Airlines Corp 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) | | 10.1% | -1.0% | 10.2% | 2.8% |
| Cathay Pacific Airways Ltd ($293) | | 1.0% | 1.1% | 5.5% | -3.4% |
| |
|---|
| Median (2 companies) | | 5.5% | 0.1% | 7.8% | -0.3% |
|---|
| China Eastern Airlines Corp Ltd ($670) | | 3.5% | 3.5% | 2.2% | 4.2% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Southern Airlines Co Ltd ($1055) | 13.4% | 13.5% | 11.1% | 14.5% | 22.7% |
| Cathay Pacific Airways Ltd ($293) | 11.4% | 8.2% | 11.2% | 12.3% | 15.0% |
| |
|---|
| Median (2 companies) | 12.4% | 10.8% | 11.1% | 13.4% | 18.9% |
|---|
| China Eastern Airlines Corp Ltd ($670) | 13.5% | 14.0% | 11.1% | 16.9% | 25.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cathay Pacific Airways Ltd ($293) | 17.9% | 21.1% | 20.4% | 14.0% | 12.9% |
| China Southern Airlines Co Ltd ($1055) | 22.2% | 15.8% | 12.5% | 8.0% | 10.9% |
| |
|---|
| Median (2 companies) | 20.0% | 18.5% | 16.5% | 11.0% | 11.9% |
|---|
| China Eastern Airlines Corp Ltd ($670) | 6.5% | 7.2% | 2.1% | 6.5% | 9.2% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Southern Airlines Co Ltd ($1055) | 4.6% | 4.7% | 1.2% | 3.2% | 8.7% |
| Cathay Pacific Airways Ltd ($293) | 4.8% | 1.2% | 2.9% | 3.5% | 5.3% |
| |
|---|
| Median (2 companies) | 4.7% | 3.0% | 2.1% | 3.4% | 7.0% |
|---|
| China Eastern Airlines Corp Ltd ($670) | 5.3% | 5.0% | 1.6% | 5.2% | 8.7% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Southern Airlines Co Ltd ($1055) | 4.4x | 4.8x | 7.4x | 6.2x | 3.8x |
| Cathay Pacific Airways Ltd ($293) | 2.1x | 4.4x | 4.1x | 3.5x | 3.3x |
| |
|---|
| Median (2 companies) | 3.3x | 4.6x | 5.7x | 4.9x | 3.5x |
|---|
| China Eastern Airlines Corp Ltd ($670) | 5.2x | 5.5x | 7.3x | 6.3x | 4.7x |
