China Fiber Optic Network System Group Ltd reports 112% CAPEX growth while 12.9% Revenue decline
30/03/2016 • About China Fiber Optic Network System Group Ltd (
$3777) • By InTwits
China Fiber Optic Network System Group Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Fiber Optic Network System Group Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.1%. At the same time it's a lot of higher than industry average of 11.4%.
- CAPEX is quite volatile: 613 in 2015, 290 in 2014, 289 in 2013, 71.8 in 2012, 308 in 2011
- The company has business model with low profitability: ROIC is at 9.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.3x while industry average is 2.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Fiber Optic Network System Group Ltd ($3777) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,257 | 1,494 | 1,776 | 2,209 | 1,923 | -12.9% |
| Gross Profit | 400 | 426 | 515 | 678 | 550 | -18.8% |
| SG&A | | 67 | 86 | 126 | 146 | 15.6% |
| EBITDA | 364 | 421 | 507 | 643 | 501 | -22.0% |
| Net Income | 253 | 272 | 333 | 425 | 294 | -30.9% |
Balance Sheet
|
|---|
| Cash | 550 | 796 | 769 | 851 | 107 | -87.5% |
| Short Term Debt | 498 | 416 | 525 | 519 | 973 | 87.6% |
| Long Term Debt | 0 | 0 | 166 | 176 | 289 | 64.8% |
Cash flow
|
|---|
| Capex | 308 | 72 | 289 | 290 | 613 | 111.6% |
Ratios
|
|---|
| Revenue growth | 50.0% | 18.9% | 18.8% | 24.4% | -12.9% | |
| EBITDA growth | 41.7% | 15.6% | 20.5% | 26.8% | -22.0% | |
| Gross Margin | 31.8% | 28.5% | 29.0% | 30.7% | 28.6% | -2.1% |
| EBITDA Margin | 29.0% | 28.1% | 28.5% | 29.1% | 26.1% | -3.0% |
| Net Income Margin | 20.1% | 18.2% | 18.7% | 19.2% | 15.3% | -4.0% |
| SG&A, % of revenue | | 4.5% | 4.9% | 5.7% | 7.6% | 1.9% |
| CAPEX, % of revenue | 24.5% | 4.8% | 16.3% | 13.1% | 31.9% | 18.7% |
| ROIC | 23.1% | 18.8% | 17.6% | 16.6% | 9.3% | -7.3% |
| ROE | 26.7% | 20.1% | 18.9% | 17.1% | 9.5% | -7.6% |
| Net Debt/EBITDA | -0.1x | -0.9x | -0.2x | -0.2x | 2.3x | 2.6x |
Revenue and profitability
China Fiber Optic Network System Group Ltd's Revenue dropped on 12.9% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.0 pp from 29.1% to 26.1% in 2015.
Gross Margin decreased on 2.1 pp from 30.7% to 28.6% in 2015. SG&A as a % of Revenue increased slightly on 1.9 pp from 5.7% to 7.6% in 2015.
Net Income marign decreased on 4.0 pp from 19.2% to 15.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 China Fiber Optic Network System Group Ltd had CAPEX/Revenue of 31.9%. China Fiber Optic Network System Group Ltd showed fast CAPEX/Revenue growth of 27.1 pp from 4.8% in 2012 to 31.9% in 2015. For the last three years the average CAPEX/Revenue was 20.4%.Battling declining revenue the company made large investments to CAPEX (122% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (9.29%) and ROE (9.50%). ROIC decreased on 7.3 pp from 16.6% to 9.3% in 2015. ROE decreased on 7.6 pp from 17.1% to 9.5% in 2015.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA jumped on 2.6x from -0.2x to 2.3x in 2015. Debt surged on 81.8% in 2015 while cash dropped on 87.5% in 2015.
Appendix 1: Peers in Telecommunications
Below we provide China Fiber Optic Network System Group 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 |
|---|
| Hong Kong Television Network Ltd ($1137) | | | 107.4% | -82.2% | 8,010.0% |
| Hanny Holdings Ltd ($275) | | 236.4% | 131.2% | -85.2% | 349.3% |
| CCT Fortis Holdings Ltd ($138) | | -24.1% | -55.3% | -71.3% | 207.1% |
| Xi'an Haitian Antenna Technologies Co Ltd ($8227) | | -8.5% | -45.9% | -56.2% | 111.6% |
| China Trends Holdings Ltd ($8171) | | 167.0% | -70.2% | -16.7% | 106.0% |
| |
|---|
| Median (50 companies) | 23.4% | 8.9% | 8.3% | 7.2% | 6.1% |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | | 18.9% | 18.8% | 24.4% | -12.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| HKBN Ltd ($1310) | | | 84.3% | 86.5% | 86.9% |
| Netel Technology Holdings Ltd ($8256) | 40.8% | 27.9% | 42.1% | 54.9% | 72.3% |
| Great World Co Holdings Ltd ($8003) | 34.2% | -11.0% | 43.0% | 45.5% | 67.9% |
| APT Satellite Holdings Ltd ($1045) | 52.3% | 58.7% | 64.1% | 62.5% | 61.0% |
| Cisco Systems Inc ($4333) | 61.4% | 61.2% | 60.6% | 58.9% | 60.4% |
| |
|---|
| Median (44 companies) | 27.3% | 21.9% | 24.3% | 25.0% | 21.6% |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | 31.8% | 28.5% | 29.0% | 30.7% | 28.6% |
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% |
| China Mobile Ltd ($941) | 47.1% | 43.7% | 38.2% | 36.9% | 36.0% |
| |
|---|
| Median (50 companies) | 9.9% | 9.0% | 6.4% | 7.3% | 9.2% |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | 29.0% | 28.1% | 28.5% | 29.1% | 26.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| APT Satellite Holdings Ltd ($1045) | 155.2% | 74.3% | 2.5% | 27.2% | 115.8% |
| Hong Kong Television Network Ltd ($1137) | | 12,435.9% | 504.9% | 1,283.5% | 79.4% |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 61.8% | 93.8% | 71.7% | 75.0% | 52.8% |
| China Unicom Hong Kong Ltd ($762) | 37.2% | 34.9% | 24.7% | 24.4% | 31.9% |
| China Telecom Corp Ltd ($728) | 19.8% | 17.7% | 22.1% | 24.8% | 30.8% |
| |
|---|
| Median (50 companies) | 2.9% | 2.4% | 3.0% | 3.2% | 2.9% |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | 24.5% | 4.8% | 16.3% | 13.1% | 31.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telecom Service One Holdings Ltd ($8145) | | 95.0% | 5.4% | 26.7% | 39.8% |
| VTech Holdings Ltd ($303) | 40.5% | 37.6% | 39.5% | 40.0% | 39.8% |
| Coolpad Group Ltd ($2369) | 7.2% | 8.1% | 6.0% | 9.6% | 29.1% |
| SmarTone Telecommunications Holdings Ltd ($315) | 30.2% | 37.2% | 23.1% | 12.8% | 17.7% |
| TCL Communication Technology Holdings Ltd ($2618) | 6.4% | -1.6% | 6.0% | 17.2% | 13.4% |
| |
|---|
| Median (51 companies) | 7.1% | 6.6% | 5.9% | 6.2% | 5.4% |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | 23.1% | 18.8% | 17.6% | 16.6% | 9.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| CCT Land Holdings Ltd ($261) | | 10.1x | 23.8x | 48.4x | 44.8x |
| China Energine International Holdings Ltd ($1185) | | | | 13.3x | 31.7x |
| China Ground Source Energy Industry Group Ltd ($8128) | -0.6x | -1.6x | 3.5x | 14.3x | 11.3x |
| China All Access Holdings Ltd ($633) | -1.0x | 0.9x | 1.8x | 5.2x | 5.6x |
| Beijing Digital Telecom Co Ltd ($6188) | 2.1x | 2.4x | 3.5x | 2.9x | 4.1x |
| |
|---|
| Median (36 companies) | -0.2x | -0.1x | 0.8x | 0.9x | 0.3x |
|---|
| China Fiber Optic Network System Group Ltd ($3777) | -0.1x | -0.9x | -0.2x | -0.2x | 2.3x |
