China Communication Telecom Services Co Ltd reports 9.9% revenue decline in FY2016 and 32.8 pp EBITDA Margin decline from -7.9% to -40.7%
17/06/2016 • About China Communication Telecom Services Co Ltd (
$8206) • By InTwits
China Communication Telecom Services Co Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Communication Telecom Services Co Ltd doesn't have a profitable business model yet: FY2016 ROIC is -34.9%
- The company operates at negative EBITDA Margin: -40.7%
- China Communication Telecom Services Co Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -10.2% for the sames years0
- China Communication Telecom Services Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 58.8%.
- CAPEX is quite volatile: 0.20 in FY2016, 0.82 in FY2015, 0.92 in FY2014, 0.56 in FY2013, 0.66 in FY2012
- The company has unprofitable business model: ROIC is at -34.9%
- It operates with high leverage: Net Debt/EBITDA is 1.0x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Communication Telecom Services Co Ltd ($8206) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 33.102 | 34.495 | 38.865 | 38.484 | 34.684 | -9.9% |
| Gross Profit | 20.393 | 20.208 | 26.850 | 27.007 | 23.664 | -12.4% |
| SG&A | | 31.959 | 32.024 | 33.511 | 40.652 | 21.3% |
| EBITDA | 2.248 | -2.134 | -1.313 | -3.024 | -14.112 | |
| Net Income | 163.794 | -14.270 | -9.113 | -9.871 | -20.370 | |
Balance Sheet
|
|---|
| Cash | 38.425 | 59.248 | 51.680 | 45.167 | 17.961 | -60.2% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 99.303 | 96.274 | 98.171 | 100.065 | 101.949 | 1.9% |
Cash flow
|
|---|
| Capex | 0.660 | 0.557 | 0.918 | 0.816 | 0.200 | -75.5% |
Ratios
|
|---|
| Revenue growth | 9.0% | 4.2% | 12.7% | -1.0% | -9.9% | |
| EBITDA growth | -108.0% | -194.9% | -38.5% | 130.3% | 366.7% | |
| Gross Margin | 61.6% | 58.6% | 69.1% | 70.2% | 68.2% | -1.9% |
| EBITDA Margin | 6.8% | -6.2% | -3.4% | -7.9% | -40.7% | -32.8% |
| Net Income Margin | 494.8% | -41.4% | -23.4% | -25.6% | -58.7% | -33.1% |
| SG&A, % of revenue | | 92.6% | 82.4% | 87.1% | 117.2% | 30.1% |
| CAPEX, % of revenue | 2.0% | 1.6% | 2.4% | 2.1% | 0.6% | -1.5% |
| ROIC | -12.9% | -17.5% | -7.3% | -10.3% | -34.9% | -24.5% |
| Net Debt/EBITDA | 27.1x | | | | | 0.0x |
Revenue and profitability
The company's Revenue decreased on 9.9%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 32.8 pp from -7.9% to -40.7% in FY2016.
Gross Margin decreased slightly on 1.9 pp from 70.2% to 68.2% in FY2016. SG&A as a % of Revenue jumped on 30.1 pp from 87.1% to 117% in FY2016.
Net Income marign dropped on 33.1 pp from -25.6% to -58.7% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 0.58%. China Communication Telecom Services Co Ltd showed small CAPEX/Revenue decline of 1.0 pp from 1.6% in FY2013 to 0.58% in FY2016. For the last three years the average CAPEX/Revenue was 1.7%.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.0x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt increased slightly on 1.9% while cash dropped on 60.2%.
Appendix 1: Peers in Commercial Services
Below we provide China Communication Telecom Services Co Ltd benchmarking against other companies in Commercial Services 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kai Yuan Holdings Ltd ($1215) | 99.1% | 14.9% | -88.3% | 271.8% | |
| China Seven Star Holdings Ltd ($245) | 6.7% | -81.8% | -39.3% | 195.3% | |
| China Smartpay Group Holdings Ltd ($8325) | 60.0% | 274.7% | 75.6% | 124.5% | |
| Celebrate International Holdings Ltd ($8212) | -90.1% | 1,437.6% | -6.3% | 117.0% | |
| Haier Healthwise Holdings Ltd ($348) | -22.0% | -50.1% | -7.5% | 101.1% | |
| |
|---|
| Median (65 companies) | 6.9% | 8.6% | 9.8% | 4.7% | |
|---|
| China Communication Telecom Services Co Ltd ($8206) | | 4.2% | 12.7% | -1.0% | -9.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HC International Inc ($2280) | 87.5% | 91.9% | 92.5% | 89.6% | |
| Winto Group Holdings Ltd ($8238) | 90.2% | 93.4% | 92.0% | 88.4% | |
| Dingyi Group Investment Ltd ($508) | 75.8% | | 64.5% | 86.0% | |
| Fu Shou Yuan International Group Ltd ($1448) | 80.5% | 80.4% | 80.0% | 77.6% | |
| Nirvana Asia Ltd ($1438) | 68.3% | 69.6% | 70.5% | 75.7% | |
| |
|---|
| Median (60 companies) | 31.6% | 30.7% | 31.0% | 31.2% | |
|---|
| China Communication Telecom Services Co Ltd ($8206) | 61.6% | 58.6% | 69.1% | 70.2% | 68.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Zuoli Kechuang Micro-Finance Co Ltd ($6866) | 61.6% | 84.9% | 75.9% | 80.9% | |
| Shenzhen International Holdings Ltd ($152) | 60.2% | 65.8% | 97.1% | 73.6% | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 78.3% | 74.5% | 74.0% | 71.6% | |
| CAR Inc ($699) | 43.6% | 30.1% | 43.1% | 67.4% | |
| Jiangsu Expressway Co Ltd ($177) | 57.0% | 60.7% | 59.3% | 61.5% | |
| |
|---|
| Median (65 companies) | 17.6% | 16.0% | 12.9% | 10.1% | |
|---|
| China Communication Telecom Services Co Ltd ($8206) | 6.8% | -6.2% | -3.4% | -7.9% | -40.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Blue Sky Power Holdings Ltd ($6828) | 21.3% | 9.0% | 13.9% | 47.4% | |
| COSCO Pacific Ltd ($1199) | 96.6% | 66.6% | 43.3% | 45.8% | |
| Shenzhen International Holdings Ltd ($152) | 23.0% | 22.1% | 20.9% | 35.0% | |
| Celebrate International Holdings Ltd ($8212) | 211.7% | 12.0% | 6.2% | 34.2% | |
| China Maple Leaf Educational Systems Ltd ($1317) | 25.7% | 50.9% | 21.1% | 32.8% | |
| |
|---|
| Median (65 companies) | 3.1% | 4.0% | 3.2% | 3.9% | |
|---|
| China Communication Telecom Services Co Ltd ($8206) | 2.0% | 1.6% | 2.4% | 2.1% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wonderful Sky Financial Group Holdings Ltd ($1260) | 51.5% | 26.6% | 30.0% | 29.5% | |
| 1010 Printing Group Ltd ($1127) | 13.5% | 20.8% | 17.8% | 19.9% | |
| China Packaging Holdings Development Ltd ($1439) | 52.0% | 46.6% | 34.1% | 19.8% | |
| iOne Holdings Ltd ($982) | 12.5% | 11.1% | 9.4% | 19.2% | |
| CAR Inc ($699) | 5.2% | 2.7% | 12.2% | 19.0% | |
| |
|---|
| Median (65 companies) | 7.5% | 6.4% | 5.8% | 3.3% | |
|---|
| China Communication Telecom Services Co Ltd ($8206) | -12.9% | -17.5% | -7.3% | -10.3% | -34.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Celebrate International Holdings Ltd ($8212) | | | | 22.2x | |
| Kai Yuan Holdings Ltd ($1215) | -143.8x | -0.7x | | 18.8x | |
| Eagle Legend Asia Ltd ($936) | 4.0x | 4.0x | 3.3x | 6.2x | |
| Sichuan Expressway Co Ltd ($107) | 2.7x | 3.8x | 4.3x | 5.5x | |
| Yuexiu Transport Infrastructure Ltd ($1052) | 4.5x | 3.1x | 2.7x | 5.3x | |
| |
|---|
| Median (43 companies) | -0.0x | -0.7x | -0.5x | -0.6x | |
|---|
