SmarTone Telecommunications Holdings Ltd reports 14.8% Net Income decline and 1.1 pp EBITDA Margin decline from 15.7% to 14.5%
26/08/2016 • About SmarTone Telecommunications Holdings Ltd (
$315) • By InTwits
SmarTone Telecommunications Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 14.5% in FY2016 vs. 15.7% in FY2015 vs. 30.0% in FY2012
- SmarTone Telecommunications Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.4%. At the same time it's a lot of higher than industry average of 5.5%.
- CAPEX is quite volatile: 228 in 2016, 515 in 2015, 357 in 2014, 350 in 2013, 170 in 2012
- The company has highly profitable business model: ROIC is at 14.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
SmarTone Telecommunications Holdings Ltd ($315) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9,952 | 12,067 | 13,244 | 18,659 | 18,356 | -1.6% |
| EBITDA | 2,984 | 2,994 | 2,586 | 2,921 | 2,663 | -8.8% |
| Net Income | 1,023 | 843 | 537 | 935 | 797 | -14.8% |
Balance Sheet
|
|---|
| Cash | 1,268 | 646 | 1,837 | 2,304 | 2,899 | 25.8% |
| Short Term Debt | 0 | 65 | 101 | 124 | 126 | 1.5% |
| Long Term Debt | 66 | 2,530 | 2,739 | 2,844 | 2,724 | -4.2% |
Cash flow
|
|---|
| Capex | 809 | 1,255 | 824 | 757 | 606 | -20.0% |
Ratios
|
|---|
| Revenue growth | 50.1% | 21.2% | 9.8% | 40.9% | -1.6% | |
| EBITDA growth | 39.7% | 0.3% | -13.6% | 13.0% | -8.8% | |
| EBITDA Margin | 30.0% | 24.8% | 19.5% | 15.7% | 14.5% | -1.1% |
| Net Income Margin | 10.3% | 7.0% | 4.1% | 5.0% | 4.3% | -0.7% |
| CAPEX, % of revenue | 8.1% | 10.4% | 6.2% | 4.1% | 3.3% | -0.8% |
| ROIC | 37.2% | 23.1% | 12.8% | 17.7% | 14.5% | -3.2% |
| ROE | 34.2% | 27.7% | 17.4% | 26.6% | 19.5% | -7.0% |
| Net Debt/EBITDA | -0.4x | 0.7x | 0.4x | 0.2x | -0.0x | -0.2x |
Revenue and profitability
The company's Revenue decreased slightly on 1.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 14.3 pp from -14.7% to -0.42% in FY2016.
Net Income marign decreased slightly on 0.67 pp from 5.0% to 4.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 SmarTone Telecommunications Holdings Ltd had CAPEX/Revenue of 3.3%. SmarTone Telecommunications Holdings Ltd showed decline in CAPEX/Revenue of 7.1 pp from 10.4% in FY2013 to 3.3% in FY2016. Average CAPEX/Revenue for the last three years was 4.5%.
Return on investment
The company operates at good ROIC (14.45%) and ROE (19.52%). ROIC decreased on 3.2 pp from 17.7% to 14.5% in FY2016. ROE decreased on 7.0 pp from 26.6% to 19.5% in FY2016.
Leverage (Debt)
Debt level is -0.0x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 0.2x to -0.018x in FY2016. Debt decreased on 4.0% while cash surged on 25.8%.
Management team
The company's CEO is Anna Yip. Anna Yip has 2 years tenure at the company.
Appendix 1: Peers in Telecommunications
Below you can find SmarTone Telecommunications Holdings 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 107.4% | -82.2% | 8,010.0% | |
| Hanny Holdings Ltd ($275) | | 131.2% | -85.2% | 349.3% | -78.5% |
| 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 (52 companies) | 8.9% | 8.1% | 9.6% | 6.1% | -2.2% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | | 21.2% | 9.8% | 40.9% | -1.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HKBN Ltd ($1310) | | 84.3% | 86.5% | 86.9% | |
| Netel Technology Holdings Ltd ($8256) | 27.9% | 42.1% | 54.9% | 72.3% | 73.1% |
| Great World Co Holdings Ltd ($8003) | -11.0% | 43.0% | 45.5% | 67.9% | 42.0% |
| APT Satellite Holdings Ltd ($1045) | 58.7% | 64.1% | 62.5% | 61.0% | |
| Cisco Systems Inc ($4333) | 61.2% | 60.6% | 58.9% | 60.4% | 62.9% |
| |
|---|
| Median (50 companies) | 25.5% | 24.4% | 26.1% | 23.1% | 31.4% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 86.5% | 85.8% | 81.6% | 82.4% | |
| APT Satellite Holdings Ltd ($1045) | 81.0% | 78.9% | 77.5% | 78.8% | |
| Synertone Communication Corp ($1613) | 44.9% | 48.5% | 49.4% | 51.5% | -77.6% |
| HKBN Ltd ($1310) | | 39.2% | 40.1% | 39.0% | |
| HKT Trust & HKT Ltd ($6823) | 36.3% | 35.0% | 35.9% | 34.9% | |
| |
|---|
| Median (52 companies) | 6.7% | 5.5% | 5.4% | 8.3% | -6.3% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 30.0% | 24.8% | 19.5% | 15.7% | 14.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| APT Satellite Holdings Ltd ($1045) | 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) | 93.8% | 71.7% | 75.0% | 52.8% | |
| China Fiber Optic Network System Group Ltd ($3777) | 4.8% | 16.3% | 13.1% | 31.9% | |
| Directel Holdings Ltd ($8337) | 2.1% | 0.1% | 0.6% | 30.2% | |
| |
|---|
| Median (52 companies) | 2.1% | 2.9% | 2.9% | 2.6% | 3.5% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 8.1% | 10.4% | 6.2% | 4.1% | 3.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telecom Service One Holdings Ltd ($8145) | 95.0% | 5.4% | 26.7% | 39.8% | 37.4% |
| VTech Holdings Ltd ($303) | 37.6% | 39.5% | 40.0% | 39.8% | 37.9% |
| Coolpad Group Ltd ($2369) | 8.1% | 6.0% | 9.6% | 29.1% | |
| Telecom Digital Holdings Ltd ($8336) | | 13.3% | 20.2% | 18.9% | 16.7% |
| TCL Communication Technology Holdings Ltd ($2618) | -1.6% | 6.0% | 17.2% | 13.4% | |
| |
|---|
| Median (53 companies) | 7.1% | 5.8% | 5.8% | 5.4% | -1.8% |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | 37.2% | 23.1% | 12.8% | 17.7% | 14.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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) | -1.6x | 3.5x | 14.3x | 11.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.0x | -1.3x | 12.5x | 7.6x | |
| China All Access Holdings Ltd ($633) | 0.9x | 1.8x | 5.2x | 5.6x | |
| |
|---|
| Median (38 companies) | -0.2x | 0.6x | 1.0x | 0.8x | 1.4x |
|---|
| SmarTone Telecommunications Holdings Ltd ($315) | -0.4x | 0.7x | 0.4x | 0.2x | -0.0x |
