PCCW Ltd Net Income dropped on 10.6% in 2016 while EBITDA Margin increased slightly on 1.3 pp from 30.6% to 31.9%
16/01/2017 • About PCCW Ltd (
$8) • By InTwits
PCCW Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- PCCW Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.2%. At the same time it's in pair with industry average of 4.9%.
- CAPEX is quite volatile: 780 in FY2016, 676 in FY2015, 566 in FY2014, 388 in FY2013, 307 in FY2012
- The company has business model with low profitability: ROIC is at 9.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
PCCW Ltd ($8) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 25,318 | 27,317 | 33,277 | 39,314 | 38,384 | -2.4% |
| Gross Profit | 13,502 | 14,206 | 18,126 | 20,349 | 20,641 | 1.4% |
| SG&A | 5,729 | 6,164 | 7,788 | 8,474 | 8,412 | -0.7% |
| EBITDA | 8,112 | 8,715 | 13,048 | 12,025 | 12,254 | 1.9% |
| Net Income | 1,661 | 1,885 | 3,310 | 2,295 | 2,051 | -10.6% |
Balance Sheet
|
|---|
| Cash | 4,553 | 5,519 | 7,943 | 7,504 | 5,204 | -30.7% |
| Short Term Debt | 8,540 | 1 | 4,823 | 3,879 | 457 | -88.2% |
| Long Term Debt | 17,926 | 29,074 | 36,494 | 38,090 | 45,131 | 18.5% |
Cash flow
|
|---|
| Capex | 2,255 | 3,996 | 3,776 | 4,033 | 4,150 | 2.9% |
Ratios
|
|---|
| Revenue growth | 2.8% | 7.9% | 21.8% | 18.1% | -2.4% | |
| EBITDA growth | 4.8% | 7.4% | 49.7% | -7.8% | 1.9% | |
| Gross Margin | 53.3% | 52.0% | 54.5% | 51.8% | 53.8% | 2.0% |
| EBITDA Margin | 32.0% | 31.9% | 39.2% | 30.6% | 31.9% | 1.3% |
| Net Income Margin | 6.6% | 6.9% | 9.9% | 5.8% | 5.3% | -0.5% |
| SG&A, % of revenue | 22.6% | 22.6% | 23.4% | 21.6% | 21.9% | 0.4% |
| CAPEX, % of revenue | 8.9% | 14.6% | 11.3% | 10.3% | 10.8% | 0.6% |
| ROIC | 10.3% | 10.6% | 13.8% | 10.3% | 9.1% | -1.2% |
| ROE | 22.3% | 21.0% | 34.2% | 21.7% | 17.8% | -3.9% |
| Net Debt/EBITDA | 2.7x | 2.7x | 2.6x | 2.9x | 3.3x | 0.4x |
Revenue and profitability
The company's Revenue decreased on 2.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.3 pp from 30.6% to 31.9% in 2016.
Gross Margin increased on 2.0 pp from 51.8% to 53.8% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 10.8% in 2016. CAPEX/Revenue decreased on 3.8 pp from 14.6% in 2013 to 10.8% in 2016. It's average CAPEX/Revenue for the last three years was 10.8%.
Return on investment
The company operates at good ROE (17.80%) while ROIC is low (9.07%). ROIC decreased slightly on 1.2 pp from 10.3% to 9.1% in 2016. ROE decreased on 3.9 pp from 21.7% to 17.8% in 2016.
Leverage (Debt)
Debt level is 3.3x Net Debt / EBITDA and 3.7x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 2.9x to 3.3x in 2016. Debt increased on 8.6% while cash dropped on 30.7%.
Appendix 1: Peers in Telecommunications
Below you can find PCCW 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) | 10.0% | 9.8% | 9.6% | 6.1% | -1.6% |
|---|
| PCCW Ltd ($8) | | 7.9% | 21.8% | 18.1% | -2.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HKBN Ltd ($1310) | | 84.3% | 86.5% | 86.9% | 83.8% |
| 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 (49 companies) | 23.6% | 24.3% | 25.0% | 22.7% | 38.2% |
|---|
| PCCW Ltd ($8) | 53.3% | 52.0% | 54.5% | 51.8% | 53.8% |
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% | 35.2% |
| HKT Trust & HKT Ltd ($6823) | 36.3% | 35.0% | 35.9% | 34.9% | 37.2% |
| |
|---|
| Median (52 companies) | 6.7% | 5.5% | 5.4% | 8.3% | 8.1% |
|---|
| PCCW Ltd ($8) | 32.0% | 31.9% | 39.2% | 30.6% | 31.9% |
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% | 3.8% |
|---|
| PCCW Ltd ($8) | 8.9% | 14.6% | 11.3% | 10.3% | 10.8% |
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% |
| SmarTone Telecommunications Holdings Ltd ($315) | 37.2% | 23.1% | 12.8% | 17.7% | 14.5% |
| |
|---|
| Median (53 companies) | 7.1% | 5.8% | 5.8% | 5.4% | 4.8% |
|---|
| PCCW Ltd ($8) | 10.3% | 10.6% | 13.8% | 10.3% | 9.1% |
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) | -0.4x | 0.6x | 0.6x | 0.5x | 1.4x |
|---|
| PCCW Ltd ($8) | 2.7x | 2.7x | 2.6x | 2.9x | 3.3x |
