HSBC Holdings reports 81.7% Net Income decline
21/02/2017 • About HSBC Holdings (
$5) • By InTwits
HSBC Holdings reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- HSBC Holdings is a company in decline: 2016 revenue growth was -18.4%, 5 years revenue CAGR was -8.5%
- HSBC Holdings has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 19.0%.
- CAPEX is quite volatile: 1,432 in 2016, 1,594 in 2015, 1,879 in 2014, 3,298 in 2013, 4,912 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.8%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is -5.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HSBC Holdings ($5) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 91,079 | 83,837 | 81,086 | 77,769 | 63,459 | -18.4% |
| Net Income | 14,027 | 16,204 | 13,688 | 13,522 | 2,479 | -81.7% |
Balance Sheet
|
|---|
| Cash | 148,835 | 172,620 | 134,884 | 104,702 | 133,012 | 27.0% |
| Short Term Debt | 411,992 | 336,237 | 267,998 | 195,985 | 213,630 | 9.0% |
| Long Term Debt | 148,940 | 133,056 | 122,611 | 111,651 | 86,899 | -22.2% |
Cash flow
|
|---|
| Capex | 1,318 | 1,952 | 1,477 | 1,352 | 1,151 | -14.9% |
Ratios
|
|---|
| Revenue growth | -8.0% | -8.0% | -3.3% | -4.1% | -18.4% | |
| Net Income Margin | 15.4% | 19.3% | 16.9% | 17.4% | 3.9% | -13.5% |
| CAPEX, % of revenue | 1.4% | 2.3% | 1.8% | 1.7% | 1.8% | 0.1% |
| ROIC | 2.3% | 2.8% | 2.4% | 2.5% | 0.8% | -1.7% |
| ROE | 8.1% | 8.8% | 7.0% | 6.6% | 0.7% | -5.9% |
Revenue and profitability
HSBC Holdings's Revenue dropped on 18.4%.
Net Income marign dropped on 13.5 pp from 17.4% to 3.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 HSBC Holdings had CAPEX/Revenue of 1.8%. The company showed small CAPEX/Revenue decline of 0.51 pp from 2.3% in 2013 to 1.8% in 2016. For the last three years the average CAPEX/Revenue was 1.8%.
Return on investment
The company operates at low ROIC (0.82%) and ROE (0.71%). ROIC decreased slightly on 1.7 pp from 2.5% to 0.82% in 2016. ROE decreased on 5.9 pp from 6.6% to 0.71% in 2016.
Leverage (Debt)
Debt decreased on 2.3% while cash jumped on 27.0%.
Management team
Stuart Gulliver is a HSBC Holdings's CEO. Stuart Gulliver has spent 7 years at the company. Iain James Mackay is a The company's CFO. Iain James Mackay has spent 8 years at the company.
Appendix 1: Peers in Banks
Below you can find HSBC Holdings benchmarking vs. other companies in Banks 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 |
|---|
| KVB Kunlun Financial Group Ltd ($8077) | -20.6% | 43.4% | 6.8% | 116.4% | |
| Huishang Bank Corp Ltd ($3698) | 33.9% | 22.8% | 24.3% | 24.6% | |
| Shengjing Bank Co Ltd ($2066) | 36.5% | 36.3% | 40.1% | 24.3% | |
| Bank of Chongqing Co Ltd ($1963) | 38.4% | 26.6% | 28.4% | 18.5% | |
| BOC Hong Kong Holdings Ltd ($2388) | 15.1% | 11.4% | -3.0% | 11.6% | |
| |
|---|
| Median (13 companies) | 22.2% | 12.5% | 24.0% | 7.6% | -6.0% |
|---|
| HSBC Holdings ($5) | | -8.0% | -3.3% | -4.1% | -18.4% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| KVB Kunlun Financial Group Ltd ($8077) | 4.1% | 29.9% | 27.0% | 33.5% | |
| |
|---|
| Median (1 company) | 4.1% | 29.9% | 27.0% | 33.5% | |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dah Sing Banking Group Ltd ($2356) | 3.9% | 4.1% | 2.2% | 7.5% | |
| Dah Sing Financial Holdings Ltd ($440) | 3.0% | 3.4% | 1.7% | 5.9% | |
| Harbin Bank Co Ltd ($6138) | 19.8% | 9.9% | 6.5% | 5.8% | |
| Chongqing Rural Commercial Bank Co Ltd ($3618) | 4.0% | 4.3% | 4.8% | 4.4% | |
| Shengjing Bank Co Ltd ($2066) | 1.6% | 2.2% | 5.0% | 3.0% | |
| |
|---|
| Median (13 companies) | 2.8% | 3.2% | 1.7% | 2.8% | 1.8% |
|---|
| HSBC Holdings ($5) | 1.4% | 2.3% | 1.8% | 1.7% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hang Seng Bank Ltd ($11) | 8.6% | 9.5% | 9.0% | 8.3% | 8.1% |
| BOC Hong Kong Holdings Ltd ($2388) | 5.9% | 6.4% | 5.8% | 6.2% | |
| Dah Sing Financial Holdings Ltd ($440) | 3.8% | 5.1% | 5.2% | 5.9% | |
| Chong Hing Bank Ltd ($1111) | 5.5% | 5.2% | 16.4% | 5.7% | |
| Dah Sing Banking Group Ltd ($2356) | 4.2% | 5.4% | 5.4% | 5.5% | |
| |
|---|
| Median (13 companies) | 6.0% | 6.3% | 5.4% | 4.8% | 2.1% |
|---|
| HSBC Holdings ($5) | 2.3% | 2.8% | 2.4% | 2.5% | 0.8% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| KVB Kunlun Financial Group Ltd ($8077) | -66.3x | -7.1x | -10.6x | -5.7x | |
| |
|---|
| Median (1 company) | -66.3x | -7.1x | -10.6x | -5.7x | |
|---|
