Hang Seng Bank Ltd Net Income dropped on 41.0% in 2016
21/02/2017 • About Hang Seng Bank Ltd (
$11) • By InTwits
Hang Seng Bank Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hang Seng Bank Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.3%.
- CAPEX is quite volatile: 899 in 2016, 1,492 in 2015, 682 in 2014, 3,589 in 2013, 359 in 2012
- The company has business model with low profitability: ROIC is at 8.1%
- It operates with high leverage: Net Debt/EBITDA is 4.1x 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.
Hang Seng Bank Ltd ($11) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 42,743 | 46,499 | 50,811 | 51,499 | 50,475 | -2.0% |
| Net Income | 19,327 | 26,678 | 15,131 | 27,494 | 16,212 | -41.0% |
Balance Sheet
|
|---|
| Cash | 20,506 | 33,294 | 11,311 | 10,118 | 23,299 | 130.3% |
| Short Term Debt | 79,698 | 73,943 | 81,682 | 81,697 | 82,199 | 0.6% |
| Long Term Debt | 11,821 | 11,824 | 5,817 | 2,325 | 2,327 | 0.1% |
Cash flow
|
|---|
| Capex | 359 | 3,589 | 682 | 1,492 | 899 | -39.7% |
Ratios
|
|---|
| Revenue growth | 8.5% | 8.8% | 9.3% | 1.4% | -2.0% | |
| Net Income Margin | 45.2% | 57.4% | 29.8% | 53.4% | 32.1% | -21.3% |
| CAPEX, % of revenue | 0.8% | 7.7% | 1.3% | 2.9% | 1.8% | -1.1% |
| ROIC | 8.6% | 9.5% | 9.0% | 8.3% | 8.1% | -0.2% |
| ROE | 22.5% | 26.7% | 12.6% | 20.3% | 11.8% | -8.5% |
Revenue and profitability
The company's Revenue decreased slightly on 2.0%.
Net Income marign dropped on 21.3 pp from 53.4% to 32.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
Hang Seng Bank Ltd's CAPEX/Revenue was 1.8% in 2016. The company's CAPEX/Revenue decreased on 5.9 pp from 7.7% in 2013 to 1.8% in 2016. For the last three years the average CAPEX/Revenue was 2.0%.
Return on investment
The company operates at low ROIC (8.12%) and ROE (11.81%). ROIC showed almost no change in 2016. ROE decreased on 8.5 pp from 20.3% to 11.8% in 2016.
Leverage (Debt)
Debt increased slightly on 0.60% while cash jumped on 130%.
Management team
Lee Wai Mun "Rose" is a the company's CEO. Lee Wai Mun "Rose" has spent 6 years at the company. Leung Wing Lok "Andrew" is a Hang Seng Bank Ltd's CFO. Leung Wing Lok "Andrew" has spent 9 years at the company.
Appendix 1: Peers in Banks
Below you can find Hang Seng Bank Ltd 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% | -16.0% |
|---|
| Hang Seng Bank Ltd ($11) | | 8.8% | 9.3% | 1.4% | -2.0% |
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% | 2.6% | 1.8% | 2.3% | 1.8% |
|---|
| Hang Seng Bank Ltd ($11) | 0.8% | 7.7% | 1.3% | 2.9% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | |
| Harbin Bank Co Ltd ($6138) | 8.4% | 5.6% | 5.2% | 5.3% | |
| |
|---|
| Median (13 companies) | 6.0% | 5.9% | 5.3% | 4.3% | 0.8% |
|---|
| Hang Seng Bank Ltd ($11) | 8.6% | 9.5% | 9.0% | 8.3% | 8.1% |
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 | |
|---|
