Hutchison Telecommunications Hong Kong Holdings Ltd reports 45.4% revenue decline in FY2016 and 7.9 pp EBITDA Margin growth from 12.6% to 20.5%
28/02/2017 • About Hutchison Telecommunications Hong Kong Holdings Ltd (
$215) • By InTwits
Hutchison Telecommunications Hong Kong Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hutchison Telecommunications Hong Kong Holdings Ltd is a company in decline: FY2016 revenue growth was -45.4%, 5 years revenue CAGR was -2.2%
- Hutchison Telecommunications Hong Kong Holdings Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.4%. At the same time it's a lot of higher than industry average of 8.2%.
- CAPEX is quite volatile: 2,146 in 2016, 5,856 in 2015, 9,841 in 2014, 8,456 in 2013, 3,643 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hutchison Telecommunications Hong Kong Holdings Ltd ($215) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 15,536 | 12,777 | 16,296 | 22,042 | 12,024 | -45.4% |
| Gross Profit | 9,028 | 8,834 | 8,583 | 7,979 | 7,713 | -3.3% |
| SG&A | 398 | 359 | 339 | | | |
| EBITDA | 3,008 | 2,674 | 2,679 | 2,788 | 2,465 | -11.6% |
| Net Income | 1,215 | 916 | 833 | 915 | 701 | -23.4% |
Balance Sheet
|
|---|
| Cash | 182 | 209 | 359 | 1,021 | 237 | -76.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 3,746 | 4,571 | 3,952 | 3,962 | 4,467 | 12.7% |
Cash flow
|
|---|
| Capex | 1,616 | 1,257 | 1,208 | 1,053 | 1,128 | 7.1% |
Ratios
|
|---|
| Revenue growth | 15.9% | -17.8% | 27.5% | 35.3% | -45.4% | |
| EBITDA growth | 15.2% | -11.1% | 0.2% | 4.1% | -11.6% | |
| Gross Margin | 58.1% | 69.1% | 52.7% | 36.2% | 64.1% | 27.9% |
| EBITDA Margin | 19.4% | 20.9% | 16.4% | 12.6% | 20.5% | 7.9% |
| Net Income Margin | 7.8% | 7.2% | 5.1% | 4.2% | 5.8% | 1.7% |
| SG&A, % of revenue | 2.6% | 2.8% | 2.1% | | | 0.0% |
| CAPEX, % of revenue | 10.4% | 9.8% | 7.4% | 4.8% | 9.4% | 4.6% |
| ROIC | 11.8% | 8.6% | 8.5% | 8.8% | 6.2% | -2.6% |
| ROE | 11.3% | 8.3% | 7.5% | 8.0% | 6.1% | -2.0% |
| Net Debt/EBITDA | 1.2x | 1.6x | 1.3x | 1.1x | 1.7x | 0.7x |
Revenue and profitability
Hutchison Telecommunications Hong Kong Holdings Ltd's Revenue dropped on 45.4%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.9 pp from 12.6% to 20.5% in FY2016.
Gross Margin jumped on 27.9 pp from 36.2% to 64.1% in FY2016.
Net Income marign increased slightly on 1.7 pp from 4.2% to 5.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Hutchison Telecommunications Hong Kong Holdings Ltd had CAPEX/Revenue of 9.4%. Hutchison Telecommunications Hong Kong Holdings Ltd's CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 7.2%.
Return on investment
The company operates at low ROIC (6.18%) and ROE (6.07%). ROIC decreased on 2.6 pp from 8.8% to 6.2% in FY2016. ROE decreased slightly on 2.0 pp from 8.0% to 6.1% in FY2016.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA jumped on 0.7x from 1.1x to 1.7x in FY2016. Debt jumped on 12.7% while cash dropped on 76.8%.
Management team
The company's CEO is Woo Chiu Man "Cliff". Woo Chiu Man "Cliff" has 1 year tenure at the company. Cheng Wai Sin "Suzanne" is a Hutchison Telecommunications Hong Kong Holdings Ltd's CFO. Cheng Wai Sin "Suzanne" has spent 6 years at the company.
Appendix 1: Peers in Telecommunications
Below you can find Hutchison Telecommunications Hong Kong 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) | 8.7% | 9.8% | 9.6% | 6.1% | -2.0% |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | | -17.8% | 27.5% | 35.3% | -45.4% |
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% | 40.9% |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | 58.1% | 69.1% | 52.7% | 36.2% | 64.1% |
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% | 8.9% |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | 19.4% | 20.9% | 16.4% | 12.6% | 20.5% |
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% | 6.1% |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | 10.4% | 9.8% | 7.4% | 4.8% | 9.4% |
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% | 8.6% |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | 11.8% | 8.6% | 8.5% | 8.8% | 6.2% |
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 | 1.7x |
|---|
| Hutchison Telecommunications Hong Kong Holdings Ltd ($215) | 1.2x | 1.6x | 1.3x | 1.1x | 1.7x |
