China Telecom Corp Ltd Net Income dropped on 10.2% in 2016 while Revenue increased on 6.4%
21/03/2017 • About China Telecom Corp Ltd (
$728) • By InTwits
China Telecom Corp Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Telecom Corp Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.6%. At the same time it's in pair with industry average of 27.2%.
- CAPEX is quite volatile: 35,584 in 2016, 25,711 in 2015, 17,793 in 2014, 15,105 in 2013, 9,763 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Telecom Corp Ltd ($728) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 283,176 | 321,584 | 324,394 | 331,202 | 352,534 | 6.4% |
| SG&A | 63,099 | 70,448 | 62,719 | 54,472 | 56,426 | 3.6% |
| EBITDA | 70,874 | 96,551 | 94,853 | 94,106 | 95,162 | 1.1% |
| Net Income | 14,949 | 17,545 | 17,680 | 20,054 | 18,018 | -10.2% |
Balance Sheet
|
|---|
| Cash | 30,099 | 16,070 | 20,436 | 31,869 | 24,617 | -22.8% |
| Short Term Debt | 16,735 | 47,760 | 44,058 | 51,758 | 103,108 | 99.2% |
| Long Term Debt | 83,073 | 62,617 | 62,918 | 64,911 | 9,420 | -85.5% |
Cash flow
|
|---|
| Capex | 50,204 | 71,032 | 80,457 | 102,022 | 96,777 | -5.1% |
Ratios
|
|---|
| Revenue growth | 15.5% | 13.6% | 0.9% | 2.1% | 6.4% | |
| EBITDA growth | -6.0% | 36.2% | -1.8% | -0.8% | 1.1% | |
| EBITDA Margin | 25.0% | 30.0% | 29.2% | 28.4% | 27.0% | -1.4% |
| Net Income Margin | 5.3% | 5.5% | 5.5% | 6.1% | 5.1% | -0.9% |
| SG&A, % of revenue | 22.3% | 21.9% | 19.3% | 16.4% | 16.0% | -0.4% |
| CAPEX, % of revenue | 17.7% | 22.1% | 24.8% | 30.8% | 27.5% | -3.4% |
| ROIC | 6.3% | 7.3% | 7.2% | 6.4% | 6.3% | -0.1% |
| ROE | 5.7% | 6.5% | 6.2% | 6.8% | 5.8% | -0.9% |
| Net Debt/EBITDA | 1.0x | 1.0x | 0.9x | 0.9x | 0.9x | 0.0x |
China Telecom Corp Ltd ($728) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 86,426 | 90,402 | 86,988 | 88,718 | | | | |
| EBITDA | 23,811 | 26,744 | 25,478 | 19,129 | | | | |
| Net Income | 5,119 | 6,554 | 5,870 | 475 | | | | |
Balance Sheet
|
|---|
Ratios
|
|---|
| EBITDA Margin | 27.6% | 29.6% | 29.3% | 21.6% | | | | |
| Net Income Margin | 5.9% | 7.2% | 6.7% | 0.5% | | | | |
Revenue and profitability
China Telecom Corp Ltd's Revenue increased on 6.4%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.4 pp from 28.4% to 27.0% in 2016.
SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign decreased slightly on 0.94 pp from 6.1% to 5.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 27.5% in 2016. China Telecom Corp Ltd showed CAPEX/Revenue growth of 5.4 pp from 22.1% in 2013 to 27.5% in 2016. Average CAPEX/Revenue for the last three years was 27.7%.The company investments to CAPEX were large: 102% of EBITDA.
Return on investment
The company operates at low ROIC (6.34%) and ROE (5.82%). ROIC showed almost no change in 2016. ROE decreased slightly on 0.94 pp from 6.8% to 5.8% in 2016.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA increased on 0.023x from 0.9x to 0.9x in 2016. Debt decreased on 3.5% while cash dropped on 22.8%.
Management team
The company's CEO is Yang Jie. Yang Jie has 2 years tenure at the company.
Appendix 1: Peers in Telecommunications
Below we provide China Telecom Corp Ltd benchmarking against other companies in Telecommunications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
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) | | -70.2% | -16.7% | 106.0% | -22.7% |
| |
|---|
| Median (54 companies) | 5.5% | 9.8% | 9.6% | 6.1% | -2.9% |
|---|
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 (51 companies) | 23.6% | 24.3% | 25.0% | 22.7% | 35.6% |
|---|
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% | 81.5% |
| 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 (54 companies) | 7.2% | 5.5% | 5.4% | 8.3% | 10.2% |
|---|
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 (54 companies) | 2.1% | 2.9% | 2.9% | 2.6% | 8.4% |
|---|
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 (55 companies) | 7.3% | 6.0% | 5.8% | 5.4% | 6.1% |
|---|
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 (39 companies) | -0.2x | 0.6x | 0.6x | 0.6x | 1.8x |
|---|
