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China Mobile Ltd reports 6.7% EBITDA growth and 6.0% Revenue growth

23/03/2017 • About China Mobile Ltd ($941) • By InTwits

China Mobile Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • China Mobile Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.7%. At the same time it's in pair with industry average of 24.8%.
  • The company has highly profitable business model: ROIC is at 12.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

China Mobile Ltd ($941) key annual financial indicators

mln. CNY201220132014201520162016/2015
Net Income129,274121,692109,218108,539108,7410.2%
Balance Sheet
Short Term Debt68685,2497,2744,998-31.3%
Long Term Debt28,6194,9894,9924,9950-100.0%
Cash flow
Revenue growth10.2%8.3%3.4%2.6%6.0%
EBITDA growth2.1%-5.2%-0.1%-0.1%6.9%
EBITDA Margin43.7%38.2%36.9%36.0%36.3%0.3%
Net Income Margin22.2%19.3%16.8%16.2%15.3%-0.9%
SG&A, % of revenue13.8%14.6%11.6%9.0%-9.0%
CAPEX, % of revenue21.5%22.2%27.0%26.0%26.7%0.7%
Net Debt/EBITDA-0.2x-0.2x-0.3x-0.3x-0.3x-0.1x

China Mobile Ltd ($941) key quoterly financial indicators

mln. CNY16Q116Q216Q316Q4YoY change
Net Income23,90036,67227,52820,641
Balance Sheet
Net Income Margin 13.5% 19.0% 16.0% 12.5%

Revenue and profitability

The company's Revenue increased on 6.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.67 pp from 16.3% to 17.0% in 2016.

Net Income marign decreased slightly on 0.89 pp from 16.2% to 15.3% in 2016.

Capital expenditures (CAPEX) and working capital investments

In 2016 the company had CAPEX/Revenue of 26.7%. The company showed CAPEX/Revenue growth of 4.5 pp from 22.2% in 2013 to 26.7% in 2016. Average CAPEX/Revenue for the last three years was 26.6%.China Mobile Ltd invested a large share of EBITDA (73.6%) to CAPEX.

Return on investment

The company operates at good ROIC (12.55%) while ROE is low (11.47%). ROIC increased slightly on 1.1 pp from 11.4% to 12.6% in 2016. ROE decreased slightly on 0.56 pp from 12.0% to 11.5% in 2016.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is 0.0x. Net Debt / EBITDA decreased on 0.1x from -0.3x to -0.3x in 2016. Debt dropped on 59.3% while cash surged on 13.2%.

Management team

China Mobile Ltd's CEO Li Yue has spent 8 years at the company. Dong Xin is a The company's CFO. Dong Xin has spent 1 year at the company.

Appendix 1: Peers in Telecommunications

Below we provide China Mobile 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%65.8%
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)12.2%9.8%9.6%6.1%-2.7%

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%8.9%

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 (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%5.2%

Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
CCT Land Holdings Ltd ($261)10.1x23.8x48.4x44.8x
China Energine International Holdings Ltd ($1185)13.3x31.7x
China Ground Source Energy Industry Group Ltd ($8128)-1.6x3.5x14.3x11.3x
China Electronics Corp Holdings Co Ltd ($85)-2.0x-1.3x12.5x7.6x
China All Access Holdings Ltd ($633)0.9x1.8x5.2x5.6x
Median (39 companies)-0.2x0.6x0.6x0.6x1.7x