China Merchants Bank Co Ltd reports 92.8% CAPEX growth while 2.6% Revenue decline
24/03/2017 • About China Merchants Bank Co Ltd (
$3968) • By InTwits
China Merchants Bank Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Merchants Bank Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: 17,504 in 2016, 9,079 in 2015, 8,125 in 2014, 8,211 in 2013, 6,494 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.0%
- It operates with high leverage: Net Debt/EBITDA is 0.9x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Merchants Bank Co Ltd ($3968) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 176,882 | 209,841 | 280,956 | 302,557 | 295,523 | -2.3% |
| Net Income | 45,268 | 51,743 | 55,911 | 57,696 | 62,081 | 7.6% |
Balance Sheet
|
|---|
| Cash | 752,262 | 556,089 | 710,771 | 584,342 | 597,529 | 2.3% |
| Short Term Debt | 368,507 | 639,314 | 859,039 | 1,168,702 | 1,356,510 | 16.1% |
| Long Term Debt | 77,111 | 68,936 | 104,864 | 59,776 | 53,163 | -11.1% |
Cash flow
|
|---|
| Capex | 6,494 | 8,211 | 8,125 | 9,079 | 17,504 | 92.8% |
Ratios
|
|---|
| Revenue growth | 24.0% | 18.6% | 33.9% | 7.7% | -2.3% | |
| Net Income Margin | 25.6% | 24.7% | 19.9% | 19.1% | 21.0% | 1.9% |
| CAPEX, % of revenue | 3.7% | 3.9% | 2.9% | 3.0% | 5.9% | 2.9% |
| ROIC | 8.6% | 6.8% | 5.9% | 4.7% | 4.0% | -0.7% |
| ROE | 24.8% | 22.2% | 19.3% | 17.1% | 16.3% | -0.8% |
China Merchants Bank Co Ltd ($3968) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 83,262 | 72,829 | 68,766 | 71,515 | | | | |
| Net Income | 18,350 | 16,881 | 16,911 | 9,939 | | | | |
Balance Sheet
|
|---|
| Cash | 662,577 | 693,195 | 641,332 | 597,529 | | | | |
| Short Term Debt | 836,034 | 627,150 | 747,504 | 1,356,510 | | | | |
| Long Term Debt | 353,156 | 346,427 | 306,636 | 53,163 | | | | |
Ratios
|
|---|
| Net Income Margin | 22.0% | 23.2% | 24.6% | 13.9% | | | | |
Revenue and profitability
The company's Revenue decreased on 2.3%.
Net Income marign increased slightly on 1.9 pp from 19.1% to 21.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
China Merchants Bank Co Ltd's CAPEX/Revenue was 5.9% in 2016. CAPEX/Revenue increased on 2.0 pp from 3.9% in 2013 to 5.9% in 2016. For the last three years the average CAPEX/Revenue was 3.9%.
Return on investment
The company operates at good ROE (16.27%) while ROIC is low (4.04%). ROIC decreased slightly on 0.65 pp from 4.7% to 4.0% in 2016. ROE decreased slightly on 0.82 pp from 17.1% to 16.3% in 2016.
Leverage (Debt)
Debt surged on 14.7% while cash increased on 2.3%.
Management team
Tian Huiyu is a the company's CEO. Tian Huiyu has spent 5 years at the company.
Appendix 1: Peers in Banks
Below we provide China Merchants Bank Co Ltd benchmarking against other companies in Banks 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 |
|---|
| KVB Kunlun Financial Group Ltd ($8077) | | 43.4% | 6.8% | 116.4% | |
| Huishang Bank Corp Ltd ($3698) | | 22.8% | 24.3% | 24.6% | 17.3% |
| Shengjing Bank Co Ltd ($2066) | | 36.3% | 40.1% | 24.3% | 17.5% |
| Bank of Chongqing Co Ltd ($1963) | | 26.6% | 28.4% | 18.5% | |
| BOC Hong Kong Holdings Ltd ($2388) | 15.1% | 11.4% | -3.0% | 11.6% | |
| |
|---|
| Median (14 companies) | 36.7% | 12.1% | 23.6% | 4.8% | -3.3% |
|---|
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% | 2.0% |
| Shengjing Bank Co Ltd ($2066) | 1.6% | 2.2% | 5.0% | 3.0% | 2.3% |
| |
|---|
| Median (14 companies) | 2.6% | 2.9% | 1.8% | 2.5% | 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% |
| Chong Hing Bank Ltd ($1111) | 5.5% | 5.2% | 16.4% | 5.7% | 5.6% |
| Chongqing Rural Commercial Bank Co Ltd ($3618) | 6.3% | 5.7% | 5.2% | 4.3% | 4.1% |
| Huishang Bank Corp Ltd ($3698) | 8.4% | 6.8% | 5.8% | 4.3% | 4.0% |
| Shengjing Bank Co Ltd ($2066) | 6.0% | 6.6% | 5.3% | 3.5% | 2.3% |
| |
|---|
| Median (12 companies) | 6.0% | 6.2% | 5.4% | 4.3% | 3.1% |
|---|
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 | |
|---|
