Air China reports 14.0% CAPEX decline in 2016 while 2.8% Revenue growth
30/03/2017 • About Air China (
$753) • By InTwits
Air China reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 28.9% in 2016 vs. 27.3% in 2015 vs. 19.7% in 2012
- Air China has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.9%. At the same time it's in pair with industry average of 16.0%.
- CAPEX is quite volatile: 2,119 in 2016, 1,720 in 2015, 1,291 in 2014, 905 in 2013, 709 in 2012
- The company has business model with low profitability: ROIC is at 9.9%
- It operates with high leverage: Net Debt/EBITDA is 3.2x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Air China ($753) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 95,319 | 94,603 | 101,385 | 104,368 | 107,298 | 2.8% |
| Gross Profit | | | | | 24,041 | |
| SG&A | 6,320 | 6,982 | 6,483 | 5,974 | 5,295 | -11.4% |
| EBITDA | 18,804 | 15,109 | 18,638 | 28,535 | 30,979 | 8.6% |
| Net Income | 4,816 | 3,264 | 3,852 | 7,063 | 6,809 | -3.6% |
Balance Sheet
|
|---|
| Cash | 11,788 | 14,762 | 8,640 | 7,138 | 6,848 | -4.1% |
| Short Term Debt | 31,690 | 43,362 | 32,669 | 17,266 | 32,075 | 85.8% |
| Long Term Debt | 67,731 | 68,239 | 80,263 | 86,791 | 74,129 | -14.6% |
Cash flow
|
|---|
| Capex | 16,019 | 18,054 | 18,947 | 11,297 | 9,720 | -14.0% |
Ratios
|
|---|
| Revenue growth | 2.1% | -0.8% | 7.2% | 2.9% | 2.8% | |
| EBITDA growth | 18.5% | -19.7% | 23.4% | 53.1% | 8.6% | |
| Gross Margin | | | | | 22.4% | 22.4% |
| EBITDA Margin | 19.7% | 16.0% | 18.4% | 27.3% | 28.9% | 1.5% |
| Net Income Margin | 5.1% | 3.4% | 3.8% | 6.8% | 6.3% | -0.4% |
| SG&A, % of revenue | 6.6% | 7.4% | 6.4% | 5.7% | 4.9% | -0.8% |
| CAPEX, % of revenue | 16.8% | 19.1% | 18.7% | 10.8% | 9.1% | -1.8% |
| ROIC | 5.7% | 2.5% | 4.2% | 9.1% | 9.9% | 0.8% |
| ROE | 10.0% | 6.3% | 7.1% | 12.4% | 10.6% | -1.8% |
| Net Debt/EBITDA | 4.7x | 6.4x | 5.6x | 3.4x | 3.2x | -0.2x |
Air China ($753) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 26,311 | 27,076 | 31,852 | 27,144 | | | | |
| Net Income | 2,435 | 1,022 | 3,769 | -413 | | | | |
Balance Sheet
|
|---|
| Cash | 8,816 | 7,864 | 9,420 | 6,848 | | | | |
| Short Term Debt | 18,295 | 24,303 | 27,620 | 26,928 | | | | |
| Long Term Debt | 46,256 | 41,115 | 39,547 | 74,129 | | | | |
Ratios
|
|---|
| Gross Margin | 23.9% | 22.0% | 27.4% | 15.5% | | | | |
| Net Income Margin | 9.3% | 3.8% | 11.8% | -1.5% | | | | |
Revenue and profitability
Air China's Revenue increased on 2.8%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.5 pp from 27.3% to 28.9% in 2016.
SG&A as a % of Revenue decreased slightly on 0.79 pp from 5.7% to 4.9% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Air China had CAPEX/Revenue of 9.1%. CAPEX/Revenue dropped on 10.0 pp from 19.1% in 2013 to 9.1% in 2016. Average CAPEX/Revenue for the last three years was 12.9%.
Return on investment
The company operates at low ROIC (9.90%) and ROE (10.59%). ROIC increased slightly on 0.83 pp from 9.1% to 9.9% in 2016. ROE decreased slightly on 1.8 pp from 12.4% to 10.6% in 2016.
Leverage (Debt)
Debt level is 3.2x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 3.4x to 3.2x in 2016. Debt increased on 2.1% while cash decreased on 4.1%.
