China Communications Services Corp Ltd revenue increased on 9.3% and EBITDA Margin showed almost no change
30/03/2017 • About China Communications Services Corp Ltd (
$552) • By InTwits
China Communications Services Corp Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Communications Services Corp Ltd is a growth stock: 2016 revenue growth was 9.3%, 5 year revenue CAGR was 10.5% at 2016 ROIC 10.3%
- EBITDA Margin is relatively stable: 4.1% in 2016 vs. 4.3% in 2015 vs. 5.9% in 2012
- China Communications Services Corp Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 1,432 in 2016, 1,594 in 2015, 1,879 in 2014, 3,298 in 2013, 4,912 in 2012
- The company has business model with average profitability: ROIC is at 10.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Communications Services Corp Ltd ($552) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 61,517 | 68,459 | 73,176 | 80,960 | 88,449 | 9.3% |
| Gross Profit | 9,785 | 10,378 | 10,682 | 11,388 | 11,690 | 2.7% |
| SG&A | 7,515 | 8,288 | 8,777 | 9,306 | 9,501 | 2.1% |
| EBITDA | 3,644 | 3,468 | 3,325 | 3,506 | 3,659 | 4.4% |
| Net Income | 2,407 | 2,238 | 2,150 | 2,334 | 2,536 | 8.6% |
Balance Sheet
|
|---|
| Cash | 8,879 | 6,760 | 7,314 | 9,536 | 13,324 | 39.7% |
| Short Term Debt | 410 | 54 | 247 | 177 | 47 | -73.6% |
| Long Term Debt | 90 | 52 | 39 | 34 | 17 | -49.7% |
Cash flow
|
|---|
| Capex | 973 | 809 | 795 | 812 | 847 | 4.3% |
Ratios
|
|---|
| Revenue growth | 14.4% | 11.3% | 6.9% | 10.6% | 9.3% | |
| EBITDA growth | 9.1% | -4.8% | -4.1% | 5.4% | 4.4% | |
| Gross Margin | 15.9% | 15.2% | 14.6% | 14.1% | 13.2% | -0.8% |
| EBITDA Margin | 5.9% | 5.1% | 4.5% | 4.3% | 4.1% | -0.2% |
| Net Income Margin | 3.9% | 3.3% | 2.9% | 2.9% | 2.9% | -0.0% |
| SG&A, % of revenue | 12.2% | 12.1% | 12.0% | 11.5% | 10.7% | -0.8% |
| CAPEX, % of revenue | 1.6% | 1.2% | 1.1% | 1.0% | 1.0% | -0.0% |
| ROIC | 14.3% | 11.9% | 10.5% | 10.5% | 10.3% | -0.2% |
| ROE | 13.1% | 10.6% | 9.6% | 9.8% | 9.9% | 0.1% |
| Net Debt/EBITDA | -2.3x | -1.9x | -2.1x | -2.7x | -3.6x | -1.0x |
Revenue and profitability
The company's Revenue increased on 9.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.2 pp from 3.1% to 4.2% in 2016.
Gross Margin decreased slightly on 0.85 pp from 14.1% to 13.2% in 2016. SG&A as a % of Revenue decreased slightly on 0.75 pp from 11.5% to 10.7% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 0.96%. China Communications Services Corp Ltd's CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 1.0%.
Return on investment
The company operates at low ROIC (10.26%) and ROE (9.88%). ROIC showed almost no change in 2016. ROE showed almost no change in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.6x and Debt / EBITDA is 0.0x. Net Debt / EBITDA dropped on 1.0x from -2.7x to -3.6x in 2016. Debt dropped on 69.7% while cash surged on 39.7%.
Appendix 1: Peers in Telecommunications
Below we provide China Communications Services 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% | 65.8% |
| Hanny Holdings Ltd ($275) | | 131.2% | -85.2% | 349.3% | -78.5% |
| CCT Fortis Holdings Ltd ($138) | | -55.3% | -71.3% | 207.1% | 47.2% |
| Xi'an Haitian Antenna Technologies Co Ltd ($8227) | | -45.9% | -56.2% | 111.6% | 55.3% |
| China Trends Holdings Ltd ($8171) | | -70.2% | -16.7% | 106.0% | -22.7% |
| |
|---|
| Median (53 companies) | 12.9% | 8.3% | 9.7% | 4.3% | -2.5% |
|---|
| China Communications Services Corp Ltd ($552) | | 11.3% | 6.9% | 10.6% | 9.3% |
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 (50 companies) | 25.5% | 24.4% | 26.1% | 23.1% | 35.6% |
|---|
| China Communications Services Corp Ltd ($552) | 15.9% | 15.2% | 14.6% | 14.1% | 13.2% |
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 (53 companies) | 7.6% | 5.5% | 5.9% | 9.1% | 8.9% |
|---|
| China Communications Services Corp Ltd ($552) | 5.9% | 5.1% | 4.5% | 4.3% | 4.1% |
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 (53 companies) | 2.2% | 2.9% | 3.1% | 2.6% | 8.4% |
|---|
| China Communications Services Corp Ltd ($552) | 1.6% | 1.2% | 1.1% | 1.0% | 1.0% |
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 (54 companies) | 7.1% | 5.9% | 5.7% | 5.4% | 5.2% |
|---|
| China Communications Services Corp Ltd ($552) | 14.3% | 11.9% | 10.5% | 10.5% | 10.3% |
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) | -0.1x | 0.6x | 0.7x | 0.8x | 1.7x |
|---|
| China Communications Services Corp Ltd ($552) | -2.3x | -1.9x | -2.1x | -2.7x | -3.6x |
