Bank of China Ltd reports 3.7% Net Income decline in 2016 and 1.8% Revenue decline
31/03/2017 • About Bank of China Ltd (
$3988) • By InTwits
Bank of China Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bank of China Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's a lot of higher than industry average of 2.3%.
- The company has potentially unprofitable business model: ROIC is at 4.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bank of China Ltd ($3988) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 620,899 | 649,194 | 744,656 | 767,159 | 753,105 | -1.8% |
| Net Income | 139,656 | 156,911 | 169,595 | 170,845 | 164,578 | -3.7% |
Balance Sheet
|
|---|
| Cash | 2,006,772 | 2,214,340 | 2,391,211 | 2,269,434 | 2,349,188 | 3.5% |
| Short Term Debt | 2,007,655 | 2,163,878 | 2,461,085 | 2,691,922 | 2,683,947 | -0.3% |
| Long Term Debt | 221,741 | 182,224 | 201,255 | 249,261 | 295,936 | 18.7% |
Cash flow
|
|---|
| Capex | 29,490 | 34,771 | 35,108 | 36,942 | 34,247 | -7.3% |
Ratios
|
|---|
| Revenue growth | 19.7% | 4.6% | 14.7% | 3.0% | -1.8% | |
| Net Income Margin | 22.5% | 24.2% | 22.8% | 22.3% | 21.9% | -0.4% |
| CAPEX, % of revenue | 4.7% | 5.4% | 4.7% | 4.8% | 4.5% | -0.3% |
| ROIC | 6.2% | 6.3% | 6.2% | 5.4% | 4.8% | -0.6% |
| ROE | 18.0% | 17.9% | 17.0% | 15.0% | 13.1% | -1.9% |
Bank of China Ltd ($3988) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 191,152 | 204,732 | 174,621 | 182,600 | | | | |
| Net Income | 46,619 | 46,418 | 41,776 | 29,765 | | | | |
Balance Sheet
|
|---|
| Cash | 2,173,202 | 2,362,124 | 2,256,136 | 2,349,188 | | | | |
| Short Term Debt | 2,276,885 | 2,980,121 | 2,387,065 | 2,683,947 | | | | |
| Long Term Debt | 318,786 | 2,936 | 380,056 | 295,936 | | | | |
Ratios
|
|---|
| Net Income Margin | 24.4% | 22.7% | 23.9% | 16.3% | | | | |
Revenue and profitability
The company's Revenue decreased slightly on 1.8%.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 4.5% in 2016. The company showed small CAPEX/Revenue decline of 0.81 pp from 5.4% in 2013 to 4.5% in 2016. For the last three years the average CAPEX/Revenue was 4.7%.
Return on investment
The company operates at good ROE (13.08%) while ROIC is low (4.84%). ROIC decreased slightly on 0.56 pp from 5.4% to 4.8% in 2016. ROE decreased slightly on 1.9 pp from 15.0% to 13.1% in 2016.
Leverage (Debt)
Debt increased slightly on 1.3% while cash increased on 3.5%.
Appendix 1: Peers in Banks
Below you can find Bank of China Ltd benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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 | |
|---|
