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China Mobile Ltd EBITDA increased on 5.3% and Revenue increased on 4.5%

22/03/2018 • About China Mobile Ltd ($941) • By InTwits

China Mobile Ltd reported 2017 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 25.6%. At the same time it's in pair with industry average of 26.8%.
  • CAPEX is quite volatile: 292 in 2017, 481 in 2016, 327 in 2015, 1,270 in 2014, 252 in 2013
  • The company has highly profitable business model: ROIC is at 12.4%
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. CNY201320142015201620172017/2016
Net Income121,692109,218108,539108,741114,2795.1%
Balance Sheet
Short Term Debt685,2497,2744,9980-100.0%
Long Term Debt4,9894,9924,99500
Cash flow
Revenue growth8.3%3.4%2.6%6.0%4.5%
EBITDA growth-5.2%-0.1%-0.1%6.9%5.3%
EBITDA Margin38.2%36.9%36.0%36.3%36.6%0.3%
Net Income Margin19.3%16.8%16.2%15.3%15.4%0.1%
SG&A, % of revenue14.6%11.6%9.0%0.0%
CAPEX, % of revenue22.2%27.0%26.0%26.7%26.1%-0.6%
Net Debt/EBITDA-0.2x-0.3x-0.3x-0.3x-0.4x-0.1x

China Mobile Ltd ($941) key quoterly financial indicators

mln. CNY17Q117Q217Q317Q4YoY change
Net Income24,80037,87529,42522,1793.8%3.3%6.9%7.5%
Balance Sheet
Net Income Margin 13.5% 18.5% 16.3% 13.0%0.0%-0.5%0.3%0.5%

Revenue and profitability

The company's Revenue increased on 4.5%. Revenue growth showed slow down in 17Q4 - it was 3.2% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.0 pp from 69.9% to 75.0% in 2017.

Net Income marign showed almost no change in 2017.

Capital expenditures (CAPEX) and working capital investments

In 2017 China Mobile Ltd had CAPEX/Revenue of 26.1%. The company showed small CAPEX/Revenue decline of 0.82 pp from 27.0% in 2014 to 26.1% in 2017. For the last three years the average CAPEX/Revenue was 26.3%.The company maintained rich investment policy and has spent a big chunk of EBITDA (71.5%) to CAPEX.

Return on investment

The company operates at good ROIC (12.44%) while ROE is low (11.63%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.

Leverage (Debt)

The company paid down all the debt in 2017. Cash jumped on 33.4%.

Appendix 1: Peers in Telecommunications

Below you can find China Mobile Ltd benchmarking vs. other companies in Telecommunications 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 FY2013 FY2014 FY2015 FY2016 FY2017
Great World Co Holdings Ltd ($8003)-81.7%61.9%-3.7%1,112.5%
Zheda Lande Scitech Ltd ($8106)6.9%-21.6%34.3%117.3%
Hong Kong Television Network Ltd ($1137)107.4%-82.2%8,010.0%65.8%
Xi'an Haitian Antenna Technologies Co Ltd ($8227)-45.9%-56.2%111.6%55.3%
CCT Fortis Holdings Ltd ($138)-55.3%-71.3%207.1%47.2%
Median (37 companies)9.8%9.6%6.1%-2.4%

Top companies by Gross margin, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
HKBN Ltd ($1310)84.3%86.5%86.9%83.8%
Netel Technology Holdings Ltd ($8256)42.1%54.9%72.3%73.1%
Hutchison Telecommunications Hong Kong Holdings Ltd ($215)69.1%52.7%36.2%64.1%
Cisco Systems Inc ($4333)60.6%58.9%60.4%62.9%
HKT Trust & HKT Ltd ($6823)55.7%58.2%55.3%57.3%
Median (26 companies)24.3%25.0%22.7%33.5%

Top companies by EBITDA margin, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Asia Satellite Telecommunications Holdings Ltd ($1135)85.8%81.6%82.4%81.5%
Champion Technology Holdings Ltd ($92)41.1%33.1%25.6%58.1%
HKT Trust & HKT Ltd ($6823)35.0%35.9%34.9%37.2%
HKBN Ltd ($1310)39.2%40.1%39.0%35.2%
PCCW Ltd ($8)31.9%39.2%30.6%31.9%
Median (28 companies)5.5%5.4%8.3%8.1%

Top companies by CAPEX/Revenue, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Hanny Holdings Ltd ($275)11.6%28.3%0.2%643.1%
Vision Values Holdings Ltd ($862)1.2%8.4%3.0%72.5%
Netel Technology Holdings Ltd ($8256)15.4%16.6%9.0%25.0%
Great World Co Holdings Ltd ($8003)108.7%7.8%0.4%14.6%
Synertone Communication Corp ($1613)38.4%15.8%2.1%14.3%
Median (18 companies)2.9%2.9%2.6%6.1%

Top companies by ROIC, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
VTech Holdings Ltd ($303)39.5%40.0%39.8%37.9%
Telecom Service One Holdings Ltd ($8145)5.4%26.7%39.8%37.4%
Champion Technology Holdings Ltd ($92)3.0%5.2%0.9%17.4%
Telecom Digital Holdings Ltd ($8336)13.3%20.2%18.9%16.7%
Cisco Systems Inc ($4333)15.8%12.1%13.4%14.7%
Median (38 companies)6.0%5.8%5.4%6.0%

Top companies by Net Debt / EBITDA

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Z-Obee Holdings Ltd ($948)5.9x70.9x
HKBN Ltd ($1310)3.8x3.0x3.0x3.5x
PCCW Ltd ($8)2.7x2.6x2.9x3.3x
CITIC Telecom International Holdings Ltd ($1883)3.5x3.4x3.2x3.2x
Asia Satellite Telecommunications Holdings Ltd ($1135)-1.2x-1.0x3.2x2.9x
Median (18 companies)0.6x0.6x0.6x1.6x