China Merchants Bank Co Ltd reports 13.0% Net Income growth in 2017
23/03/2018 • About China Merchants Bank Co Ltd (
$3968) • By InTwits
China Merchants Bank Co Ltd reported 2017 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 4.2%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: 16,336 in 2017, 17,504 in 2016, 9,079 in 2015, 8,125 in 2014, 8,211 in 2013
- The company has potentially unprofitable business model: ROIC is at 4.3%
- It operates with high leverage: Net Debt/EBITDA is 0.8x 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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 209,841 | 280,956 | 302,557 | 295,523 | 323,082 | 9.3% |
| Net Income | 51,743 | 55,911 | 57,696 | 62,081 | 70,150 | 13.0% |
Balance Sheet
|
|---|
| Cash | 556,089 | 710,771 | 584,342 | 597,529 | 693,337 | 16.0% |
| Short Term Debt | 639,314 | 859,039 | 1,168,702 | 1,356,510 | 711,852 | -47.5% |
| Long Term Debt | 68,936 | 104,864 | 59,776 | 53,163 | 690,380 | 1,198.6% |
Cash flow
|
|---|
| Capex | 8,211 | 8,125 | 9,079 | 17,504 | 16,336 | -6.7% |
Ratios
|
|---|
| Revenue growth | 18.6% | 33.9% | 7.7% | -2.3% | 9.3% | |
| Net Income Margin | 24.7% | 19.9% | 19.1% | 21.0% | 21.7% | 0.7% |
| CAPEX, % of revenue | 3.9% | 2.9% | 3.0% | 5.9% | 5.1% | -0.9% |
| ROIC | 6.8% | 5.9% | 4.7% | 4.0% | 4.3% | 0.3% |
| ROE | 22.2% | 19.3% | 17.1% | 16.3% | 16.5% | 0.3% |
China Merchants Bank Co Ltd ($3968) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 80,534 | 78,764 | 79,693 | 72,922 | -3.3% | 8.1% | 15.9% | 2.0% |
| Net Income | 19,977 | 19,282 | 19,546 | 11,345 | 8.9% | 14.2% | 15.6% | 14.1% |
Balance Sheet
|
|---|
| Cash | 584,347 | 667,935 | 648,725 | 693,337 | -11.8% | -3.6% | 1.2% | 16.0% |
| Short Term Debt | 909,642 | 612,359 | 687,271 | 711,852 | 8.8% | -2.4% | -8.1% | -47.5% |
| Long Term Debt | 355,577 | 669,952 | 715,602 | 690,380 | 0.7% | 93.4% | 133.4% | 1,198.6% |
Ratios
|
|---|
| Net Income Margin | 24.8% | 24.5% | 24.5% | 15.6% | 2.8% | 1.3% | -0.1% | 1.7% |
Revenue and profitability
The company's Revenue increased on 9.3%. Revenue growth showed slow down in 17Q4 - it was 2.0% YoY.
Net Income marign increased slightly on 0.71 pp from 21.0% to 21.7% in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 China Merchants Bank Co Ltd had CAPEX/Revenue of 5.1%. CAPEX/Revenue increased on 2.2 pp from 2.9% in 2014 to 5.1% in 2017. For the last three years the average CAPEX/Revenue was 4.7%.
Return on investment
The company operates at good ROE (16.54%) while ROIC is low (4.30%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Debt decreased slightly on 0.53% while cash jumped on 16.0%.
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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Shengjing Bank Co Ltd ($2066) | 36.3% | 40.1% | 24.3% | 17.5% | |
| Huishang Bank Corp Ltd ($3698) | 22.8% | 24.3% | 24.6% | 17.3% | |
| Chong Hing Bank Ltd ($1111) | -1.2% | 121.1% | -17.4% | 0.7% | |
| Hang Seng Bank Ltd ($11) | 8.8% | 9.3% | 1.4% | -2.0% | |
| Chongqing Rural Commercial Bank Co Ltd ($3618) | 21.7% | 23.6% | 7.6% | -4.7% | |
| |
|---|
| Median (8 companies) | 12.1% | 23.6% | 4.8% | -3.3% | 7.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Shengjing Bank Co Ltd ($2066) | 2.2% | 5.0% | 3.0% | 2.3% | |
| Chong Hing Bank Ltd ($1111) | 1.6% | 0.7% | 1.9% | 2.1% | |
| Chongqing Rural Commercial Bank Co Ltd ($3618) | 4.3% | 4.8% | 4.4% | 2.0% | |
| HSBC Holdings ($5) | 2.3% | 1.8% | 1.7% | 1.8% | |
| Bank of East Asia Ltd/The ($23) | 2.9% | 1.1% | 1.6% | 1.8% | |
| |
|---|
| Median (8 companies) | 2.9% | 1.8% | 2.5% | 1.8% | 0.8% |
|---|
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Hang Seng Bank Ltd ($11) | 9.5% | 9.0% | 8.3% | 8.1% | |
| Chong Hing Bank Ltd ($1111) | 5.2% | 16.4% | 5.7% | 5.6% | |
| Chongqing Rural Commercial Bank Co Ltd ($3618) | 5.7% | 5.2% | 4.3% | 4.1% | |
| Huishang Bank Corp Ltd ($3698) | 6.8% | 5.8% | 4.3% | 4.0% | |
| Shengjing Bank Co Ltd ($2066) | 6.6% | 5.3% | 3.5% | 2.3% | |
| |
|---|
| Median (12 companies) | 6.2% | 5.4% | 4.3% | 3.1% | 1.5% |
|---|
