China Communications Services Corp Ltd revenue increased on 6.9% and EBITDA Margin showed almost no change
27/03/2018 • About China Communications Services Corp Ltd (
$552) • By InTwits
China Communications Services Corp Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 4.0% in 2017 vs. 4.1% in 2016 vs. 5.1% in 2013
- China Communications Services Corp Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 1,818 in 2017, 1,432 in 2016, 1,594 in 2015, 1,879 in 2014, 3,298 in 2013
- The company has business model with low profitability: ROIC is at 9.8%
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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 68,459 | 73,176 | 80,960 | 88,449 | 94,572 | 6.9% |
| Gross Profit | 10,378 | 10,682 | 11,388 | 11,690 | 12,212 | 4.5% |
| SG&A | 8,288 | 8,777 | 9,306 | 9,501 | 9,885 | 4.0% |
| EBITDA | 3,468 | 3,325 | 3,506 | 3,659 | 3,738 | 2.2% |
| Net Income | 2,238 | 2,150 | 2,334 | 2,536 | 2,714 | 7.0% |
Balance Sheet
|
|---|
| Cash | 6,760 | 7,314 | 9,536 | 13,324 | 13,267 | -0.4% |
| Short Term Debt | 54 | 247 | 177 | 47 | 309 | 561.4% |
| Long Term Debt | 52 | 39 | 34 | 17 | 18 | 1.7% |
Cash flow
|
|---|
| Capex | 809 | 795 | 812 | 847 | 1,014 | 19.7% |
Ratios
|
|---|
| Revenue growth | 11.3% | 6.9% | 10.6% | 9.3% | 6.9% | |
| EBITDA growth | -4.8% | -4.1% | 5.4% | 4.4% | 2.2% | |
| Gross Margin | 15.2% | 14.6% | 14.1% | 13.2% | 12.9% | -0.3% |
| EBITDA Margin | 5.1% | 4.5% | 4.3% | 4.1% | 4.0% | -0.2% |
| Net Income Margin | 3.3% | 2.9% | 2.9% | 2.9% | 2.9% | 0.0% |
| SG&A, % of revenue | 12.1% | 12.0% | 11.5% | 10.7% | 10.5% | -0.3% |
| CAPEX, % of revenue | 1.2% | 1.1% | 1.0% | 1.0% | 1.1% | 0.1% |
| ROIC | 11.9% | 10.5% | 10.5% | 10.3% | 9.8% | -0.4% |
| ROE | 10.6% | 9.6% | 9.8% | 9.9% | 9.9% | 0.0% |
| Net Debt/EBITDA | -1.9x | -2.1x | -2.7x | -3.6x | -3.5x | 0.2x |
Revenue and profitability
The company's Revenue increased on 6.9%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Gross Margin showed almost no change in 2017. SG&A as a % of Revenue showed almost no change in 2017.
Net Income marign showed almost no change in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 China Communications Services Corp Ltd had CAPEX/Revenue of 1.1%. CAPEX/Revenue showed almost no change from 2014 to 2017. It's average level of CAPEX/Revenue for the last three years was 1.0%.
Return on investment
The company operates at low ROIC (9.81%) and ROE (9.89%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.5x and Debt / EBITDA is 0.1x. Net Debt / EBITDA surged on 0.2x from -3.6x to -3.5x in 2017. Debt jumped on 410% while cash showed almost no change in 2017.
Appendix 1: Peers in Telecommunications
Below you can find China Communications Services Corp 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 (36 companies) | 8.3% | 9.7% | 4.3% | -2.5% | |
|---|
| China Communications Services Corp Ltd ($552) | | 6.9% | 10.6% | 9.3% | 6.9% |
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 (25 companies) | 24.4% | 26.1% | 23.1% | 35.6% | |
|---|
| China Communications Services Corp Ltd ($552) | 15.2% | 14.6% | 14.1% | 13.2% | 12.9% |
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 (27 companies) | 5.5% | 5.9% | 9.1% | 8.9% | |
|---|
| China Communications Services Corp Ltd ($552) | 5.1% | 4.5% | 4.3% | 4.1% | 4.0% |
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 (17 companies) | 2.9% | 3.1% | 2.6% | 8.4% | |
|---|
| China Communications Services Corp Ltd ($552) | 1.2% | 1.1% | 1.0% | 1.0% | 1.1% |
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 (37 companies) | 5.9% | 5.7% | 5.4% | 5.2% | |
|---|
| China Communications Services Corp Ltd ($552) | 11.9% | 10.5% | 10.5% | 10.3% | 9.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Z-Obee Holdings Ltd ($948) | 5.9x | | | 70.9x | |
| HKBN Ltd ($1310) | 3.8x | 3.0x | 3.0x | 3.5x | |
| PCCW Ltd ($8) | 2.7x | 2.6x | 2.9x | 3.3x | |
| CITIC Telecom International Holdings Ltd ($1883) | 3.5x | 3.4x | 3.2x | 3.2x | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | -1.2x | -1.0x | 3.2x | 2.9x | |
| |
|---|
| Median (17 companies) | 0.6x | 0.7x | 0.8x | 1.7x | |
|---|
| China Communications Services Corp Ltd ($552) | -1.9x | -2.1x | -2.7x | -3.6x | -3.5x |
