Industrial & Commercial Bank of China Ltd reports 5.5% revenue growth in 2017
27/03/2018 • About Industrial & Commercial Bank of China Ltd (
$1398) • By InTwits
Industrial & Commercial Bank of China Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Industrial & Commercial Bank of China Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: 13,096 in 2017, 39,281 in 2016, 42,297 in 2015, 53,957 in 2014, 44,427 in 2013
- The company has potentially unprofitable business model: ROIC is at 6.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Industrial & Commercial Bank of China Ltd ($1398) key annual financial indicators
| mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 915,094 | 1,005,230 | 1,051,953 | 980,469 | 1,034,039 | 5.5% |
| Net Income | 262,649 | 275,811 | 277,131 | 278,249 | 286,049 | 2.8% |
Balance Sheet
|
|---|
| Cash | 3,294,007 | 3,523,622 | 3,059,633 | 3,350,788 | 3,613,872 | 7.9% |
| Short Term Debt | 1,269,979 | 1,539,870 | 2,266,070 | 2,017,344 | 1,707,005 | -15.4% |
| Long Term Debt | 253,018 | 279,590 | 306,622 | 357,937 | 526,940 | 47.2% |
Cash flow
|
|---|
| Capex | 44,427 | 53,957 | 42,297 | 39,281 | 13,096 | -66.7% |
Ratios
|
|---|
| Revenue growth | 8.6% | 9.8% | 4.6% | -6.8% | 5.5% | |
| Net Income Margin | 28.7% | 27.4% | 26.3% | 28.4% | 27.7% | -0.7% |
| CAPEX, % of revenue | 4.9% | 5.4% | 4.0% | 4.0% | 1.3% | -2.7% |
| ROIC | 10.2% | 9.9% | 8.1% | 7.1% | 6.6% | -0.5% |
| ROE | 21.9% | 19.7% | 16.7% | 15.2% | 14.6% | -0.6% |
Industrial & Commercial Bank of China Ltd ($1398) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 254,335 | 258,592 | 259,174 | 261,938 | -0.2% | 6.0% | 8.7% | 7.7% |
| Net Income | 75,786 | 77,209 | 75,004 | 58,050 | 1.4% | 2.3% | 3.3% | 4.7% |
Balance Sheet
|
|---|
| Cash | 3,437,830 | 3,542,773 | 3,541,914 | 3,613,872 | 3.4% | 6.3% | 7.2% | 7.9% |
| Short Term Debt | 1,776,662 | 1,815,556 | 1,715,063 | 1,707,005 | -13.3% | -19.2% | -8.7% | -15.4% |
| Long Term Debt | 374,569 | 413,016 | 408,912 | 526,940 | 20.1% | 28.8% | 20.7% | 47.2% |
Ratios
|
|---|
| Net Income Margin | 29.8% | 29.9% | 28.9% | 22.2% | 0.5% | -1.1% | -1.5% | -0.6% |
Revenue and profitability
Industrial & Commercial Bank of China Ltd's Revenue increased on 5.5%. Revenue growth showed acceleration in 17Q4 - it increased 7.7% YoY.
Net Income marign decreased slightly on 0.72 pp from 28.4% to 27.7% in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.3% in 2017. The company showed decline in CAPEX/Revenue of 4.1 pp from 5.4% in 2014 to 1.3% in 2017. Average CAPEX/Revenue for the last three years was 3.1%.
Return on investment
The company operates at good ROE (14.58%) while ROIC is low (6.62%). ROIC showed almost no change in 2017. ROE decreased slightly on 0.58 pp from 15.2% to 14.6% in 2017.
Leverage (Debt)
Debt decreased on 6.0% while cash increased on 7.9%.
Appendix 1: Peers in Banks
Below we provide Industrial & Commercial Bank of China 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% |
|---|
