Bank of China Ltd CAPEX surged on 34.4% and Revenue increased on 3.2%
29/03/2018 • About Bank of China Ltd (
$3988) • By InTwits
Bank of China Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bank of China Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.1%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: 292 in 2017, 481 in 2016, 327 in 2015, 1,270 in 2014, 252 in 2013
- The company has potentially unprofitable business model: ROIC is at 4.5%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is
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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 649,194 | 744,656 | 767,159 | 753,105 | 776,861 | 3.2% |
| Net Income | 156,911 | 169,595 | 170,845 | 164,578 | 172,407 | 4.8% |
Balance Sheet
|
|---|
| Cash | 2,214,340 | 2,391,211 | 2,269,434 | 2,349,188 | 2,303,020 | -2.0% |
| Short Term Debt | 2,163,878 | 2,461,085 | 2,691,922 | 2,683,947 | 3,091,350 | 15.2% |
| Long Term Debt | 182,224 | 201,255 | 249,261 | 295,936 | 399,557 | 35.0% |
Cash flow
|
|---|
| Capex | 34,771 | 35,108 | 36,942 | 34,247 | 46,011 | 34.4% |
Ratios
|
|---|
| Revenue growth | 4.6% | 14.7% | 3.0% | -1.8% | 3.2% | |
| Net Income Margin | 24.2% | 22.8% | 22.3% | 21.9% | 22.2% | 0.3% |
| CAPEX, % of revenue | 5.4% | 4.7% | 4.8% | 4.5% | 5.9% | 1.4% |
| ROIC | 6.3% | 6.2% | 5.4% | 4.8% | 4.5% | -0.4% |
| ROE | 17.9% | 17.0% | 15.0% | 13.1% | 12.2% | -0.8% |
Bank of China Ltd ($3988) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 198,239 | 190,906 | 192,512 | 196,407 | 3.7% | -6.8% | 10.2% | 7.6% |
| Net Income | 46,649 | 57,041 | 41,816 | 26,901 | 0.1% | 22.9% | 0.1% | -9.6% |
Balance Sheet
|
|---|
| Cash | 2,465,986 | 2,595,717 | 2,274,289 | 2,303,020 | 13.5% | 9.9% | 0.8% | -2.0% |
| Short Term Debt | 2,526,607 | 3,103,820 | 2,785,250 | 3,091,350 | 11.0% | 4.2% | 16.7% | 15.2% |
| Long Term Debt | 409,997 | 287,619 | 510,779 | 399,557 | 28.6% | 9,696.3% | 34.4% | 35.0% |
Ratios
|
|---|
| Net Income Margin | 23.5% | 29.9% | 21.7% | 13.7% | -0.9% | 7.2% | -2.2% | -2.6% |
Revenue and profitability
The company's Revenue increased on 3.2%. Revenue growth showed acceleration in 17Q4 - it increased 7.6% YoY.
Net Income marign showed almost no change in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.9% in 2017. The company showed small growth in CAPEX/Revenue of 1.2 pp from 4.7% in 2014 to 5.9% in 2017. Average CAPEX/Revenue for the last three years was 5.1%.
Return on investment
The company operates at good ROE (12.23%) while ROIC is low (4.46%). ROIC showed almost no change in 2017. ROE decreased slightly on 0.84 pp from 13.1% to 12.2% in 2017.
Leverage (Debt)
Debt surged on 17.1% while cash decreased slightly on 2.0%.
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 | 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% |
|---|
