Bank of Communications Co Ltd reports 22.1% CAPEX decline in 2017 while 11.3% Revenue growth
29/03/2018 • About Bank of Communications Co Ltd (
$3328) • By InTwits
Bank of Communications Co Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bank of Communications Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: 9,619 in 2017, 5,310 in 2016, 8,384 in 2015, 5,048 in 2014, 3,724 in 2013
- The company has potentially unprofitable business model: ROIC is at 2.5%
- It operates with high leverage: Net Debt/EBITDA is 3.2x 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 Communications Co Ltd ($3328) key annual financial indicators
| mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 297,013 | 333,632 | 357,489 | 350,511 | 390,049 | 11.3% |
| Net Income | 62,295 | 65,850 | 66,528 | 67,210 | 70,223 | 4.5% |
Balance Sheet
|
|---|
| Cash | 896,556 | 938,055 | 920,228 | 991,435 | 938,571 | -5.3% |
| Short Term Debt | 1,127,727 | 1,413,622 | 1,658,651 | 2,051,851 | 2,397,054 | 16.8% |
| Long Term Debt | 82,238 | 129,547 | 170,106 | 229,515 | 287,662 | 25.3% |
Cash flow
|
|---|
| Capex | 15,105 | 17,793 | 25,711 | 35,584 | 27,736 | -22.1% |
Ratios
|
|---|
| Revenue growth | 9.4% | 12.3% | 7.2% | -2.0% | 11.3% | |
| Net Income Margin | 21.0% | 19.7% | 18.6% | 19.2% | 18.0% | -1.2% |
| CAPEX, % of revenue | 5.1% | 5.3% | 7.2% | 10.2% | 7.1% | -3.0% |
| ROIC | 5.1% | 4.5% | 3.8% | 3.0% | 2.5% | -0.5% |
| ROE | 15.6% | 14.8% | 13.4% | 11.7% | 10.9% | -0.8% |
Bank of Communications Co Ltd ($3328) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 100,549 | 96,266 | 95,781 | 96,922 | 5.6% | 12.2% | | 12.1% |
| Net Income | 19,323 | 19,652 | 15,444 | 15,804 | 1.3% | 5.7% | | 8.0% |
Balance Sheet
|
|---|
| Cash | 1,010,524 | 963,575 | 950,286 | 938,571 | 14.4% | -7.4% | | -5.3% |
| Short Term Debt | 2,192,794 | 2,362,241 | 2,388,207 | 2,397,054 | 31.4% | 14.7% | | 16.8% |
| Long Term Debt | 228,024 | 260,945 | 259,744 | 287,662 | 27.9% | 45.6% | | 25.3% |
Ratios
|
|---|
| Net Income Margin | 19.2% | 20.4% | 16.1% | 16.3% | -0.8% | -1.3% | | -0.6% |
Revenue and profitability
The company's Revenue surged on 11.3%. Revenue growth showed acceleration in 17Q4 - it increased 12.1% YoY.
Net Income marign decreased slightly on 1.2 pp from 19.2% to 18.0% in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 Bank of Communications Co Ltd had CAPEX/Revenue of 7.1%. Bank of Communications Co Ltd showed small growth in CAPEX/Revenue of 1.8 pp from 5.3% in 2014 to 7.1% in 2017. It's average level of CAPEX/Revenue for the last three years was 8.2%.
Return on investment
The company operates at low ROIC (2.51%) and ROE (10.89%). ROIC decreased slightly on 0.53 pp from 3.0% to 2.5% in 2017. ROE decreased slightly on 0.81 pp from 11.7% to 10.9% in 2017.
Leverage (Debt)
Debt surged on 17.7% while cash decreased on 5.3%.
Appendix 1: Peers in Banks
Below you can find Bank of Communications Co 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% |
|---|
