China Eastern Airlines Corp Ltd Net Income surged on 40.7% and Revenue increased on 4.2%
29/03/2018 • About China Eastern Airlines Corp Ltd (
$670) • By InTwits
China Eastern Airlines Corp Ltd reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Eastern Airlines Corp Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.2%. At the same time it's in pair with industry average of 17.4%.
- CAPEX is quite volatile: 24,563 in 2017, 38,715 in 2016, 8,691 in 2015, 5,828 in 2014, 1,822 in 2013
- The company has potentially unprofitable business model: ROIC is at 5.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Eastern Airlines Corp Ltd ($670) key annual financial indicators
| mln. CNY | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 88,245 | 90,185 | 93,969 | 98,323 | 102,475 | 4.2% |
| Gross Profit | | | | 15,736 | | -100.0% |
| SG&A | | 4,120 | 3,651 | 8,264 | | -100.0% |
| EBITDA | 9,803 | 15,241 | 23,467 | 19,242 | 23,355 | 21.4% |
| Net Income | 2,373 | 3,410 | 4,537 | 4,508 | 6,342 | 40.7% |
Balance Sheet
|
|---|
| Cash | 1,995 | 1,355 | 9,080 | 1,698 | 4,605 | 171.2% |
| Short Term Debt | 26,266 | 33,272 | 44,323 | 44,839 | 49,504 | 10.4% |
| Long Term Debt | 47,470 | 64,612 | 74,788 | 82,484 | 82,338 | -0.2% |
Cash flow
|
|---|
| Capex | 1,822 | 5,828 | 8,691 | 38,715 | 24,563 | -36.6% |
Ratios
|
|---|
| Revenue growth | 3.5% | 2.2% | 4.2% | 4.6% | 4.2% | |
| EBITDA growth | -17.7% | 55.5% | 54.0% | -18.0% | 21.4% | |
| Gross Margin | | | | 16.0% | | -16.0% |
| EBITDA Margin | 11.1% | 16.9% | 25.0% | 19.6% | 22.8% | 3.2% |
| Net Income Margin | 2.7% | 3.8% | 4.8% | 4.6% | 6.2% | 1.6% |
| SG&A, % of revenue | | 4.6% | 3.9% | 8.4% | | -8.4% |
| CAPEX, % of revenue | 2.1% | 6.5% | 9.2% | 39.4% | 24.0% | -15.4% |
| ROIC | 1.6% | 5.2% | 8.7% | 4.2% | 5.1% | 0.9% |
| ROE | 10.1% | 12.0% | 13.5% | 10.7% | 12.4% | 1.7% |
| Net Debt/EBITDA | 7.3x | 6.3x | 4.7x | 6.5x | 5.4x | -1.1x |
China Eastern Airlines Corp Ltd ($670) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 24,471 | 23,414 | 29,423 | 24,150 | 4.1% | 2.9% | 1.3% | 4.9% |
| Net Income | 2,818 | 1,529 | 3,568 | -1,563 | 8.3% | 142.3% | 3.1% | |
Balance Sheet
|
|---|
| Cash | 2,282 | 8,570 | 4,390 | 4,605 | 75.5% | -35.2% | 220.4% | 171.2% |
| Short Term Debt | 24,525 | 48,129 | 35,269 | 49,504 | -31.4% | -19.0% | 170.5% | 10.4% |
| Long Term Debt | 27,025 | 83,140 | 25,617 | 82,338 | 83.0% | 26.1% | 13.6% | -0.2% |
Ratios
|
|---|
| Gross Margin | 12.2% | 9.7% | 21.8% | -2.0% | -9.0% | -5.9% | -2.0% | -3.4% |
| Net Income Margin | 11.5% | 6.5% | 12.1% | -6.5% | 0.4% | 3.8% | 0.2% | 3.0% |
Revenue and profitability
The company's Revenue increased on 4.2%. Revenue growth showed acceleration in 17Q4 - it increased 4.9% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Net Income marign increased slightly on 1.6 pp from 4.6% to 6.2% in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 the company had CAPEX/Revenue of 24.0%. China Eastern Airlines Corp Ltd showed fast CAPEX/Revenue growth of 17.5 pp from 6.5% in 2014 to 24.0% in 2017. It's average CAPEX/Revenue for the last three years was 24.2%.The company investments to CAPEX were large: 105% of EBITDA.
Return on investment
The company operates at good ROE (12.37%) while ROIC is low (5.07%). ROIC increased slightly on 0.88 pp from 4.2% to 5.1% in 2017. ROE increased slightly on 1.7 pp from 10.7% to 12.4% in 2017.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.4x and Debt / EBITDA is 5.6x. Net Debt / EBITDA dropped on 1.1x from 6.5x to 5.4x in 2017. Debt increased on 3.5% while cash jumped on 171%.
Appendix 1: Peers in Airlines
Below you can find China Eastern Airlines Corp Ltd benchmarking vs. other companies in Airlines 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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Cathay Pacific Airways Ltd ($293) | | 5.5% | -3.4% | -9.4% | 4.9% |
| |
|---|
| Median (1 company) | | 5.5% | -3.4% | -9.4% | 4.9% |
|---|
Top companies by EBITDA margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Cathay Pacific Airways Ltd ($293) | 11.2% | 12.3% | 15.0% | 9.0% | 8.2% |
| |
|---|
| Median (1 company) | 11.2% | 12.3% | 15.0% | 9.0% | 8.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Cathay Pacific Airways Ltd ($293) | 20.4% | 14.0% | 12.9% | 16.0% | 17.4% |
| |
|---|
| Median (1 company) | 20.4% | 14.0% | 12.9% | 16.0% | 17.4% |
|---|
Top companies by ROIC, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Cathay Pacific Airways Ltd ($293) | 2.9% | 3.5% | 5.3% | -0.2% | -1.0% |
| |
|---|
| Median (1 company) | 2.9% | 3.5% | 5.3% | -0.2% | -1.0% |
|---|
Top companies by Net Debt / EBITDA
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Cathay Pacific Airways Ltd ($293) | 4.1x | 3.5x | 3.3x | 6.7x | 8.4x |
| |
|---|
| Median (1 company) | 4.1x | 3.5x | 3.3x | 6.7x | 8.4x |
|---|
