Kt Corp reports 40.9% EBITDA growth and 7.2 pp EBITDA Margin growth from 14.9% to 22.1%
29 Jan 2016 • About Kt Corp (
$KTCD) • By InTwits
Kt Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kt Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.9%. At the same time it's in pair with industry average of 12.2%.
- CAPEX is quite volatile: 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012, 5,330,968 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.3x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kt Corp ($KTCD) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 21,990,051 | 23,856,375 | 23,810,599 | 23,421,673 | 22,281,221 | -4.9% |
| Gross Profit | 17,937,424 | 17,999,940 | 18,089,255 | 18,253,547 | 17,352,326 | -4.9% |
| SG&A | 12,828,304 | 13,363,458 | 13,512,277 | 14,416,989 | 12,439,028 | -13.7% |
| EBITDA | 4,965,454 | 4,523,066 | 4,460,091 | 3,492,087 | 4,919,480 | 40.9% |
| Net Income | 1,446,550 | 1,046,130 | -162,437 | -1,055,000 | 552,964 | -152.4% |
Balance Sheet
|
|---|
| Cash | 1,436,462 | 2,050,923 | 2,068,871 | 1,885,345 | 2,550,431 | 35.3% |
| Short Term Debt | 2,158,593 | 3,211,062 | 3,040,193 | 2,975,799 | 1,787,273 | -39.9% |
| Long Term Debt | 8,976,156 | 8,266,703 | 8,511,910 | 9,894,593 | 7,003,821 | -29.2% |
Cash flow
|
|---|
| Capex | 3,208,337 | 3,760,255 | 3,088,185 | 2,852,869 | 3,115,728 | 9.2% |
Ratios
|
|---|
| Revenue growth | 8.2% | 8.5% | -0.2% | -1.6% | -4.9% | |
| EBITDA growth | -5.4% | -8.9% | -1.4% | -21.7% | 40.9% | |
| Gross Margin | 81.6% | 75.5% | 76.0% | 77.9% | 77.9% | -0.1% |
| EBITDA Margin | 22.6% | 19.0% | 18.7% | 14.9% | 22.1% | 7.2% |
| Net Income Margin | 6.6% | 4.4% | -0.7% | -4.5% | 2.5% | 7.0% |
| SG&A, % of revenue | 58.3% | 56.0% | 56.7% | 61.6% | 55.8% | -5.7% |
| CAPEX, % of revenue | 14.6% | 15.8% | 13.0% | 12.2% | 14.0% | 1.8% |
| ROIC | 8.8% | 4.9% | 3.4% | -1.5% | 5.7% | 7.1% |
| ROE | 12.7% | 8.7% | -1.3% | -9.5% | 5.2% | 14.8% |
| Net Debt/EBITDA | 2.0x | 2.1x | 2.1x | 3.1x | 1.3x | -1.9x |
Revenue and profitability
The company's Revenue decreased on 4.9% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.2 pp from 14.9% to 22.1% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue decreased on 5.7 pp from 61.6% to 55.8% in 2015.
Net Income marign increased on 7.0 pp from -4.5% to 2.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 14.0%. CAPEX/Revenue decreased slightly on 1.8 pp from 15.8% in 2012 to 14.0% in 2015. For the last three years the average CAPEX/Revenue was 13.0%.Battling declining revenue Kt Corp invested a large share of EBITDA (63.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (5.66%) and ROE (5.22%). ROIC increased on 7.1 pp from -1.5% to 5.7% in 2015. ROE surged on 14.8 pp from -9.5% to 5.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 1.8x. Net Debt / EBITDA dropped on 1.9x from 3.1x to 1.3x in 2015. Debt dropped on 31.7% in 2015 while cash surged on 35.3% in 2015.
Appendix 1: Peers in Fixed Line Telecommunications
Below we provide Kt Corp benchmarking against other companies in Fixed Line Telecommunications 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Syqic ($SYQ) | 190.6% | 37.6% | 20.5% | 126.5% | |
| Alternative Networks ($AN.) | | -2.1% | -0.4% | 17.5% | 9.2% |
| Telecom Egypt ($TEEG) | -3.4% | 1.6% | 11.0% | 9.2% | |
| Verizon Communications Inc ($VZC) | | 4.5% | 4.1% | 5.4% | 3.6% |
| Rostelekom ($RKMD) | 7.4% | -0.2% | -1.6% | 2.8% | |
| |
|---|
| Median (13 companies) | 0.6% | -2.1% | -4.1% | -0.8% | 3.6% |
|---|
| Kt Corp ($KTCD) | | 8.5% | -0.2% | -1.6% | -4.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Verizon Communications Inc ($VZC) | 58.6% | 60.1% | 62.8% | 60.7% | 60.1% |
| Telecom Egypt ($TEEG) | 45.0% | 41.4% | 41.9% | 44.2% | |
| Syqic ($SYQ) | 59.6% | 57.3% | 59.9% | 43.6% | |
| Alternative Networks ($AN.) | 38.1% | 39.0% | 39.2% | 41.2% | 41.3% |
| Adept Telecom ($ADT) | 35.9% | 32.2% | 34.5% | 36.4% | 37.6% |
| |
|---|
| Median (5 companies) | 45.0% | 41.4% | 41.9% | 43.6% | 41.3% |
|---|
| Kt Corp ($KTCD) | 81.6% | 75.5% | 76.0% | 77.9% | 77.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| O2 Czech Republic As ($O2CZ) | 41.6% | 39.1% | 38.6% | 41.0% | 29.9% |
| Koninklijke Kpn Nv ($0O8F) | 39.5% | 35.9% | 34.1% | 39.1% | |
| Ooredoo Qsc ($ORDS) | 45.9% | 46.0% | 42.4% | 37.6% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 33.0% | 32.0% | 28.8% | 35.4% | |
| Orange Polska Sa ($OPLD) | 39.2% | 34.3% | 30.1% | 33.2% | |
| |
|---|
| Median (13 companies) | 33.0% | 34.0% | 33.1% | 31.9% | 29.9% |
|---|
| Kt Corp ($KTCD) | 22.6% | 19.0% | 18.7% | 14.9% | 22.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ooredoo Qsc ($ORDS) | 20.7% | 21.9% | 27.5% | 25.3% | |
| Rostelekom ($RKMD) | 28.0% | 31.7% | 23.6% | 19.3% | |
| Telefonica Sa ($TDE) | 14.5% | 15.2% | 17.0% | 19.1% | |
| Orange Polska Sa ($OPLD) | 17.5% | 16.6% | 16.9% | 17.6% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 14.2% | 11.7% | 14.8% | 15.4% | |
| |
|---|
| Median (13 companies) | 13.2% | 13.5% | 13.8% | 13.0% | 4.5% |
|---|
| Kt Corp ($KTCD) | 14.6% | 15.8% | 13.0% | 12.2% | 14.0% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| BT Group ($BT.A) | 23.3% | 23.6% | 27.0% | 34.7% | 37.5% |
| Syqic ($SYQ) | 64.3% | 38.9% | 3.2% | 33.9% | |
| Alternative Networks ($AN.) | 36.7% | 35.2% | 33.7% | 28.5% | 20.2% |
| Adept Telecom ($ADT) | 11.9% | 11.6% | 15.5% | 13.2% | 14.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 4.8% | 8.2% | 5.4% | 10.4% | |
| |
|---|
| Median (13 companies) | 11.9% | 11.2% | 9.7% | 8.7% | 19.3% |
|---|
| Kt Corp ($KTCD) | 8.8% | 4.9% | 3.4% | -1.5% | 5.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telefonica Sa ($TDE) | 3.0x | 2.5x | 2.5x | 3.6x | |
| Koninklijke Kpn Nv ($0O8F) | 2.4x | 3.8x | 3.4x | 3.0x | |
| Verizon Communications Inc ($VZC) | 1.4x | 1.7x | 0.8x | 2.8x | 2.1x |
| Ooredoo Qsc ($ORDS) | 1.7x | 1.6x | 1.7x | 2.0x | |
| Rostelekom ($RKMD) | 1.3x | 1.7x | 1.8x | 1.8x | |
| |
|---|
| Median (13 companies) | 1.4x | 1.6x | 1.1x | 1.4x | 0.9x |
|---|
| Kt Corp ($KTCD) | 2.0x | 2.1x | 2.1x | 3.1x | 1.3x |
