Air China Net Income jumped on 83.3% in 2015 and Revenue increased on 2.9%
30 Mar 2016 • About Air China (
$AIRC) • By InTwits
Air China reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Air China has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.9%. At the same time it's a lot of higher than industry average of 12.0%.
- CAPEX is quite volatile: 5,372 in 2015, 8,815 in 2014, 9,559 in 2013, 2,970 in 2012, 2,606 in 2011
- The company has business model with low profitability: ROIC is at 9.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Air China ($AIRC) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 93,343 | 95,319 | 94,603 | 101,385 | 104,368 | 2.9% |
| SG&A | 7,742 | 6,320 | 6,982 | 6,483 | 5,974 | -7.9% |
| EBITDA | 15,873 | 18,804 | 15,109 | 18,638 | 28,535 | 53.1% |
| Net Income | 7,082 | 4,816 | 3,264 | 3,852 | 7,063 | 83.3% |
Balance Sheet
|
|---|
| Cash | 15,457 | 11,788 | 14,762 | 8,640 | 7,138 | -17.4% |
| Short Term Debt | 30,825 | 31,690 | 43,362 | 32,669 | 17,266 | -47.1% |
| Long Term Debt | 58,590 | 67,731 | 68,239 | 80,263 | 86,791 | 8.1% |
Cash flow
|
|---|
| Capex | 22,330 | 16,019 | 18,054 | 18,947 | 11,297 | -40.4% |
Ratios
|
|---|
| Revenue growth | 19.4% | 2.1% | -0.8% | 7.2% | 2.9% | |
| EBITDA growth | -18.9% | 18.5% | -19.7% | 23.4% | 53.1% | |
| EBITDA Margin | 17.0% | 19.7% | 16.0% | 18.4% | 27.3% | 9.0% |
| Net Income Margin | 7.6% | 5.1% | 3.4% | 3.8% | 6.8% | 3.0% |
| SG&A, % of revenue | 8.3% | 6.6% | 7.4% | 6.4% | 5.7% | -0.7% |
| CAPEX, % of revenue | 23.9% | 16.8% | 19.1% | 18.7% | 10.8% | -7.9% |
| ROIC | 4.6% | 5.7% | 2.5% | 4.2% | 9.1% | 4.8% |
| ROE | 16.2% | 10.0% | 6.3% | 7.1% | 12.4% | 5.3% |
| Net Debt/EBITDA | 4.7x | 4.7x | 6.4x | 5.6x | 3.4x | -2.2x |
Revenue and profitability
The company's Revenue increased on 2.9% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.0 pp from 47.7% to 49.8% in 2015.
SG&A as a % of Revenue decreased slightly on 0.67 pp from 6.4% to 5.7% in 2015.
Net Income marign increased on 3.0 pp from 3.8% to 6.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Air China had CAPEX/Revenue of 10.8%. Air China's CAPEX/Revenue decreased on 6.0 pp from 16.8% in 2012 to 10.8% in 2015. It's average CAPEX/Revenue for the last three years was 16.2%.
Return on investment
The company operates at good ROE (12.39%) while ROIC is low (9.07%). ROIC increased on 4.8 pp from 4.2% to 9.1% in 2015. ROE increased on 5.3 pp from 7.1% to 12.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 3.6x. Net Debt / EBITDA dropped on 2.2x from 5.6x to 3.4x in 2015. Debt decreased on 7.9% in 2015 while cash dropped on 17.4% in 2015.
Appendix 1: Peers in Travel & Leisure
Below you can find Air China benchmarking vs. other companies in Travel & Leisure 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dalata Hotel Group ($DAL) | | 55.4% | 12.0% | 30.4% | 185.4% |
| Action Hotels ($AHCG) | 19.5% | 12.3% | 5.4% | 26.2% | |
| Everyman Media Group ($EMAN) | 23.0% | 23.4% | 26.5% | 22.4% | |
| Paddy Power ($PAP) | | 30.9% | 14.0% | 18.3% | 24.1% |
| Eclectic Bar Grp ($BAR) | | 27.6% | 3.8% | 10.5% | -1.9% |
| |
|---|
| Median (23 companies) | 24.3% | 12.3% | 8.8% | 6.1% | 7.6% |
|---|
| Air China ($AIRC) | | 2.1% | -0.8% | 7.2% | 2.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Paddy Power ($PAP) | 91.2% | 84.7% | 82.8% | 81.0% | 74.7% |
| Eclectic Bar Grp ($BAR) | 80.1% | 79.1% | 78.9% | 79.0% | 79.4% |
| Action Hotels ($AHCG) | 73.2% | 75.1% | 75.0% | 73.3% | |
| Dalata Hotel Group ($DAL) | 61.8% | 61.2% | 62.0% | 62.8% | 61.5% |
| Everyman Media Group ($EMAN) | 59.9% | 57.6% | 59.2% | 58.9% | |
| |
|---|
| Median (12 companies) | 21.1% | 29.5% | 30.8% | 30.2% | 31.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Action Hotels ($AHCG) | 24.0% | 31.0% | 27.9% | 28.6% | |
| Irish Continental Group ($ICGC) | 18.9% | 17.1% | 18.6% | 27.3% | 23.6% |
| Paddy Power ($PAP) | 33.8% | 25.7% | 23.7% | 24.0% | 20.4% |
| Mandarin Oriental International ($MDOB) | 20.9% | 19.5% | 22.4% | 24.0% | 26.2% |
| Young & Co'S Brewery ($YNGN) | 22.3% | 21.2% | 21.8% | 21.7% | 22.9% |
| |
|---|
| Median (23 companies) | 13.4% | 12.8% | 12.9% | 12.3% | 14.0% |
|---|
| Air China ($AIRC) | 17.0% | 19.7% | 16.0% | 18.4% | 27.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Action Hotels ($AHCG) | 47.8% | 21.0% | 25.6% | 90.0% | |
| Dalata Hotel Group ($DAL) | 2.0% | 0.7% | 6.2% | 26.7% | 12.7% |
| Everyman Media Group ($EMAN) | 0.0% | 0.0% | 36.4% | 25.9% | |
| Marston'S ($MARS) | | 18.0% | 19.3% | 17.5% | 16.2% |
| Richoux Group ($RIC) | 38.6% | 7.0% | 17.3% | 14.3% | |
| |
|---|
| Median (23 companies) | 3.4% | 3.7% | 4.8% | 4.5% | 7.2% |
|---|
| Air China ($AIRC) | 23.9% | 16.8% | 19.1% | 18.7% | 10.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Paddy Power ($PAP) | 58.5% | 53.4% | 47.2% | 47.6% | 53.2% |
| Irish Continental Group ($ICGC) | 14.3% | 14.6% | 18.9% | 40.0% | 33.9% |
| Air Partner ($AIP) | 51.1% | 34.8% | 27.5% | 21.2% | 20.0% |
| Hanatour Service Inc ($TOUR) | 17.4% | 22.5% | 19.9% | 19.6% | 19.4% |
| Netplay Tv ($NPT) | | | 26.3% | 10.2% | 4.8% |
| |
|---|
| Median (24 companies) | 7.6% | 6.8% | 7.8% | 4.2% | 5.9% |
|---|
| Air China ($AIRC) | 4.6% | 5.7% | 2.5% | 4.2% | 9.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Marston'S ($MARS) | | | 6.5x | 14.0x | 8.2x |
| Meikles Ltd ($MIK) | | | 5.1x | 10.7x | 73.1x |
| Action Hotels ($AHCG) | 14.1x | 11.2x | 7.8x | 9.6x | |
| Peel Hotels ($PHO) | 5.8x | 8.2x | 7.3x | 5.9x | 4.4x |
| Ana Hldgs Inc ($ANA) | 4.8x | 4.3x | 3.6x | 4.0x | 3.5x |
| |
|---|
| Median (21 companies) | 1.3x | 1.0x | 2.2x | 1.1x | 1.9x |
|---|
| Air China ($AIRC) | 4.7x | 4.7x | 6.4x | 5.6x | 3.4x |
