Kt Corp reports 11.3% CAPEX decline while 2.1% Revenue growth
01 Feb 2017 • About Kt Corp (
$KTCD) • By InTwits
Kt Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kt Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.4%. At the same time it's in pair with industry average of 12.2%.
- CAPEX is quite volatile: 2,324,112 in 2016, 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kt Corp ($KTCD) key annual financial indicators
| mln. KRW | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 23,856,375 | 23,810,599 | 23,421,673 | 22,281,221 | 22,743,665 | 2.1% |
| Gross Profit | 17,999,940 | 18,089,255 | 18,253,547 | 17,352,326 | 17,851,742 | 2.9% |
| SG&A | 13,363,458 | 13,512,277 | 14,416,989 | 12,439,028 | 12,898,616 | 3.7% |
| EBITDA | 4,523,066 | 4,460,091 | 3,492,087 | 4,919,480 | 4,861,479 | -1.2% |
| Net Income | 1,046,130 | -162,437 | -1,055,000 | 552,964 | 711,089 | 28.6% |
Balance Sheet
|
|---|
| Cash | 2,050,923 | 2,068,871 | 1,885,345 | 2,550,431 | 2,880,391 | 12.9% |
| Short Term Debt | 3,211,062 | 3,040,193 | 2,975,799 | 1,787,273 | 1,884,009 | 5.4% |
| Long Term Debt | 8,266,703 | 8,511,910 | 9,894,593 | 7,003,821 | 6,417,496 | -8.4% |
Cash flow
|
|---|
| Capex | 3,760,255 | 3,088,185 | 2,852,869 | 3,115,728 | 2,764,346 | -11.3% |
Ratios
|
|---|
| Revenue growth | 8.5% | -0.2% | -1.6% | -4.9% | 2.1% | |
| EBITDA growth | -8.9% | -1.4% | -21.7% | 40.9% | -1.2% | |
| Gross Margin | 75.5% | 76.0% | 77.9% | 77.9% | 78.5% | 0.6% |
| EBITDA Margin | 19.0% | 18.7% | 14.9% | 22.1% | 21.4% | -0.7% |
| Net Income Margin | 4.4% | -0.7% | -4.5% | 2.5% | 3.1% | 0.6% |
| SG&A, % of revenue | 56.0% | 56.7% | 61.6% | 55.8% | 56.7% | 0.9% |
| CAPEX, % of revenue | 15.8% | 13.0% | 12.2% | 14.0% | 12.2% | -1.8% |
| ROIC | 4.9% | 3.4% | -1.5% | 5.7% | 6.9% | 1.2% |
| ROE | 8.7% | -1.3% | -9.5% | 5.2% | 6.4% | 1.2% |
| Net Debt/EBITDA | 2.1x | 2.1x | 3.1x | 1.3x | 1.1x | -0.2x |
Revenue and profitability
Kt Corp's Revenue increased on 2.1% in 2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.8 pp from 9.7% to 11.4% in 2016.
Gross Margin increased slightly on 0.61 pp from 77.9% to 78.5% in 2016. SG&A as a % of Revenue increased slightly on 0.89 pp from 55.8% to 56.7% in 2016.
Net Income marign increased slightly on 0.64 pp from 2.5% to 3.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Kt Corp had CAPEX/Revenue of 12.2%. Kt Corp showed small CAPEX/Revenue decline of 0.82 pp from 13.0% in 2013 to 12.2% in 2016. Average CAPEX/Revenue for the last three years was 12.8%.Kt Corp maintained rich investment policy and has spent a big chunk of EBITDA (56.9%) to CAPEX.
Return on investment
The company operates at low ROIC (6.87%) and ROE (6.38%). ROIC increased slightly on 1.2 pp from 5.7% to 6.9% in 2016. ROE increased slightly on 1.2 pp from 5.2% to 6.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.7x. Net Debt / EBITDA dropped on 0.2x from 1.3x to 1.1x in 2016. Debt decreased on 5.6% in 2016 while cash surged on 12.9% in 2016.
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telefonica Sa ($TDE) | -0.8% | -8.5% | -23.8% | 26.4% | |
| Alternative Networks ($AN.) | | -0.4% | 17.5% | 9.2% | -7.5% |
| Syqic ($SYQ) | 37.6% | 20.5% | 126.5% | 9.2% | |
| Adept Telecom ($ADT) | | -4.1% | -0.8% | 5.8% | 30.9% |
| Verizon Communications Inc ($VZC) | | 4.1% | 5.4% | 3.6% | -4.3% |
| |
|---|
| Median (13 companies) | -0.5% | -4.1% | -0.8% | 0.0% | 0.4% |
|---|
| Kt Corp ($KTCD) | | -0.2% | -1.6% | -4.9% | 2.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Verizon Communications Inc ($VZC) | 60.1% | 62.8% | 60.7% | 60.1% | 59.2% |
| Telecom Egypt ($TEEG) | 41.4% | 41.9% | 44.2% | 41.6% | |
| Alternative Networks ($AN.) | 39.0% | 39.2% | 41.2% | 41.3% | 40.9% |
| Syqic ($SYQ) | 57.3% | 59.9% | 43.6% | 41.2% | |
| Adept Telecom ($ADT) | 32.2% | 34.5% | 36.4% | 37.6% | 40.3% |
| |
|---|
| Median (5 companies) | 41.4% | 41.9% | 43.6% | 41.3% | 40.9% |
|---|
| Kt Corp ($KTCD) | 75.5% | 76.0% | 77.9% | 77.9% | 78.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 46.0% | 42.4% | 37.6% | 39.2% | 44.8% |
| Verizon Communications Inc ($VZC) | 25.6% | 40.3% | 28.4% | 37.3% | 34.1% |
| BT Group ($BT.A) | 31.2% | 32.0% | 31.9% | 33.5% | 33.4% |
| Rostelekom ($RKMD) | 39.7% | 39.0% | 33.0% | 33.4% | |
| Koninklijke Kpn Nv ($0O8F) | 35.9% | 34.1% | 39.1% | 33.2% | 35.7% |
| |
|---|
| Median (13 companies) | 34.0% | 33.1% | 31.9% | 29.9% | 33.4% |
|---|
| Kt Corp ($KTCD) | 19.0% | 18.7% | 14.9% | 22.1% | 21.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 21.9% | 27.5% | 25.3% | 26.5% | 17.2% |
| Telecom Egypt ($TEEG) | 5.1% | 6.8% | 13.0% | 21.4% | |
| Rostelekom ($RKMD) | 31.7% | 23.6% | 19.3% | 21.1% | |
| Telefonica Sa ($TDE) | 15.2% | 17.0% | 19.1% | 18.7% | |
| Orange Polska Sa ($OPLD) | 16.6% | 16.9% | 17.6% | 16.9% | |
| |
|---|
| Median (13 companies) | 13.5% | 13.8% | 13.0% | 14.4% | 13.0% |
|---|
| Kt Corp ($KTCD) | 15.8% | 13.0% | 12.2% | 14.0% | 12.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BT Group ($BT.A) | 23.6% | 27.0% | 34.7% | 37.5% | 21.6% |
| Syqic ($SYQ) | 38.9% | 3.2% | 33.9% | 22.9% | |
| Alternative Networks ($AN.) | 35.2% | 33.7% | 28.5% | 20.2% | 15.2% |
| Verizon Communications Inc ($VZC) | 8.0% | 16.7% | 10.1% | 19.3% | 15.4% |
| O2 Czech Republic As ($O2CZ) | 11.8% | 11.7% | 7.2% | 14.5% | 26.8% |
| |
|---|
| Median (13 companies) | 11.2% | 9.7% | 8.7% | 8.2% | 15.4% |
|---|
| Kt Corp ($KTCD) | 4.9% | 3.4% | -1.5% | 5.7% | 6.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telefonica Sa ($TDE) | 2.5x | 2.5x | 3.6x | 4.2x | |
| Koninklijke Kpn Nv ($0O8F) | 3.8x | 3.4x | 3.0x | 3.6x | 3.1x |
| Verizon Communications Inc ($VZC) | 1.7x | 0.8x | 2.8x | 2.1x | 2.4x |
| Ooredoo Qsc ($ORDS) | 1.6x | 1.7x | 2.0x | 2.0x | 1.7x |
| Rostelekom ($RKMD) | 1.7x | 1.8x | 1.8x | 1.8x | |
| |
|---|
| Median (13 companies) | 1.6x | 1.1x | 1.4x | 1.2x | 1.7x |
|---|
| Kt Corp ($KTCD) | 2.1x | 2.1x | 3.1x | 1.3x | 1.1x |
