Megafon OJSC Net Income dropped on 34.7% in 2016 and Revenue increased slightly on 0.92%
16 Mar 2017 • About Megafon OJSC (
$MFON) • By InTwits
Megafon OJSC reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 37.0% in 2016 vs. 41.9% in 2015 vs. 42.4% in 2012
- Megafon OJSC has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.7%. At the same time it's a lot of higher than industry average of 12.2%.
- CAPEX is quite volatile: 27,421 in 2016, 25,019 in 2015, 12,232 in 2014, 10,772 in 2013, 11,290 in 2012
- The company has highly profitable business model: ROIC is at 14.8%
- It operates with high leverage: Net Debt/EBITDA is 1.7x while industry average is 1.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Megafon OJSC ($MFON) key annual financial indicators
| mln. RUB | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 272,336 | 297,229 | 314,795 | 313,383 | 316,275 | 0.9% |
| Gross Profit | 205,382 | 221,837 | 230,166 | 228,973 | 221,118 | -3.4% |
| SG&A | 86,914 | 87,208 | 90,248 | 94,516 | 99,979 | 5.8% |
| EBITDA | 115,436 | 131,392 | 137,083 | 131,444 | 116,890 | -11.1% |
| Net Income | 44,393 | 51,608 | 36,726 | 39,041 | 25,496 | -34.7% |
Balance Sheet
|
|---|
| Cash | 2,387 | 9,939 | 22,223 | 17,449 | 31,922 | 82.9% |
| Short Term Debt | 20,457 | 21,184 | 51,149 | 47,037 | 39,389 | -16.3% |
| Long Term Debt | 125,575 | 130,825 | 156,319 | 172,643 | 195,724 | 13.4% |
Cash flow
|
|---|
| Capex | 46,674 | 43,022 | 58,146 | 62,956 | 57,892 | -8.0% |
Ratios
|
|---|
| Revenue growth | 12.3% | 9.1% | 5.9% | -0.4% | 0.9% | |
| EBITDA growth | 14.5% | 13.8% | 4.3% | -4.1% | -11.1% | |
| Gross Margin | 75.4% | 74.6% | 73.1% | 73.1% | 69.9% | -3.2% |
| EBITDA Margin | 42.4% | 44.2% | 43.5% | 41.9% | 37.0% | -5.0% |
| Net Income Margin | 16.3% | 17.4% | 11.7% | 12.5% | 8.1% | -4.4% |
| SG&A, % of revenue | 31.9% | 29.3% | 28.7% | 30.2% | 31.6% | 1.5% |
| CAPEX, % of revenue | 17.1% | 14.5% | 18.5% | 20.1% | 18.3% | -1.8% |
| ROIC | 21.0% | 27.7% | 23.7% | 19.6% | 14.8% | -4.8% |
| ROE | 22.6% | 40.4% | 24.8% | 25.6% | 18.7% | -6.8% |
| Net Debt/EBITDA | 1.2x | 1.1x | 1.4x | 1.5x | 1.7x | 0.2x |
Revenue and profitability
Megafon OJSC's Revenue increased slightly on 0.92% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.0 pp from 8.6% to 9.6% in 2016.
Gross Margin decreased on 3.2 pp from 73.1% to 69.9% in 2016. SG&A as a % of Revenue increased slightly on 1.5 pp from 30.2% to 31.6% in 2016.
Net Income marign decreased on 4.4 pp from 12.5% to 8.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 18.3%. Megafon OJSC's CAPEX/Revenue increased on 3.8 pp from 14.5% in 2013 to 18.3% in 2016. It's average level of CAPEX/Revenue for the last three years was 19.0%.
Return on investment
The company operates at good ROIC (14.81%) and ROE (18.74%). ROIC decreased on 4.8 pp from 19.6% to 14.8% in 2016. ROE decreased on 6.8 pp from 25.6% to 18.7% in 2016.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from 1.5x to 1.7x in 2016. Debt increased on 7.0% in 2016 while cash jumped on 82.9% in 2016.
Appendix 1: Peers in Mobile Telecommunications
Below we provide Megafon OJSC benchmarking against other companies in Mobile 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 |
|---|
| Zamano ($ZMNO) | 28.0% | -16.5% | 23.9% | 22.3% | |
| Sistema Jsfc ($SSAA) | 9.7% | -44.6% | 8.7% | 10.6% | |
| Sk Telecom ($SKMD) | | 2.9% | 3.4% | -0.2% | -0.3% |
| Monitise ($MONI) | | 101.7% | 30.6% | -5.7% | -24.7% |
| Kcell JSC ($KCEL) | | 3.1% | -0.0% | -10.2% | -12.7% |
| |
|---|
| Median (7 companies) | 18.8% | 2.9% | 3.4% | -5.7% | -12.7% |
|---|
| Megafon OJSC ($MFON) | | 9.1% | 5.9% | -0.4% | 0.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sk Telecom ($SKMD) | 92.0% | 92.2% | 90.2% | 88.6% | 89.2% |
| Global Telecom Hldg Sae ($GLTD) | 57.6% | 82.1% | 83.4% | 81.8% | 41.3% |
| Monitise ($MONI) | 66.4% | 75.8% | 64.9% | 51.8% | 57.5% |
| Sistema Jsfc ($SSAA) | 59.5% | 54.4% | 50.4% | 46.7% | |
| Kcell JSC ($KCEL) | 58.1% | 57.6% | 55.1% | 46.6% | 37.5% |
| |
|---|
| Median (7 companies) | 58.1% | 57.6% | 55.1% | 46.7% | 41.3% |
|---|
| Megafon OJSC ($MFON) | 75.4% | 74.6% | 73.1% | 73.1% | 69.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kcell JSC ($KCEL) | 55.3% | 55.8% | 55.5% | 45.8% | |
| Global Telecom Hldg Sae ($GLTD) | 50.8% | 12.1% | 42.8% | 43.9% | 40.3% |
| Monitise ($MONI) | -36.7% | -5.1% | -21.1% | 40.0% | -58.6% |
| Sk Telecom ($SKMD) | 26.9% | 29.2% | 27.5% | 27.4% | 26.9% |
| Sistema Jsfc ($SSAA) | 20.1% | 33.3% | 23.9% | 22.5% | |
| |
|---|
| Median (7 companies) | 20.1% | 15.9% | 23.9% | 27.4% | 10.4% |
|---|
| Megafon OJSC ($MFON) | 42.4% | 44.2% | 43.5% | 41.9% | 37.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Global Telecom Hldg Sae ($GLTD) | 8.6% | 15.7% | 36.5% | 26.2% | 18.3% |
| Sistema Jsfc ($SSAA) | 11.3% | 13.3% | 14.2% | 15.0% | |
| Sk Telecom ($SKMD) | 21.0% | 17.3% | 17.5% | 14.5% | 14.6% |
| Kcell JSC ($KCEL) | 12.8% | 9.2% | 9.6% | 9.5% | 29.8% |
| Monitise ($MONI) | 8.7% | 7.0% | 5.1% | 4.6% | 1.3% |
| |
|---|
| Median (7 companies) | 8.7% | 9.2% | 9.6% | 9.5% | 14.6% |
|---|
| Megafon OJSC ($MFON) | 17.1% | 14.5% | 18.5% | 20.1% | 18.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kcell JSC ($KCEL) | 63.7% | 66.0% | 62.9% | 40.2% | 23.9% |
| Mobile Streams ($MOS) | | 216.7% | 11.3% | 24.0% | -35.3% |
| Zamano ($ZMNO) | 31.4% | 30.9% | 25.5% | 23.3% | |
| Global Telecom Hldg Sae ($GLTD) | 17.8% | -6.9% | 17.4% | 14.7% | 18.3% |
| Sistema Jsfc ($SSAA) | 11.7% | 12.1% | 8.3% | 7.4% | |
| |
|---|
| Median (7 companies) | 14.8% | 12.1% | 11.3% | 14.7% | 6.3% |
|---|
| Megafon OJSC ($MFON) | 21.0% | 27.7% | 23.7% | 19.6% | 14.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sistema Jsfc ($SSAA) | 2.0x | 1.5x | 2.7x | 3.5x | |
| Global Telecom Hldg Sae ($GLTD) | 1.5x | 5.6x | 2.0x | 1.6x | 1.7x |
| Sk Telecom ($SKMD) | 1.4x | 1.1x | 1.3x | 1.5x | 1.3x |
| Kcell JSC ($KCEL) | 0.5x | 0.1x | 0.1x | 0.2x | |
| Zamano ($ZMNO) | -0.1x | -0.8x | -1.7x | -2.1x | |
| |
|---|
| Median (7 companies) | 0.9x | 0.6x | 0.7x | 0.2x | 1.5x |
|---|
| Megafon OJSC ($MFON) | 1.2x | 1.1x | 1.4x | 1.5x | 1.7x |
