Ooredoo Qsc reports 22.7% CAPEX growth in 2018 while 8.6% Revenue decline
13 Feb 2019 • About Ooredoo Qsc (
$ORDS) • By InTwits
Ooredoo Qsc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Ooredoo Qsc is a company in decline: 2018 revenue growth was -8.6%, 5 years revenue CAGR was -2.4%
- Ooredoo Qsc has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.3%. At the same time it's a lot of higher than industry average of 8.3%.
- CAPEX is quite volatile: 4,665 QARm in 2018, 3,801 QARm in 2017, 5,706 QARm in 2016, 8,537 QARm in 2015, 8,391 QARm in 2014
- The company has potentially unprofitable business model: ROIC is 4.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is 1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ooredoo Qsc's Revenue decreased on 8.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018. During the last 5 years EBITDA Margin topped in 2017 at 40.5%.
SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue stuck to a declining trend at -1.0 pp per annum in 2014-2018.
Net Income margin decreased slightly on 0.78 pp from 6.0% to 5.2% in 2018. During the last 5 years Net Income margin topped in 2016 at 6.7% and was declining since that time. The efficient tax rate was 23.7% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 15.6% in 2018. The company showed big decline in CAPEX/Revenue of 11.0 pp from 26.5% in 2015 to 15.6% in 2018. It's average CAPEX/Revenue for the last three years was 14.9%.
Return on investment
The company operates at low ROIC (4.4%) and ROE (6.9%). ROIC decreased on 2.5 pp from 6.9% to 4.4% in 2018. ROE decreased slightly on 1.8 pp from 8.7% to 6.9% in 2018. During 2014-2018 ROE topped in 2016 at 10.0% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 3.3x. Net Debt / EBITDA jumped on 0.1x from 1.6x to 1.8x in 2018. Debt decreased on 7.7% while cash decreased on 5.2%.
Ooredoo Qsc has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.6x. Ooredoo Qsc has no short term refinancing risk: cash is higher than short term debt (185.0%).
Average interest expence charged on company's debt was 5.0% in 2018.
The company paid 71.6% of Net Income as dividends in 2018.
Management team
Saud Bin Nasser Faleh Al Thani is a Ooredoo Qsc's CEO. Saud Bin Nasser Faleh Al Thani has spent 4 years with the company. Ooredoo Qsc's CFO is Abdullah Ahmed Al Zaman. Abdullah Ahmed Al Zaman has 1 year tenure at the company.
Financial and operational results
FY ended 31 Dec 2018
Ooredoo Qsc ($ORDS) key annual financial indicators| mln. QAR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 33,207 | 32,161 | 32,503 | 32,735 | 29,927 | -8.6% |
| SG&A | 8,305 | 7,757 | 7,291 | 6,889 | 6,410 | -7.0% |
| EBITDA | 12,492 | 12,595 | 12,729 | 13,263 | 11,053 | -16.7% |
| EBIT | | | | | 3,052 | |
| Interest expence | | | | | 1,858 | |
| Tax | | | | | 485 | |
| Net Income | 2,134 | 2,118 | 2,193 | 1,967 | 1,565 | -20.4% |
Balance Sheet
|
|---|
| Cash | 17,437 | 18,158 | 16,502 | 18,459 | 17,493 | -5.2% |
| Inventory | | | | | 643 | |
| Short Term Debt | 7,156 | 6,664 | 3,463 | 7,398 | 9,458 | 27.8% |
| Long Term Debt | 35,641 | 36,108 | 38,231 | 32,612 | 27,479 | -15.7% |
Cash flow
|
|---|
| Capex | 8,391 | 8,537 | 5,706 | 3,801 | 4,665 | 22.7% |
| Dividends | | | | | 1,121 | |
Ratios
|
|---|
| Revenue growth | -1.9% | -3.2% | 1.1% | 0.7% | -8.6% | |
| EBITDA growth | -13.0% | 0.8% | 1.1% | 4.2% | -16.7% | |
|
|---|
| EBITDA Margin | 37.6% | 39.2% | 39.2% | 40.5% | 36.9% | -3.6% |
| EBIT Margin | | | | | 10.2% |
| SG&A, % of revenue | 25.0% | 24.1% | 22.4% | 21.0% | 21.4% | 0.4% |
| Net Income Margin | 6.4% | 6.6% | 6.7% | 6.0% | 5.2% | -0.8% |
| CAPEX, % of revenue | 25.3% | 26.5% | 17.6% | 11.6% | 15.6% | 4.0% |
|
|---|
| ROIC | 6.4% | 6.4% | 6.1% | 6.9% | 4.4% | -2.5% |
| ROE | 8.8% | 9.4% | 10.0% | 8.7% | 6.9% | -1.8% |
| Net Debt/EBITDA | 2.0x | 2.0x | 2.0x | 1.6x | 1.8x | 0.1x |
| Interest coverage ratio (ICR) | | | | | 1.6x |
| Interest expence / Average debt | | | | | 5.0% | |
Peers in Fixed Line Telecommunications
Below you can find Ooredoo Qsc benchmarking vs. other companies in Fixed Line Telecommunications 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | | 0.2% | 14.5% | 33.1% | |
| BT Group ($BT.A) | | -1.7% | 5.7% | 26.6% | -1.4% |
| Adept Telecom ($ADT) | | 5.8% | 30.9% | 19.2% | 34.8% |
| Kt Corp ($KTCD) | | -4.9% | 2.1% | 2.8% | 0.3% |
| Rostelekom ($RKMD) | | -0.5% | 0.0% | 2.7% | |
| |
|---|
| Median (11 companies) | 17.5% | -0.4% | 0.1% | 0.3% | 0.9% |
|---|
| Ooredoo Qsc ($ORDS) | | -3.2% | 1.1% | 0.7% | -8.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kt Corp ($KTCD) | 77.9% | 77.9% | 78.5% | 83.5% | 83.0% |
| Koninklijke Kpn Nv ($0O8F) | | | 68.7% | 70.4% | |
| Verizon Communications Inc ($VZC) | 60.7% | 60.1% | 59.2% | 59.1% | 57.6% |
| O2 Czech Republic As ($O2CZ) | | | 48.5% | 48.7% | 49.9% |
| Adept Telecom ($ADT) | 36.4% | 37.6% | 40.3% | 42.3% | 49.4% |
| |
|---|
| Median (6 companies) | 43.9% | 41.5% | 48.5% | 53.9% | 53.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Koninklijke Kpn Nv ($0O8F) | 39.1% | 33.2% | 35.7% | 35.5% | |
| Verizon Communications Inc ($VZC) | 28.4% | 37.3% | 34.1% | 35.2% | 30.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 35.4% | 31.3% | 32.4% | 32.2% | |
| Telefonica Sa ($TDE) | 31.7% | 24.1% | 29.1% | 31.1% | |
| Rostelekom ($RKMD) | 33.0% | 33.4% | 32.1% | 31.0% | |
| |
|---|
| Median (11 companies) | 31.7% | 29.1% | 28.2% | 28.0% | 28.0% |
|---|
| Ooredoo Qsc ($ORDS) | 37.6% | 39.2% | 39.2% | 40.5% | 36.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | 13.0% | 21.4% | 23.7% | 32.8% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 15.4% | 16.9% | 16.7% | 23.8% | |
| Rostelekom ($RKMD) | 19.3% | 21.1% | 20.8% | 19.9% | |
| Telefonica Sa ($TDE) | 19.1% | 18.7% | 17.7% | 17.3% | |
| Orange Polska Sa ($OPLD) | 17.6% | 16.9% | 44.8% | 17.0% | |
| |
|---|
| Median (11 companies) | 12.9% | 14.0% | 13.5% | 13.7% | 9.6% |
|---|
| Ooredoo Qsc ($ORDS) | 25.3% | 26.5% | 17.6% | 11.6% | 15.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 14.5% | 26.8% | 25.8% | 24.3% |
| BT Group ($BT.A) | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% |
| Adept Telecom ($ADT) | 13.2% | 14.3% | 16.5% | 14.2% | 14.1% |
| Verizon Communications Inc ($VZC) | 10.1% | 19.3% | 15.4% | 14.8% | 11.3% |
| Kt Corp ($KTCD) | -1.5% | 5.7% | 6.9% | 6.7% | 6.0% |
| |
|---|
| Median (10 companies) | 8.7% | 8.2% | 7.8% | 8.3% | 14.1% |
|---|
| Ooredoo Qsc ($ORDS) | 6.4% | 6.4% | 6.1% | 6.9% | 4.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telefonica Sa ($TDE) | 3.6x | 4.2x | 3.6x | 3.0x | |
| Koninklijke Kpn Nv ($0O8F) | 3.0x | 3.6x | 3.1x | 2.9x | |
| Verizon Communications Inc ($VZC) | 2.8x | 2.1x | 2.4x | 2.6x | 2.8x |
| Orange Polska Sa ($OPLD) | 1.0x | 1.2x | 5.1x | 2.3x | |
| Adept Telecom ($ADT) | 0.7x | 0.3x | 1.0x | 2.2x | 2.3x |
| |
|---|
| Median (11 companies) | 1.4x | 1.2x | 1.5x | 2.0x | 2.0x |
|---|
| Ooredoo Qsc ($ORDS) | 2.0x | 2.0x | 2.0x | 1.6x | 1.8x |
