Chunghwa Soars in 4Q, Outlook Weak - Analyst Blog
February 29 2012 - 8:00AM
Zacks
Chunghwa Telecom Co.
Ltd. (CHT) declared solid financial results for the fourth
quarter of 2011. Quarterly total revenue was approximately $1,796
million, up 5% year over year. This improved performance was the
combined result of increasing smartphone sales with continuously
growing revenue from both mobile and Internet value-added services
(VAS).
Fourth-quarter GAAP net income was
approximately $336.3 million, down 5.7% year over year.
However, net earnings per ADR were 44 cents, up 15% year over
year. The increase was primarily attributable to higher net income
and the capital reduction in January 2011, which reduced the total
number of outstanding shares by 20%.
Quarterly operating income was $385
million, down 10.4% year over year. Operating margin was 21.4%
compared with 25.1% in the year-ago quarter. Fourth-quarter 2011
EBITDA was $651.8 million, down 7.2% year over year. Quarterly
EBITDA margin came in at 36.3% compared with 41.1% in the
prior-year quarter.
During the fourth quarter of 2011,
Chunghwa generated around $957.7 million cash from operations, down
9.4% year over year. Capital expenditure during the reported
quarter was around $336.2 million, up 12.7% year over year. At the
end of 2011, Chunghwa had approximately $3,501.3 million of cash
& cash equivalents and around $60 million of outstanding debt
on its balance sheet compared with $3,000 million of cash &
cash equivalents and $112.7 million of outstanding debt at the end
of 2010.
Segment wise
Revenue
Mobile Communications segment
accounted for $786.8 million of the total fourth-quarter 2011
revenue, up 7.3% year over year. Internet segment accounted for
$198.2 million, down 1.7% year over year. Domestic Fixed-line
Communications segment generated $649.2 million, up 6.5% year over
year. International Fixed-line Communications segment accounted for
$124 million, down 1.1% year over year. Other Business segment
generated the remaining $37.5 million, down 7.7% year over
year.
In the fourth quarter, Broadband
access (including ADSL and FTTx) revenue was $167 million, down
1.9% year over year. Mobile VAS revenue was $130.8 million, up
30.7% year over year. Internet VAS revenue was $19.6 million, up
14.5% year over year.
Subscriber Statistics as of
December 31, 2011
Total Broadband subscriber base was
approximately 4.498 million and out of this, FTTx subscriber base
was around 2.4 million, accounting for 53.3% of total broadband
subscriber base. HiNet subscriber base was 3.7 million, up 3% year
over year. Mobile subscriber base was 10.072 million, up 4.1% year
over year and out of this, 3G subscriber base was 6.047 million.
Mobile Internet subscriber base was 1.5 million, up 85.4% year over
year. Management is expecting its mobile Internet subscriber base
to reach 2.2 million by the end of 2012. International /Domestic
Fixed-line subscriber base was 12.1 million. Multimedia-on-demand
(MOD) subscriber base was 1.07 million.
2012 Outlook
Chunghwa provided weak financial
outlook for fiscal 2012. Total revenue is estimated around $6,177
million, down 1.9% year over year. Operating costs and expenses
will be approximately $4,702 million, up 1.8% year over year.
Income from operations is estimated to be approximately $1,475
million, down 11.9% year over year. Net income will be around
$1,282 million, down 16.8% year over year. EBITDA will be
approximately $2,521 million, down 7.3% year over year. EBITDA
margin will be 40.8% compared with 43.2% in fiscal 2011.
Recommendation
Chunghwa faces fierce competition
from Taiwan Mobile Company and Far EasTone Telecommunications Co.
Ltd. The company entered into agreements with China Telecom
Corp. Ltd. (CHA) and China Unicom Ltd.
(CHU) to access software from their application stores for
providing premium services to its subscribers. We maintain our
long-term Neutral recommendation on Chunghwa. Currently, it holds a
short-term Zacks #3 Rank (Hold) on the stock.
CHINA TELCM-ADR (CHA): Free Stock Analysis Report
CHUNGHWA TELECM (CHT): Free Stock Analysis Report
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