Earnings First Take: 2H21 earnings further deteriorated to net loss of HK$27m vs. net profit of HK$31m in 1H21
- 2H21 turned into net loss of HK$27m from net profit of HK$215m in 2H20 and HK$31m in 1H21, due to slower local service revenue growth and higher network costs in 2H21
- Local service revenue only increased by 0.2% y-o-y in 2H21 compared to 4% growth in 1H21
- Service EBITDA decreased by 21% y-o-y in 2H21 to HK$692m (vs. HK$723m in 1H21), with full-year service EBITDA margin down 6ppts
- Expect negative share price reaction to further earnings deterioration in 2H21
What’s New
– Hutchison (HT, 215 HK) announced its FY21 results on 25 Feb 2022 after market close.
– Revenue increased by 18% y-o-y to HK$5,385m in FY21, mainly attributable to 70% y-o-y growth in hardware and other products sales.
– Service revenue decreased 1% y-o-y to HK$3,241m in FY21 and local service revenue grew 2% y-o-y to HK$2,980m in FY21, driven by 35% y-o-y growth corporate solution revenue. However, local service revenue growth slowed down from 4% in 1H21 to 0.2% in 2H21, mainly attributable to a lower local postpaid net ARPU of HK$159 in FY21 compared to HK$160 in 1H21.
– EBITDA decreased by 12% y-o-y to HK$1,477m in FY21. Service EBITDA dropped 14% y-o-y to HK$1,415m due to increasing network costs and decrease in service revenue, with service EBITDA margin down 6ppts.
– Net profit decreased by 99% y-o-y to HK$4m. Earning further deteriorated to net loss of HK27m in 2H21 from net profit of HK$31m in 1H21, vs. net profit of HK$146m in 1H20 and HK$251m in 2H20.
– A final dividend per share (DPS) of HK$0.0521 were proposed, totalling a full year DPS of HK$0.2729, including a special dividend of HK$0.198 per share announced in interim results.
Our View:
– Expect negative share price reaction to earnings further deterioration in 2H21.
– TP and rating under review.