In our earlier article on Taiwan’s telecom firm Chunghwa Telecom (NYSE:CHT), we concluded that regardless of it being a well-managed firm, we up to now have most well-liked to personal China Cell (OTCPK:CHLKF) and Singtel (OTCPK:SGAPY).
Now that CHT have come out with their Q1 2023 outcomes it’s a good time to examine if our choice nonetheless stands.
Comparability with its Asian friends
Allow us to begin by going by means of the numbers for CHT.
On their high line, they grew their income by 5.7% Y-o-Y from NT$ 51.3 billion in Q1 of 2022 to NT$54.21 billion within the final quarter. As steering, NT$54.21 billion equates to roughly USD1.8 billion.
Their internet revenue grew much more Y-o-Y by 6.4% from NT$9.06 billion to NT$9.64 billion.
EPS was NT$1.24 in Q1 of 2023.
With the share buying and selling at a worth of NT$126 per share, we nonetheless get a excessive P/E of 101.6. In March this yr, we complained about their excessive P/E. At the moment, it was 25. Nonetheless, we will not put an excessive amount of emphasis on a quarterly P/E. We’ll take a look at this on a yearly foundation once we examine it with its friends.
Administration has guided for a internet revenue for FY 2023 to be within the vary of NT$34.6 billion to 36.1 billion.
We all know that money stream trumps earnings.
Right here, CHT had a much less favorable quarter, as their free money stream truly decreased by 12% from NT$6.6 billion to NT$5.8 billion. Typically this may be defined by increased capex necessities, however for CHT this was solely NT$0.19 billion increased.
In occasions like these, we wish to be certain the corporate we contemplate proudly owning has a powerful stability sheet. CHT do tick off that field.
Their debt ratio, outlined because the ratio of whole debt to whole property, was lowered by 6.7% Q-o-Q to a ratio of 23%.
Now, allow us to take a look at the way it stacks up towards a few of its Asian friends, and the businesses that we do have a stake in. We wish to begin by trying on the ROE.
Right here we see that CHT is doing equally effectively over a 5-year interval. Now allow us to examine their P/E on a GAAP foundation.
The one firm that really stands out is China Cell with a P/E under 10.
Final however not least, we examine the Worth/Tangible Guide Worth.
Once more, right here China Cell actually shines.
We’ve got made a compilation the place we additionally take a look at different fundamentals, like debt to fairness and dividend yield as effectively.
Dangers and Conclusion
Final time round, we gave CHT a Maintain stance.
We’ve got identified in our earlier thesis concerning the geo-political dangers for CHT and our opinion that their progress potential is considerably restricted as we can not see them venturing overseas.
Keep in mind that SingTel generates as a lot as 78% of its earnings from nations outdoors its house market. That is one thing we don’t see occurring to CHT.
After we look purely at fundamentals, it’s nonetheless China Cell that appears essentially the most enticing. This has been seen not solely by us however by the market generally. It has seen fairly a giant enchancment within the share worth during the last six months, in comparison with CHT and SGAPY.
We preserve our Maintain stance for CHT.
Editor’s Notice: This text discusses a number of securities that don’t commerce on a significant U.S. trade. Please concentrate on the dangers related to these shares.