Chunghwa Telecom Co Ltd (NYSE: CHT)

Sector: Communication Services Industry: Telecom Services CIK: 0001132924
Market Cap 33.41 Bn
P/B 2.70
P/E 26.87
P/S 4.32
ROIC (Qtr) 285.02
Div Yield % 0.00
Rev 1y % (Qtr) 7.95
Total Debt (Qtr) 1.20 Bn
Debt/Equity (Qtr) 0.10
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About

Chunghwa Telecom Co., Ltd., often referred to as CHT, is a prominent player in Taiwan's telecommunications industry. The company's operations span a variety of services, including mobile, fixed-line, internet, and video services. It is listed on the Taiwan Stock Exchange under the code 2412 and on the New York Stock Exchange under the symbol CHT. CHT's primary business activities revolve around providing a comprehensive range of telecommunications services. The company's offerings are divided into three segments: consumer business, enterprise business,...

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Investment thesis

Bull case

  • Strong operating cash flow of 2.46B provides robust 2.04x coverage of total debt 1.20B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 771.87M provide 5.15x coverage of short-term debt 149.81M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 2.46B provides strong 15173.90x coverage of stock compensation 162040.68, indicating sustainable incentive practices.
  • Operating cash flow of 2.46B provides exceptional 41.64x coverage of minority interest expenses 59.05M, showing strong core operations.
  • Strong tangible asset base of 14.82B provides 12.32x coverage of total debt 1.20B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 2.46B barely covers its investment activities of (1.14B), with a coverage ratio of -2.15, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.14B) provide weak support for R&D spending of 143.71M, which is -7.96x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • High receivables of 877.78M relative to inventory of 433.38M (2.03 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 1.47B represents just -4.94x of debt issuance (298.30M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating earnings of 1.57B show weak coverage of depreciation charges of 1.31B, with a 1.20 ratio indicating high capital intensity and potential reinvestment needs.

Geographical areas [axis] Breakdown of Revenue (2024)

Markets of customers [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Telecom Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMUS T-Mobile US, Inc. 247.58 Bn 22.52 2.80 118.74 Bn
2 T At&T Inc. 210.50 Bn 12.86 1.15 155.04 Bn
3 VZ Verizon Communications Inc 202.20 Bn 11.00 1.54 181.64 Bn
4 CMCSA Comcast Corp 180.83 Bn 58.43 5.08 98.94 Bn
5 VOD Vodafone Group Public Ltd Co 44.88 Bn 3.20 0.62 60.54 Bn
6 CHT Chunghwa Telecom Co Ltd 33.41 Bn 26.87 4.32 1.20 Bn
7 SATS EchoStar CORP 32.60 Bn -2.52 2.15 30.58 Bn
8 CHTR Charter Communications, Inc. /Mo/ 32.03 Bn 6.42 0.58 96.20 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.04 0.87
EV to Cash from Ops. EV/CFO 0.28 7.73
EV to Debt EV to Debt 0.57 40.31
EV to EBIT EV/EBIT 0.43 2.24
EV to EBITDA EV/EBITDA 0.23 2.53
EV to Free Cash Flow [EV/FCF] EV/FCF 0.46 33.34
EV to Market Cap EV to Market Cap 0.02 1.71
EV to Revenue EV/Rev 0.09 5.12
Price to Book Value [P/B] P/B 2.70 2.16
Price to Earnings [P/E] P/E 26.87 76.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -0.17
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.05
Dividend per Basic Share Div per Share (Qtr) 0.00 0.79
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.04
Interest Coverage Int. cover (Qtr) -150.44 -2.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -11.68 19.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -21.89 61.85
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -2.07
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 8.71 373.65
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 6.97 192.47
EBIT Growth (1y) % EBIT 1y % (Qtr) 10.67 814.56
EBT Growth (1y) % EBT 1y % (Qtr) 10.67 -29.03
EPS Growth (1y) % EPS 1y % (Qtr) 8.53 141.81
FCF Growth (1y) % FCF 1y % (Qtr) -0.02 78.17
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.90 -10.71
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.60
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.35 0.68
Current Ratio Curr Ratio (Qtr) 1.50 1.56
Debt to Equity Ratio Debt/Equity (Qtr) 0.10 -0.46
Interest Cover Ratio Int Coverage (Qtr) -150.44 -2.53
Times Interest Earned Times Interest Earned (Qtr) -150.44 -2.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 37.30 46.49
EBIT Margin % EBIT Margin % (Qtr) 620.35 -51.60
EBT Margin % EBT Margin % (Qtr) 20.49 27.73
Gross Margin % Gross Margin % (Qtr) 36.70 55.49
Net Profit Margin % Net Margin % (Qtr) 16.10 26.33