With its stock down 14% over the past month, it is easy to disregard WuXi Biologics (Cayman) (HKG:2269). But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. In this article, we decided to focus on WuXi Biologics (Cayman)'s ROE.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
View our latest analysis for WuXi Biologics (Cayman)
How Do You Calculate Return On Equity?
ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for WuXi Biologics (Cayman) is:
12% = CN¥4.2b ÷ CN¥35b (Based on the trailing twelve months to June 2022).
The 'return' is the profit over the last twelve months. That means that for every HK$1 worth of shareholders' equity, the company generated HK$0.12 in profit.
What Is The Relationship Between ROE And Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.
A Side By Side comparison of WuXi Biologics (Cayman)'s Earnings Growth And 12% ROE
To begin with, WuXi Biologics (Cayman) seems to have a respectable ROE. And on comparing with the industry, we found that the the average industry ROE is similar at 11%. This probably goes some way in explaining WuXi Biologics (Cayman)'s significant 52% net income growth over the past five years amongst other factors. We believe that there might also be other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.
We then compared WuXi Biologics (Cayman)'s net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 17% in the same period.
SEHK:2269 Past Earnings Growth September 7th 2022
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for 2269? You can find out in our latest intrinsic value infographic research report.
Is WuXi Biologics (Cayman) Using Its Retained Earnings Effectively?
Given that WuXi Biologics (Cayman) doesn't pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.
Summary
In total, we are pretty happy with WuXi Biologics (Cayman)'s performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
由於其股價在過去一個月下跌了14%,人們很容易忽視藥明生物(開曼羣島)(HKG:2269)。但如果你仔細觀察,你可能會猜到,它強勁的財務狀況可能意味着,考慮到市場通常會獎勵財務狀況良好的公司,該股可能會在長期內增值。在本文中,我們決定把焦點放在藥明生物(開曼羣島)的淨資產收益率上。
股本回報率(ROE)是用來評估公司管理層利用公司資本效率的關鍵指標。簡而言之,它衡量的是一家公司相對於股東權益的盈利能力。
查看我們對藥明生物(開曼羣島)的最新分析
你如何計算股本回報率?
可使用以下公式計算淨資產收益率:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,藥明生物(開曼羣島)的淨資產收益率為:
12%=CN元42億×CN元350億(基於截至2022年6月的12個月)。
“收益”是過去12個月的利潤。這意味着,每1港元的股東權益,該公司就會產生0.12港元的利潤。
淨資產收益率與盈利增長之間有什麼關係?
到目前為止,我們已經瞭解到淨資產收益率衡量的是一家公司創造利潤的效率。根據公司將這些利潤再投資或“保留”多少,以及這樣做的效率如何,我們就能夠評估一家公司的收益增長潛力。假設其他條件不變,淨資產收益率和利潤保留率越高,與不一定具有這些特徵的公司相比,公司的增長率就越高。
藥明生物(開曼羣島)的盈利增長與12%淨資產收益率的並列比較
首先,藥明生物(開曼羣島)似乎有一個令人尊敬的淨資產收益率。並與行業進行比較,發現行業平均淨資產收益率相似,為11%。這可能在一定程度上解釋了開曼羣島的藥明生物在過去五年中淨利潤大幅增長52%的原因。我們認為,也可能有其他方面對公司的收益增長產生積極影響。例如,高收益留存率或高效的管理層。
然後,我們將藥明生物(開曼羣島)的淨收入增長與行業進行了比較,我們很高興地看到,該公司的增長數字高於同期行業17%的增長率。
聯交所:2269過去盈利增長2022年9月7日
賦予一家公司價值的基礎在很大程度上與其盈利增長掛鈎。投資者應該嘗試確定預期的收益增長或下降是否已計入價格,無論是哪種情況。這樣做將有助於他們確定該股的未來看起來是光明的還是不祥的。市場是否已經消化了2,269點的未來前景?你可以在我們最新的內在價值信息圖研究報告中找到答案。
藥明生物(開曼羣島)是否有效地利用了其留存收益?
鑑於藥明生物(開曼羣島)不向股東支付任何股息,我們推斷該公司一直在將所有利潤再投資於增長業務。
摘要
總體而言,我們對藥明生物(開曼羣島)的表現相當滿意。具體來説,我們喜歡該公司將大量利潤以高回報率進行再投資。這當然導致了該公司收益的大幅增長。話雖如此,正如目前分析師預測的那樣,該公司的收益增長預計將放緩。要了解更多分析師對該公司的最新預測,請查看分析師對該公司的可視化預測。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。