Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at Shanxi Huaxiang Group (SHSE:603112) and its ROCE trend, we weren't exactly thrilled.
What Is Return On Capital Employed (ROCE)?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Shanxi Huaxiang Group:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.076 = CN¥283m ÷ (CN¥5.1b - CN¥1.4b) (Based on the trailing twelve months to September 2022).
Thus, Shanxi Huaxiang Group has an ROCE of 7.6%. In absolute terms, that's a low return but it's around the Machinery industry average of 6.6%.
See our latest analysis for Shanxi Huaxiang Group
SHSE:603112 Return on Capital Employed December 14th 2022
While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Shanxi Huaxiang Group has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.
What The Trend Of ROCE Can Tell Us
On the surface, the trend of ROCE at Shanxi Huaxiang Group doesn't inspire confidence. To be more specific, ROCE has fallen from 13% over the last five years. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.
On a related note, Shanxi Huaxiang Group has decreased its current liabilities to 27% of total assets. So we could link some of this to the decrease in ROCE. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money.
Our Take On Shanxi Huaxiang Group's ROCE
In summary, Shanxi Huaxiang Group is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Additionally, the stock's total return to shareholders over the last year has been flat, which isn't too surprising. Therefore based on the analysis done in this article, we don't think Shanxi Huaxiang Group has the makings of a multi-bagger.
If you want to know some of the risks facing Shanxi Huaxiang Group we've found 2 warning signs (1 is potentially serious!) that you should be aware of before investing here.
While Shanxi Huaxiang Group isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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.
找到一傢俱有大幅增長潛力的企業並非易事,但如果我們看看幾個關鍵的財務指標,這是可能的。在其他方面,我們希望看到兩件事;第一,不斷增長的退貨一是關於已用資本(ROCE),二是公司的金額已動用資本的比例。歸根結底,這表明它是一家正在以越來越高的回報率對利潤進行再投資的企業。有鑒於此,當我們看到山西華翔集團(上海證券交易所:603112)和它的ROCE趨勢,我們並不是很興奮。
什麼是資本回報率(ROCE)?
如果你以前沒有使用過ROCE,它衡量的是一家公司從業務資本中獲得的“回報”(稅前利潤)。分析師用以下公式計算山西華翔集團的股價:
已動用資本回報率=息稅前收益(EBIT)?(總資產-流動負債)
0.076=人民幣2.83億?(人民幣51億元-人民幣14億元)(基於截至2022年9月的過去12個月).
因此,山西華翔集團的淨資產收益率為7.6%。按絕對值計算,這是一個較低的回報率,但約為機械行業6.6%的平均水準。
查看我們對山西華翔集團的最新分析
上證所:2022年12月14日603112的資本回報率
雖然過去並不代表未來,但瞭解一家公司歷史上的表現是有幫助的,這就是為什麼我們有上面的圖表。如果你想看看山西華翔集團過去在其他指標上的表現,你可以查看以下內容免費過去收益、收入和現金流的圖表。
ROCE的走勢告訴我們什麼
從表面上看,山西華翔集團的ROCE走勢並沒有激發信心。更具體地說,ROCE在過去五年中從13%下降。另一方面,該公司一直在使用更多的資本,但去年的銷售額沒有相應的改善,這可能表明這些投資是更長期的投資。從現在開始,值得密切關注該公司的收益,看看這些投資最終是否真的為利潤做出了貢獻。
與此相關的是,山西華翔集團已將流動負債降至總資產的27%。因此,我們可以將其中一些因素與淨資產收益率的下降聯繫起來。更重要的是,這可以降低業務的某些方面的風險,因為現在該公司的供應商或短期債權人為其運營提供的資金減少了。一些人會說,這降低了企業產生淨資產收益率的效率,因為它現在用自己的錢為更多的運營提供資金。
我們對山西華翔集團ROCE的看法
總而言之,山西華翔集團正在將資金重新投資到業務中,以求增長,但不幸的是,銷售額看起來還沒有太大增長。此外,該股去年給股東帶來的總回報持平,這並不太令人意外。因此,根據本文的分析,我們認為山西華翔集團不具備多套袋的條件。
如果你想知道山西華翔集團面臨的一些風險,我們已經找到了2個警告標誌(%1可能很嚴重!)在這裡投資之前你應該意識到這一點。
儘管山西華翔集團的回報率並不是最高的,但看看這個免費資產負債表穩健、股本回報率高的公司名單。
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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。