FIT Hon Teng (HKSE:06088) ROC % : 8.93% (As of Dec. 2023)

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What is FIT Hon Teng ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. FIT Hon Teng's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 8.93%.

As of today (2024-05-26), FIT Hon Teng's WACC % is 10.48%. FIT Hon Teng's ROC % is 5.08% (calculated using TTM income statement data). FIT Hon Teng earns returns that do not match up to its cost of capital. It will destroy value as it grows.

FIT Hon Teng ROC % Historical Data

The historical data trend for FIT Hon Teng's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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FIT Hon Teng ROC % Chart

FIT Hon Teng Annual Data

Trend

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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8.89

1.82

3.57

6.46

5.19

FIT Hon Teng Semi-Annual Data
	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial											6.70	5.09	7.46	-2.51	8.93

FIT Hon Teng ROC % Calculation

FIT Hon Teng's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	1650.867 * ( 1 - 27.8% )	/	( (19568.386	+	26404.957)	/ 2 )
=	1191.925974	/	22986.6715
=	5.19 %

where

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	35401.639	-	8321.292	-	( 7511.961	-	max(0, 11984.533	-	21518.814	+	7511.961	))
=	19568.386

	Invested Capital		(A: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	39781.059	-	9092.388	-	( 10288.193	-	max(0, 20020.313	-	24304.027	+	10288.193	))
=	26404.957

FIT Hon Teng's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	2823.492 * ( 1 - 19.59% )	/	( (24449.589	+	26404.957)	/ 2 )
=	2270.3699172	/	25427.273
=	8.93 %

where

	Invested Capital		(Q: Jun. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	36186.149	-	6619.888	-	( 11040.285	-	max(0, 17798.448	-	22915.12	+	11040.285	))
=	24449.589

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	39781.059	-	9092.388	-	( 10288.193	-	max(0, 20020.313	-	24304.027	+	10288.193	))
=	26404.957

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

FIT Hon Teng (HKSE:06088) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, FIT Hon Teng's WACC % is 10.48%. FIT Hon Teng's ROC % is 5.08% (calculated using TTM income statement data). FIT Hon Teng earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

FIT Hon Teng ROC % Related Terms

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FIT Hon Teng (HKSE:06088) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » FIT Hon Teng Ltd (HKSE:06088) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

FITGF:USA 0FJ:Germany

Address

66-1, Chungshan Road, Tucheng District, New Taipei Ciy, TWN, 23680

Website

https://www.fit-foxconn.com

FIT Hon Teng Ltd is a manufacturer of electronic components. It focuses on the development, manufacturing, and marketing of electronic and optoelectronic connectors, antennas, acoustic components, cables, and modules for applications in computers, communication equipment, consumer electronics, automobiles, and industrial and green energy field products. Geographically, the group has a business presence in the U.S., the PRC, Taiwan, Hong Kong, the United Kingdom, Singapore, Malaysia, and other countries, of which a majority of revenue is derived from the U.S. Its operating segments are Intermediate products and Consumer products.

Executives

Lu Sung-ching	2101 Beneficial owner
Hong Hai Jing Mi Gong Ye Gu Fen You Xian Gong Si	2201 Interest of corporation controlled by you
Foxconn (far East) Limited	2201 Interest of corporation controlled by you

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