China Evergrande Group (China Evergrande Group) ROIC % : 0.11% (As of Jun. 2023)

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What is China Evergrande Group ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. China Evergrande Group's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2023 was 0.11%.

As of today (2024-04-29), China Evergrande Group's WACC % is 2.13%. China Evergrande Group's ROIC % is 0.86% (calculated using TTM income statement data). China Evergrande Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Evergrande Group ROIC % Historical Data

The historical data trend for China Evergrande Group's ROIC % 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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China Evergrande Group ROIC % Chart

China Evergrande Group Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

ROIC %

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6.09

3.28

2.59

-4.86

0.13

China Evergrande Group Semi-Annual Data
	Dec13	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23
ROIC %	Get a 7-Day Free Trial															-0.04	-9.45	-0.83	1.65	0.11

Competitive Comparison of China Evergrande Group's ROIC %

For the Real Estate - Development subindustry, China Evergrande Group's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

China Evergrande Group's ROIC % Distribution in the Real Estate Industry

For the Real Estate industry and Real Estate sector, China Evergrande Group's ROIC % distribution charts can be found below:

* The bar in red indicates where China Evergrande Group's ROIC % falls into.

China Evergrande Group ROIC % Calculation

China Evergrande Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROIC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	302.509 * ( 1 - -11.57% )	/	( (293955.693	+	212472.281)	/ 2 )
=	337.5092913	/	253213.987
=	0.13 %

where

	Invested Capital		(A: Dec. 2021 )
=	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	))
=	330820.655	-	135355.377	-	( 3741.855	-	max(0, 395826.229	-	297335.814	+	3741.855	))
=	293955.693

	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	))
=	263685.758	-	149860.005	-	( 3222.313	-	max(0, 337496.306	-	238849.778	+	3222.313	))
=	212472.281

China Evergrande Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2023 is calculated as:

	ROIC % (Q: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2022 )	+	Invested Capital (Q: Jun. 2023 ))	/ count )
=	199.96 * ( 1 - -21.09% )	/	( (212472.281	+	217371.046)	/ 2 )
=	242.131564	/	214921.6635
=	0.11 %

where

	Invested Capital		(Q: 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	))
=	263685.758	-	149860.005	-	( 3222.313	-	max(0, 337496.306	-	238849.778	+	3222.313	))
=	212472.281

	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	))
=	243527.383	-	125732.119	-	( 1115.704	-	max(0, 319988.55	-	220412.768	+	1115.704	))
=	217371.046

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

China Evergrande Group (OTCPK:EGRNQ) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, China Evergrande Group's WACC % is 2.13%. China Evergrande Group's ROIC % is 0.86% (calculated using TTM income statement data).

Be Aware

Like ROE % and ROA %, ROIC % 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.

China Evergrande Group ROIC % Related Terms

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China Evergrande Group (China Evergrande Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » China Evergrande Group (OTCPK:EGRNQ) » Definitions » ROIC %

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03333:Hong Kong EV1:Germany

Address

Number. 78 Huangpu Avenue West, Tianhe District, Guangdong Province, Guangzhou, CHN, 510620

Website

https://www.evergrande.com

China Evergrande Group is a large real estate developer. In 2019, it was ranked in third place by sales value among developers in China. It has projects in more than 200 cities across China and property development accounts for 90% of earnings. The firm also has interests in banking, insurance, tourism, and healthcare. Evergrande was listed in Hong Kong in late 2009. The company is in the process of spinning off its real estate business into a Shenzhen-listed entity. Free float is 25%, with the company's founder Hui Ka Yan holding the remaining share.