China Petroleum & Chemical (HKSE:00386) ROC % : 4.41% (As of Jun. 2024)

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What is China Petroleum & Chemical 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 %. China Petroleum & Chemical's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 4.41%.

As of today (2024-12-15), China Petroleum & Chemical's WACC % is 5.37%. China Petroleum & Chemical's ROC % is 3.29% (calculated using TTM income statement data). China Petroleum & Chemical earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Petroleum & Chemical ROC % Historical Data

The historical data trend for China Petroleum & Chemical'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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China Petroleum & Chemical ROC % Chart

China Petroleum & Chemical Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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5.23

1.62

6.63

4.64

4.13

China Petroleum & Chemical Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
ROC %	Get a 7-Day Free Trial															4.89	1.30	4.98	4.41	2.32

China Petroleum & Chemical ROC % Calculation

China Petroleum & Chemical'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 )
=	94600.936 * ( 1 - 19.15% )	/	( (1834841.568	+	1869004.515)	/ 2 )
=	76484.856756	/	1851923.0415
=	4.13 %

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	))
=	2178845.537	-	505084.483	-	( 165900.255	-	max(0, 745278.652	-	584198.138	+	165900.255	))
=	1834841.568

	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	))
=	2214569.735	-	468769.567	-	( 181305.882	-	max(0, 707758.066	-	584553.719	+	181305.882	))
=	1869004.515

China Petroleum & Chemical's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2024 is calculated as:

	ROC % (Q: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2024 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	101789.34 * ( 1 - 17% )	/	( (1916045.681	+	1912750.785)	/ 2 )
=	84485.1522	/	1914398.233
=	4.41 %

where

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	2272472.055	-	452990.97	-	( 188975.175	-	max(0, 757129.309	-	660564.713	+	188975.175	))
=	1916045.681

	Invested Capital		(Q: Jun. 2024 )
=	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	))
=	2304367.161	-	516136.931	-	( 197666.302	-	max(0, 811014.032	-	686493.477	+	197666.302	))
=	1912750.785

Note: The Operating Income data used here is four times the quarterly (Jun. 2024) data.

China Petroleum & Chemical (HKSE:00386) 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, China Petroleum & Chemical's WACC % is 5.37%. China Petroleum & Chemical's ROC % is 3.29% (calculated using TTM income statement data). China Petroleum & Chemical 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.

China Petroleum & Chemical ROC % Related Terms

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China Petroleum & Chemical Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » China Petroleum & Chemical Corp (HKSE:00386) » Definitions » ROC %

Comparable Companies

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SNPMF:USA CHU:Germany CHU:Germany CHU:Germany 600028:China

Address

No. 22 Chaoyangmen North Street, Chaoyang District, Beijing, CHN, 100728

Website

http://www.sinopec.com

China Petroleum & Chemical, or Sinopec, is one of China's national oil companies and one of Asian's largest integrated oil companies in terms of revenue. Its income is derived primarily from refining and marketing of oil products and petrochemical production. Sinopec has China's largest petrol station network with over 30,000 stations and enjoys significant market share in petrochemicals. Established in 2000 by China Petrochemical Corporation, a state-owned enterprise and majority shareholder, the company also owns oil and gas assets in Shandong and Sichuan provinces. It has a smaller global upstream presence than peers PetroChina and CNOOC. In 2023, Sinopec's production of oil and gas equivalent was 504.09 million barrels. The firm also processed 257.52 million metric tons of crude oil.

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