China Rare Earth Holdings (HKSE:00769) ROC % : -14.20% (As of Jun. 2024)

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What is China Rare Earth Holdings 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 Rare Earth Holdings's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was -14.20%.

As of today (2024-12-13), China Rare Earth Holdings's WACC % is 10.37%. China Rare Earth Holdings's ROC % is -16.54% (calculated using TTM income statement data). China Rare Earth Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Rare Earth Holdings ROC % Historical Data

The historical data trend for China Rare Earth Holdings'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 Rare Earth Holdings ROC % Chart

China Rare Earth Holdings Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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2.07

1.83

2.32

-38.16

-25.44

China Rare Earth Holdings Semi-Annual Data
	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24
ROC %	Get a 7-Day Free Trial															3.08	-76.06	-26.82	-20.03	-14.20

China Rare Earth Holdings ROC % Calculation

China Rare Earth Holdings'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 )
=	-207.173 * ( 1 - 0.27% )	/	( (862.077	+	762.304)	/ 2 )
=	-206.6136329	/	812.1905
=	-25.44 %

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	))
=	2409.63	-	95.167	-	( 1452.386	-	max(0, 132.174	-	2149.803	+	1452.386	))
=	862.077

	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	))
=	2153.703	-	91.95	-	( 1299.449	-	max(0, 108.918	-	1932.301	+	1299.449	))
=	762.304

China Rare Earth Holdings'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: Dec. 2023 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	-119.468 * ( 1 - -1.42% )	/	( (762.304	+	944.305)	/ 2 )
=	-121.1644456	/	853.3045
=	-14.20 %

where

	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	))
=	2153.703	-	91.95	-	( 1299.449	-	max(0, 108.918	-	1932.301	+	1299.449	))
=	762.304

	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	))
=	2082.613	-	89.455	-	( 1048.853	-	max(0, 114.511	-	1878.643	+	1048.853	))
=	944.305

Note: The Operating Income data used here is two times the semi-annual (Jun. 2024) data.

China Rare Earth Holdings (HKSE:00769) 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 Rare Earth Holdings's WACC % is 10.37%. China Rare Earth Holdings's ROC % is -16.54% (calculated using TTM income statement data). China Rare Earth Holdings 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 Rare Earth Holdings ROC % Related Terms

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China Rare Earth Holdings Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » China Rare Earth Holdings Ltd (HKSE:00769) » Definitions » ROC %

Traded in Other Exchanges

CREQF:USA RAE:Germany

Address

Dingshu Town, Jiangsu Province, Yixing, CHN, 214226

Website

http://www.creh.com.hk

China Rare Earth Holdings Ltd is an investment holding company. It operates in two segments: Rare earth and Refractory. The Rare earth segment includes manufacturing and sales of rare earth products such as praseodymium, neodymium, terbium, and dysprosium through trading. It also focuses on the production of high-end products such as rare earth oxides. The Refractory segment includes the manufacturing and sales of refractory products, including Refractory materials and Magnesium grains. The majority of its revenue comes from Rare Earth Segment. Its geographical segments are China, Japan, Europe, and Others, of which China accounts for the vast majority of its revenue.

Executives

Jiang Quanlong	2202 Interest of your spouse
Qian Yuanying	2307 Founder of a discretionary trust who can infl
Yy Holdings Limited	2101 Beneficial owner
Yyt (ptc) Limited	2301 Trustee

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