Royale Home Holdings (HKSE:01198) ROC % : -9.28% (As of Dec. 2023)

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What is Royale Home 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 %. Royale Home Holdings's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was -9.28%.

As of today (2024-05-30), Royale Home Holdings's WACC % is 5.15%. Royale Home Holdings's ROC % is -5.49% (calculated using TTM income statement data). Royale Home Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Royale Home Holdings ROC % Historical Data

The historical data trend for Royale Home 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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Royale Home Holdings ROC % Chart

Royale Home Holdings Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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3.02

-0.22

1.53

0.06

-5.44

Royale Home Holdings Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial															5.62	-1.67	-1.58	-1.65	-9.28

Royale Home Holdings ROC % Calculation

Royale Home 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 )
=	-318.851 * ( 1 - 7.91% )	/	( (5346.824	+	5452.439)	/ 2 )
=	-293.6298859	/	5399.6315
=	-5.44 %

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	))
=	6049.19	-	385.246	-	( 403.812	-	max(0, 2046.315	-	2363.435	+	403.812	))
=	5346.824

	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	))
=	5803.371	-	456.053	-	( 54.858	-	max(0, 2468.533	-	2363.412	+	54.858	))
=	5452.439

Royale Home Holdings'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 )
=	-550.074 * ( 1 - 9.75% )	/	( (5251.754	+	5452.439)	/ 2 )
=	-496.441785	/	5352.0965
=	-9.28 %

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	))
=	5700.635	-	433.429	-	( 15.452	-	max(0, 1914.901	-	2041.752	+	15.452	))
=	5251.754

	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	))
=	5803.371	-	456.053	-	( 54.858	-	max(0, 2468.533	-	2363.412	+	54.858	))
=	5452.439

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

Royale Home Holdings (HKSE:01198) 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, Royale Home Holdings's WACC % is 5.15%. Royale Home Holdings's ROC % is -5.49% (calculated using TTM income statement data). Royale Home 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.

Royale Home Holdings ROC % Related Terms

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Royale Home Holdings (HKSE:01198) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Furnishings, Fixtures & Appliances » Royale Home Holdings Ltd (HKSE:01198) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

66 Mody Road, Room 607, 6th Floor, Tsim Sha Tsui Centre, Tsim Sha Tsui East, Kowloon, Hong Kong, HKG

Website

https://royale.todayir.com

Royale Home Holdings Ltd is an investment holding company. Along with its subsidiaries, the firm is engaged in the manufacture and sale of home furniture in China. The segments of the company are, 1) The furniture products segment, engaging in the manufacture and sale of home furniture. 2) The development properties for sale and property investments segment, engaging in the property investments and development. 3) The hotel operations segment, engaging in hotel operations. 4) The trading segment, engaging in the trading of aluminium ingots and bars. Geographically, it derives revenue from Mainland China.

Executives

Tse Kam Pang	2201 Interest of corporation controlled by you
Ke Xue Cheng Guang Zhou Tou Zi Ji Tuan You Xian Gong Si	2201 Interest of corporation controlled by you
Ke Xue Cheng Xiang Gang Tou Zi You Xian Gong Si	2101 Beneficial owner
Great Diamond Developments Ltd	2101 Beneficial owner

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