Travel Expert (Asia) Enterprises (HKSE:01235) ROC % : -2.25% (As of Sep. 2023)

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What is Travel Expert (Asia) Enterprises 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 %. Travel Expert (Asia) Enterprises's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was -2.25%.

As of today (2024-05-22), Travel Expert (Asia) Enterprises's WACC % is 6.16%. Travel Expert (Asia) Enterprises's ROC % is -10.58% (calculated using TTM income statement data). Travel Expert (Asia) Enterprises earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Travel Expert (Asia) Enterprises ROC % Historical Data

The historical data trend for Travel Expert (Asia) Enterprises'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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Travel Expert (Asia) Enterprises ROC % Chart

Travel Expert (Asia) Enterprises Annual Data

Trend

Mar14

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

ROC %

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-12.79

-23.79

-48.78

-119.62

-47.56

Travel Expert (Asia) Enterprises Semi-Annual Data
	Mar14	Sep14	Mar15	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23
ROC %	Get a 7-Day Free Trial															-69.51	-103.68	-75.97	-24.65	-2.25

Travel Expert (Asia) Enterprises ROC % Calculation

Travel Expert (Asia) Enterprises's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2023 is calculated as:

	ROC % (A: Mar. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2022 )	+	Invested Capital (A: Mar. 2023 ))	/ count )
=	-12.788 * ( 1 - 0.81% )	/	( (16.026	+	37.312)	/ 2 )
=	-12.6844172	/	26.669
=	-47.56 %

where

	Invested Capital		(A: Mar. 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	))
=	89.987	-	13.263	-	( 70.836	-	max(0, 24.787	-	85.485	+	70.836	))
=	16.026

	Invested Capital		(A: Mar. 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	))
=	105.361	-	15.669	-	( 74.201	-	max(0, 43.457	-	95.837	+	74.201	))
=	37.312

Travel Expert (Asia) Enterprises's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	-1.166 * ( 1 - 0% )	/	( (37.312	+	66.122)	/ 2 )
=	-1.166	/	51.717
=	-2.25 %

where

	Invested Capital		(Q: Mar. 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	))
=	105.361	-	15.669	-	( 74.201	-	max(0, 43.457	-	95.837	+	74.201	))
=	37.312

	Invested Capital		(Q: Sep. 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	))
=	141.562	-	24.395	-	( 91.164	-	max(0, 74.889	-	125.934	+	91.164	))
=	66.122

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

Travel Expert (Asia) Enterprises (HKSE:01235) 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, Travel Expert (Asia) Enterprises's WACC % is 6.16%. Travel Expert (Asia) Enterprises's ROC % is -10.58% (calculated using TTM income statement data). Travel Expert (Asia) Enterprises 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.

Travel Expert (Asia) Enterprises ROC % Related Terms

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Travel Expert (Asia) Enterprises (HKSE:01235) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Travel & Leisure » Travel Expert (Asia) Enterprises Ltd (HKSE:01235) » Definitions » ROC %

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Traded in Other Exchanges

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Address

88 Connaught Road West, 8th Floor, Guangdong Finance Building, Hong Kong, HKG

Website

https://www.tegroup.com.hk

Travel Expert (Asia) Enterprises Ltd is an investment holding company. It is engaged in the provision of services relating to sales of air tickets, hotel accommodation, and other travel/wedding-related activities. The company operates through three business segments which include the Travel and travel/wedding-related business, Food, and beverage business, and Treasury activities. It generates maximum revenue from the Travel and travel/wedding-related business segment. Geographically, it derives a majority of its revenue from Hong Kong and also has a presence in the PRC.

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