Zhong Ao Home Group (HKSE:01538) ROC % : 11.91% (As of Jun. 2024)

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What is Zhong Ao Home Group 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 %. Zhong Ao Home Group's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 11.91%.

As of today (2024-12-13), Zhong Ao Home Group's WACC % is 9.80%. Zhong Ao Home Group's ROC % is 10.53% (calculated using TTM income statement data). Zhong Ao Home Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

Zhong Ao Home Group ROC % Historical Data

The historical data trend for Zhong Ao Home Group'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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Zhong Ao Home Group ROC % Chart

Zhong Ao Home Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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17.41

14.28

14.69

10.99

10.42

Zhong Ao Home Group 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															14.21	6.77	11.50	9.08	11.91

Zhong Ao Home Group ROC % Calculation

Zhong Ao Home Group'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 )
=	181.081 * ( 1 - 32.67% )	/	( (1173.632	+	1166.534)	/ 2 )
=	121.9218373	/	1170.083
=	10.42 %

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	))
=	2185.545	-	643.126	-	( 506.685	-	max(0, 1049.533	-	1418.32	+	506.685	))
=	1173.632

	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	))
=	2261.117	-	658.484	-	( 584.673	-	max(0, 1090.988	-	1527.087	+	584.673	))
=	1166.534

Zhong Ao Home Group'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 )
=	195.488 * ( 1 - 30.07% )	/	( (1166.534	+	1129.783)	/ 2 )
=	136.7047584	/	1148.1585
=	11.91 %

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	))
=	2261.117	-	658.484	-	( 584.673	-	max(0, 1090.988	-	1527.087	+	584.673	))
=	1166.534

	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	))
=	2227.347	-	610.942	-	( 529.311	-	max(0, 1035.947	-	1522.569	+	529.311	))
=	1129.783

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

Zhong Ao Home Group (HKSE:01538) 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, Zhong Ao Home Group's WACC % is 9.80%. Zhong Ao Home Group's ROC % is 10.53% (calculated using TTM income statement data). Zhong Ao Home Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

Zhong Ao Home Group ROC % Related Terms

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Zhong Ao Home Group Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » Zhong Ao Home Group Ltd (HKSE:01538) » Definitions » ROC %

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Address

2 Baichen Lu, Chihua She Qu, 1601 Block 1, Pacific Dingwang Commercial Center, Chencun Town, Shunde District, Foshan, CHN

Website

http://www.gdzawy.com

Zhong Ao Home Group Ltd is an investment holding company mainly engaged in the provision of property management services, sales assistance services, provision of cleaning and greening services, and provision of real estate agency services in the People's Republic of China. All of the activities are carried out across China which represents the Southern Region, Eastern and Central Region, and the Northern Region. It generates a vast majority of its revenues from the property management business.

Executives

Liu Jian	2307 Founder of a discretionary trust who can infl
Hilton Assets (ptc) Limited	2301 Trustee
Qichang International Limited	2101 Beneficial owner
Greentown Service Group Co. Ltd.	2101 Beneficial owner

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