Hebei Construction Group (HKSE:01727) ROC % : 2.91% (As of Jun. 2024)

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What is Hebei Construction 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 %. Hebei Construction Group's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 2.91%.

As of today (2025-04-05), Hebei Construction Group's WACC % is 4.89%. Hebei Construction Group's ROC % is 3.01% (calculated using TTM income statement data). Hebei Construction Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Hebei Construction Group ROC % Historical Data

The historical data trend for Hebei Construction 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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Hebei Construction Group ROC % Chart

Hebei Construction Group Annual Data

Trend

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Dec24

ROC %

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9.38

8.49

3.43

3.82

3.01

Hebei Construction Group Semi-Annual Data
	Dec14	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24	Dec24
ROC %	Get a 7-Day Free Trial															2.15	3.16	3.99	2.91	3.17

Hebei Construction Group ROC % Calculation

Hebei Construction 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 )
=	1116.251 * ( 1 - 30.45% )	/	( (18740.038	+	21854.806)	/ 2 )
=	776.3525705	/	20297.422
=	3.82 %

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	))
=	75525.482	-	54154.943	-	( 10191.292	-	max(0, 65629.681	-	68260.182	+	10191.292	))
=	18740.038

	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	))
=	70970.496	-	46378.492	-	( 8426.521	-	max(0, 61028.153	-	63765.351	+	8426.521	))
=	21854.806

Hebei Construction 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 )
=	811.35 * ( 1 - 22.5% )	/	( (21854.806	+	21393.446)	/ 2 )
=	628.79625	/	21624.126
=	2.91 %

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	))
=	70970.496	-	46378.492	-	( 8426.521	-	max(0, 61028.153	-	63765.351	+	8426.521	))
=	21854.806

	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	))
=	66374.835	-	41725.381	-	( 6628.871	-	max(0, 56086.827	-	59342.835	+	6628.871	))
=	21393.446

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

Hebei Construction Group (HKSE:01727) 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, Hebei Construction Group's WACC % is 4.89%. Hebei Construction Group's ROC % is 3.01% (calculated using TTM income statement data). Hebei Construction Group 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.

Hebei Construction Group ROC % Related Terms

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Hebei Construction Group Business Description

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GURUFOCUS.COM » STOCK LIST » Industrials » Construction » Hebei Construction Group Corp Ltd (HKSE:01727) » Definitions » ROC %

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Address

No. 125, Lugang Road, Jingxiu District, Hebei Province, Baoding, CHN

Website

https://www.hebjs.com.cn

Hebei Construction Group Corp Ltd is an engineering and construction company. The company's services include construction contracting works of residential, public, industrial, and commercial buildings; and municipal and transportation infrastructure. It has two segments that are Construction contracting business and Other business. The construction contracting business segment provides general contractors for building construction projects and infrastructure construction projects. Other segment mainly includes concession arrangements and other services of the group. The majority of its revenue is generated from Mainland China.

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