CPM Group (HKSE:01932) ROC % : 4.02% (As of Dec. 2023)

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What is CPM 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 %. CPM Group's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 4.02%.

As of today (2024-06-23), CPM Group's WACC % is 4.59%. CPM Group's ROC % is 1.29% (calculated using TTM income statement data). CPM Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

CPM Group ROC % Historical Data

The historical data trend for CPM 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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CPM Group ROC % Chart

CPM Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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-6.07

2.25

-5.84

-5.50

1.31

CPM Group Semi-Annual Data
	Dec14	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial													-8.02	-12.68	0.45	-1.32	4.02

CPM Group ROC % Calculation

CPM 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 )
=	9.034 * ( 1 - 3.57% )	/	( (733.438	+	599.822)	/ 2 )
=	8.7114862	/	666.63
=	1.31 %

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	))
=	1152.832	-	347.145	-	( 147.521	-	max(0, 587.954	-	660.203	+	147.521	))
=	733.438

	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	))
=	972.859	-	258.079	-	( 144.943	-	max(0, 381.47	-	496.428	+	144.943	))
=	599.822

CPM Group'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 )
=	27.178 * ( 1 - 4.83% )	/	( (688.209	+	599.822)	/ 2 )
=	25.8653026	/	644.0155
=	4.02 %

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	))
=	1023.175	-	278.512	-	( 123.794	-	max(0, 493.526	-	549.98	+	123.794	))
=	688.209

	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	))
=	972.859	-	258.079	-	( 144.943	-	max(0, 381.47	-	496.428	+	144.943	))
=	599.822

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

CPM Group (HKSE:01932) 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, CPM Group's WACC % is 4.59%. CPM Group's ROC % is 1.29% (calculated using TTM income statement data). CPM 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.

CPM Group ROC % Related Terms

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CPM Group (HKSE:01932) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » CPM Group Ltd (HKSE:01932) » Definitions » ROC %

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Address

338 Hennessy Road, 31st Floor, CNT Tower, Wanchai, Hong Kong, HKG

Website

http://www.cpmgroup.com.hk

CPM Group Ltd is an investment holding company mainly engaged in the manufacture and sale of paint and coating products. The company has two reportable operating segments: the Paint Products segment which engages in the manufacture and sale of paint and coating products; and the Property Investment segment invests in industrial properties for their rental income potential. The company's principal products include industrial paint and coating products, architectural paint and coating products, general paint and coating, and ancillary products. It mainly distributes its products in the Mainland of China and Hong Kong markets. The group derives the majority of its revenue from Mainland China.

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