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Shandong Donghong Pipe Industry Co (SHSE:603856) ROC % : 2.97% (As of Sep. 2024)


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What is Shandong Donghong Pipe Industry Co 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 %. Shandong Donghong Pipe Industry Co's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was 2.97%.

As of today (2024-12-13), Shandong Donghong Pipe Industry Co's WACC % is 6.39%. Shandong Donghong Pipe Industry Co's ROC % is 7.54% (calculated using TTM income statement data). Shandong Donghong Pipe Industry Co 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.


Shandong Donghong Pipe Industry Co ROC % Historical Data

The historical data trend for Shandong Donghong Pipe Industry Co'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.

* Premium members only.

Shandong Donghong Pipe Industry Co ROC % Chart

Shandong Donghong Pipe Industry Co Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 12.49 18.37 7.25 8.65 7.94

Shandong Donghong Pipe Industry Co Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
ROC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.97 5.80 5.49 14.85 2.97

Shandong Donghong Pipe Industry Co ROC % Calculation

Shandong Donghong Pipe Industry Co'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 )
=267.491 * ( 1 - 11.42% )/( (3114.622 + 2855.46)/ 2 )
=236.9435278/2985.041
=7.94 %

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))
=3937.631 - 344.854 - ( 478.155 - max(0, 1486.788 - 2839.144+478.155))
=3114.622

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))
=3558.514 - 308.783 - ( 394.271 - max(0, 1244.588 - 2501.058+394.271))
=2855.46

Shandong Donghong Pipe Industry Co's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2024 is calculated as:

ROC % (Q: Sep. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2024 ) + Invested Capital (Q: Sep. 2024 ))/ count )
=146.884 * ( 1 - 34.62% )/( (3176.754 + 3299.589)/ 2 )
=96.0327592/3238.1715
=2.97 %

where

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))
=4019.162 - 613.54 - ( 228.868 - max(0, 1449.987 - 2876.936+228.868))
=3176.754

Invested Capital(Q: Sep. 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))
=3966.394 - 385.112 - ( 281.693 - max(0, 1281.911 - 2784.636+281.693))
=3299.589

Note: The Operating Income data used here is four times the quarterly (Sep. 2024) data.

* 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.


Shandong Donghong Pipe Industry Co  (SHSE:603856) 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, Shandong Donghong Pipe Industry Co's WACC % is 6.39%. Shandong Donghong Pipe Industry Co's ROC % is 7.54% (calculated using TTM income statement data). Shandong Donghong Pipe Industry Co 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.


Shandong Donghong Pipe Industry Co ROC % Related Terms

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Shandong Donghong Pipe Industry Co Business Description

Traded in Other Exchanges
N/A
Address
No.1 Donghong Road, Shandong Province, Qufu, CHN, 273100
Shandong Donghong Pipe Industry Co Ltd is engaged in the research and development, manufacturing and service of an intelligent pipeline system in China. Its products line includes steel mesh skeleton plastic composite pipes, super wear-resisting composite pipes, HDPE gas pipes, plastic-coated steel pipes, polyethylene pipes for underground coal mining, and other products.
Executives
Bi Xing Tao Director
Kong Zhi Yong Director
Xun Jin Long senior management
Fan Peng senior management
Yang Cui Wei senior management
Liu Yong Director
Ju Heng Shan Directors, senior managers
Xue Chun De senior management
Liu Bin Directors, senior managers
Ni Li Ying Director

Shandong Donghong Pipe Industry Co Headlines

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