Far East Hotels & Entertainment (HKSE:00037) ROIC % : -8.58% (As of Mar. 2024)

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What is Far East Hotels & Entertainment ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Far East Hotels & Entertainment's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was -8.58%.

As of today (2024-12-14), Far East Hotels & Entertainment's WACC % is 10.91%. Far East Hotels & Entertainment's ROIC % is -8.32% (calculated using TTM income statement data). Far East Hotels & Entertainment earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Far East Hotels & Entertainment ROIC % Historical Data

The historical data trend for Far East Hotels & Entertainment's ROIC % 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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Far East Hotels & Entertainment ROIC % Chart

Far East Hotels & Entertainment Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROIC %

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1.91

2.18

-0.24

-3.97

-6.41

Far East Hotels & Entertainment Semi-Annual Data
	Mar15	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23	Mar24	Sep24
ROIC %	Get a 7-Day Free Trial															-2.75	-5.43	-4.03	-8.58	-8.04

Competitive Comparison of Far East Hotels & Entertainment's ROIC %

For the Real Estate Services subindustry, Far East Hotels & Entertainment's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Far East Hotels & Entertainment's ROIC % Distribution in the Real Estate Industry

For the Real Estate industry and Real Estate sector, Far East Hotels & Entertainment's ROIC % distribution charts can be found below:

* The bar in red indicates where Far East Hotels & Entertainment's ROIC % falls into.

Far East Hotels & Entertainment ROIC % Calculation

Far East Hotels & Entertainment's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROIC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	-21.794 * ( 1 - 0.11% )	/	( (350.908	+	328.664)	/ 2 )
=	-21.7700266	/	339.786
=	-6.41 %

where

	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	))
=	407.678	-	11.9	-	( 50.051	-	max(0, 30.575	-	75.445	+	50.051	))
=	350.908

	Invested Capital		(A: Mar. 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	))
=	364.304	-	11.391	-	( 38.377	-	max(0, 24.558	-	48.807	+	38.377	))
=	328.664

Far East Hotels & Entertainment's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROIC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-27.678 * ( 1 - -4.21% )	/	( (343.972	+	328.664)	/ 2 )
=	-28.8432438	/	336.318
=	-8.58 %

where

	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	))
=	394.63	-	13.463	-	( 45.101	-	max(0, 29.853	-	67.048	+	45.101	))
=	343.972

	Invested Capital		(Q: Mar. 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	))
=	364.304	-	11.391	-	( 38.377	-	max(0, 24.558	-	48.807	+	38.377	))
=	328.664

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

Far East Hotels & Entertainment (HKSE:00037) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Far East Hotels & Entertainment's WACC % is 10.91%. Far East Hotels & Entertainment's ROIC % is -8.32% (calculated using TTM income statement data).

Be Aware

Like ROE % and ROA %, ROIC % 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.

Far East Hotels & Entertainment ROIC % Related Terms

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Far East Hotels & Entertainment Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » Far East Hotels & Entertainment Ltd (HKSE:00037) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

200 Gloucester Road, Suite 1902, 19th Floor, The Sun’s Group Centre, Wanchai, Hong Kong, HKG

Website

https://www.tricor.com.hk/webservice/00037

Far East Hotels & Entertainment Ltd is a Hong Kong-based investment holding company. Through its subsidiaries, the company operates under business segments of Hotel operations in Hong Kong; Serviced property letting in Mainland China; Property investment in Hong Kong; Property investment overseas; and Securities investment and trading. The company earns maximum revenue from Hotel operations in Hong Kong. The group's operations are located in Hong Kong, Mainland China, and overseas.

Executives

Chiu Derek	2201 Interest of corporation controlled by you
Lui Yu Kin	2101 Beneficial owner

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