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AIA Group (HKSE:01299) ROIC % : 2.57% (As of Jun. 2024)


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What is AIA Group 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 %. AIA Group's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 2.57%.

As of today (2024-12-14), AIA Group's WACC % is 9.71%. AIA Group's ROIC % is 1.93% (calculated using TTM income statement data). AIA Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.


AIA Group ROIC % Historical Data

The historical data trend for AIA Group'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.

* Premium members only.

AIA Group ROIC % Chart

AIA Group Annual Data
Trend Nov14 Nov15 Nov16 Nov17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 2.51 2.03 2.39 1.23 1.57

AIA Group Semi-Annual Data
Nov14 May15 Nov15 May16 Nov16 May17 Nov17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23 Dec23 Jun24
ROIC % 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 1.09 1.43 1.85 1.28 2.57

Competitive Comparison of AIA Group's ROIC %

For the Insurance - Life subindustry, AIA Group'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.


AIA Group's ROIC % Distribution in the Insurance Industry

For the Insurance industry and Financial Services sector, AIA Group's ROIC % distribution charts can be found below:

* The bar in red indicates where AIA Group's ROIC % falls into.



AIA Group ROIC % Calculation

AIA Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROIC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=39431.68 * ( 1 - 17.16% )/( (2029934.83335 + 2122161.2492)/ 2 )
=32665.203712/2076048.041275
=1.57 %

where

Invested Capital(A: Dec. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=2105724.924 - 3635.782 - ( 62438.908 - 5% * -194308.013 )
=2029934.83335

Invested Capital(A: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=2236094.126 - 31746.837 - ( 90007.945 - 5% * 156438.104 )
=2122161.2492

AIA Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2024 is calculated as:

ROIC % (Q: Jun. 2024 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2023 ) + Invested Capital (Q: Jun. 2024 ))/ count )
=64120.1 * ( 1 - 13.59% )/( (2117801.81885 + 2186919.493)/ 2 )
=55406.17841/2152360.655925
=2.57 %

where

Invested Capital(Q: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=2236094.126 - 31746.837 - ( 90007.945 - 5% * 69249.497 )
=2117801.81885

Invested Capital(Q: Jun. 2024 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=2259003.45 - 3084.95 - ( 72726.72 - 5% * 74554.26 )
=2186919.493

Note: The EBIT data used here is two times the semi-annual (Jun. 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.


AIA Group  (HKSE:01299) 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, AIA Group's WACC % is 9.71%. AIA Group's ROIC % is 1.93% (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.


AIA Group ROIC % Related Terms

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AIA Group Business Description

Traded in Other Exchanges
Address
No. 1 Connaught Road Central, 35th Floor, AIA Central, Hong Kong, HKG
Headquartered in Hong Kong, AIA is one of the largest pan-Asian insurance providers with a wide range of products including retirement savings plans, life insurance, and accident and health insurance. It was previously part of American International Group and went for a separate listing in Hong Kong in 2010. The firm also provides employee benefits, credit life, and pension services to corporate clients. AIA is present in 18 markets and serves the holders of more than 30 million individual policies and over 16 million participating members of group insurance schemes.
Executives
The Bank Of New York Mellon Corporation 2201 Interest of corporation controlled by you
Blackrock, Inc. 2201 Interest of corporation controlled by you
Citigroup Inc. 2502 Approved lending agent
Jpmorgan Chase & Co. 2502 Approved lending agent
The Capital Group Companies, Inc. 2201 Interest of corporation controlled by you
Brown Brothers Harriman & Co. 2502 Approved lending agent

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