ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. China Lesso Group Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 8.15%.
As of today (2024-05-03), China Lesso Group Holdings's WACC % is 7.23%. China Lesso Group Holdings's ROIC % is 8.92% (calculated using TTM income statement data).
China Lesso Group Holdings 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.
* 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.
Competitive Comparison of China Lesso Group Holdings's ROIC %
For the Building Products & Equipment subindustry, China Lesso Group Holdings'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.
China Lesso Group Holdings's ROIC % Distribution in the Construction Industry
For the Construction industry and Industrials sector, China Lesso Group Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where China Lesso Group Holdings's ROIC % falls into.
China Lesso Group Holdings ROIC % Calculation
China Lesso Group Holdings's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2023) 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.
China Lesso Group Holdings (HKSE:02128) 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, China Lesso Group Holdings's WACC % is 7.23%. China Lesso Group Holdings's ROIC % is 8.92% (calculated using TTM income statement data).
China Lesso Group Holdings 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.
China Lesso Group Holdings 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 %, 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.
China Lesso Group Holdings ROIC % Related Terms
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China Lesso Group Holdings (HKSE:02128) Business Description
China Lesso Group Holdings Ltd is engaged in the manufacturing and selling of piping and building materials in Mainland China. The company provides high-quality products and services such as plastic piping, building materials, and home improvement, new energy, environmental protection, and operates a supply chain service platform. The company has eight operating segments based on the geographical areas which include Southern China, Southwestern China, Central China, Eastern China, Northern China, Northwestern China, Northeastern China, and Outside China, all of which include various Chinese provinces.
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