China Fortune Investments (Holding) (STU:NLY5) ROIC % : -5.57% (As of Jun. 2021)

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What is China Fortune Investments (Holding) 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 %. China Fortune Investments (Holding)'s annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2021 was -5.57%.

As of today (2024-05-25), China Fortune Investments (Holding)'s WACC % is 9.10%. China Fortune Investments (Holding)'s ROIC % is -30.80% (calculated using TTM income statement data). China Fortune Investments (Holding) earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Fortune Investments (Holding) ROIC % Historical Data

The historical data trend for China Fortune Investments (Holding)'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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China Fortune Investments (Holding) ROIC % Chart

China Fortune Investments (Holding) Annual Data

Trend

Dec11

Dec12

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

ROIC %

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10.52

0.37

1.02

-12.47

-32.69

China Fortune Investments (Holding) Quarterly Data
	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21
ROIC %	Get a 7-Day Free Trial															-5.40	-6.42	-120.86	-7.06	-5.57

Competitive Comparison of China Fortune Investments (Holding)'s ROIC %

For the Specialty Retail subindustry, China Fortune Investments (Holding)'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 Fortune Investments (Holding)'s ROIC % Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, China Fortune Investments (Holding)'s ROIC % distribution charts can be found below:

* The bar in red indicates where China Fortune Investments (Holding)'s ROIC % falls into.

China Fortune Investments (Holding) ROIC % Calculation

China Fortune Investments (Holding)'s annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2020 is calculated as:

	ROIC % (A: Dec. 2020 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2019 )	+	Invested Capital (A: Dec. 2020 ))	/ count )
=	-5.088 * ( 1 - 0.19% )	/	( (17.539	+	13.533)	/ 2 )
=	-5.0783328	/	15.536
=	-32.69 %

where

	Invested Capital		(A: Dec. 2019 )
=	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	))
=	18.873	-	2.622	-	( 1.543	-	max(0, 16.445	-	15.157	+	1.543	))
=	17.539

	Invested Capital		(A: Dec. 2020 )
=	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	))
=	17.194	-	1.555	-	( 2.106	-	max(0, 3.346	-	17.068	+	2.106	))
=	13.533

China Fortune Investments (Holding)'s annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2021 is calculated as:

	ROIC % (Q: Jun. 2021 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2021 )	+	Invested Capital (Q: Jun. 2021 ))	/ count )
=	-0.764 * ( 1 - 0% )	/	( (0	+	13.718)	/ 1 )
=	-0.764	/	13.718
=	-5.57 %

where

	Invested Capital		(Q: Mar. 2021 )
=	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	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Jun. 2021 )
=	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	))
=	14.838	-	0.932	-	( 0.188	-	max(0, 1.296	-	14.811	+	0.188	))
=	13.718

Note: The Operating Income data used here is four times the quarterly (Jun. 2021) data.

China Fortune Investments (Holding) (STU:NLY5) 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 Fortune Investments (Holding)'s WACC % is 9.10%. China Fortune Investments (Holding)'s ROIC % is -30.80% (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.

China Fortune Investments (Holding) ROIC % Related Terms

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China Fortune Investments (Holding) (STU:NLY5) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » China Fortune Investments (Holding) Ltd (STU:NLY5) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

168-200 Connaught Road Central, Shops 212-213, 2nd Floor, Shun tak Centre, Sheung Wan, Hong Kong, HKG

Website

https://www.cfihk.com.hk

China Fortune Investments (Holding) Ltd is an investment holding company, engages in the wholesale and retail of wines and cigars and golf products in Hong Kong. The company offers red wines, white wines, champagnes, whiskeys and other liquors and spirits; and golf-related products, such as golf clubs, balls, shoes, gloves, clothing and other accessories of various brands. It operates through the following segments: Sale of Wine and Cigar; Sale of Golf Products; Sale of Watch and Jewellery; Provision of Money Lending Services, and Others. The firm's Wine and Cigar segment generate major revenue for the firm.

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