Chong Hong Construction Co (TPE:5534) ROIC % : 4.02% (As of Jun. 2024)

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What is Chong Hong Construction Co 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 %. Chong Hong Construction Co's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 4.02%.

As of today (2024-09-21), Chong Hong Construction Co's WACC % is 5.90%. Chong Hong Construction Co's ROIC % is 5.07% (calculated using TTM income statement data). Chong Hong Construction Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Chong Hong Construction Co ROIC % Historical Data

The historical data trend for Chong Hong Construction Co'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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Chong Hong Construction Co ROIC % Chart

Chong Hong Construction Co Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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11.34

8.05

3.47

6.69

4.24

Chong Hong Construction Co Quarterly Data
	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24
ROIC %	Get a 7-Day Free Trial															0.03	3.02	12.17	0.83	4.02

Competitive Comparison of Chong Hong Construction Co's ROIC %

For the Real Estate - Development subindustry, Chong Hong Construction Co'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.

Chong Hong Construction Co's ROIC % Distribution in the Real Estate Industry

For the Real Estate industry and Real Estate sector, Chong Hong Construction Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Chong Hong Construction Co's ROIC % falls into.

Chong Hong Construction Co ROIC % Calculation

Chong Hong Construction Co'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
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	2289.501 * ( 1 - 21.99% )	/	( (42743.977	+	41534.313)	/ 2 )
=	1786.0397301	/	42139.145
=	4.24 %

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	))
=	46508.7	-	2238.196	-	( 1526.527	-	max(0, 26554.264	-	46096.319	+	1526.527	))
=	42743.977

	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	))
=	45634.187	-	2255.236	-	( 1844.638	-	max(0, 25416.023	-	45139.623	+	1844.638	))
=	41534.313

Chong Hong Construction Co'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
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2024 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	2068.436 * ( 1 - 19.66% )	/	( (41705.475	+	40997.666)	/ 2 )
=	1661.7814824	/	41351.5705
=	4.02 %

where

	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	))
=	45466.307	-	2138.063	-	( 1622.769	-	max(0, 25168.287	-	45005.562	+	1622.769	))
=	41705.475

	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	))
=	47035.892	-	3381.954	-	( 2656.272	-	max(0, 27974.473	-	46554.647	+	2656.272	))
=	40997.666

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

Chong Hong Construction Co (TPE:5534) 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, Chong Hong Construction Co's WACC % is 5.90%. Chong Hong Construction Co's ROIC % is 5.07% (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.

Chong Hong Construction Co ROIC % Related Terms

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Chong Hong Construction Co Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » Chong Hong Construction Co Ltd (TPE:5534) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

No. 30, Beiping East Road, 11th Floor, Zhongzheng District, Taipei, TWN, 100

Website

http://www.chonghong.com.tw

Chong Hong Construction Co Ltd primarily operates in the development, sale, and leasing of residential and commercial property in Taiwan. The company derives revenue from the proceeds of lands, properties, contract fees, and rental income. The revenue from lands represents more than half of group income, followed by property revenue. The company operates through two segments. The Building segment is engaged in the construction of commercial buildings, public housings and the lease of factories. The construction segment is engaged in building and construction projects.

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