Putian Communication Group (HKSE:01720) ROC % : 3.12% (As of Dec. 2023)

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What is Putian Communication Group ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Putian Communication Group's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 3.12%.

As of today (2024-06-13), Putian Communication Group's WACC % is 5.17%. Putian Communication Group's ROC % is 2.45% (calculated using TTM income statement data). Putian Communication Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Putian Communication Group ROC % Historical Data

The historical data trend for Putian Communication Group's ROC % 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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Putian Communication Group ROC % Chart

Putian Communication Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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12.82

5.03

5.86

4.19

2.49

Putian Communication Group Semi-Annual Data
	Dec14	Dec15	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial												6.56	2.05	6.28	2.38	3.12

Putian Communication Group ROC % Calculation

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

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	26.957 * ( 1 - 5.03% )	/	( (1000.398	+	1052.443)	/ 2 )
=	25.6010629	/	1026.4205
=	2.49 %

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	))
=	1319.489	-	241.603	-	( 77.488	-	max(0, 536.778	-	746.497	+	77.488	))
=	1000.398

	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	))
=	1274.517	-	192.235	-	( 29.839	-	max(0, 513.024	-	781.318	+	29.839	))
=	1052.443

Putian Communication Group's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	21.182 * ( 1 - -57.19% )	/	( (1080.778	+	1052.443)	/ 2 )
=	33.2959858	/	1066.6105
=	3.12 %

where

	Invested Capital		(Q: Jun. 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	))
=	1327.391	-	208.269	-	( 38.344	-	max(0, 564.513	-	785.82	+	38.344	))
=	1080.778

	Invested Capital		(Q: 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	))
=	1274.517	-	192.235	-	( 29.839	-	max(0, 513.024	-	781.318	+	29.839	))
=	1052.443

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Putian Communication Group (HKSE:01720) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, Putian Communication Group's WACC % is 5.17%. Putian Communication Group's ROC % is 2.45% (calculated using TTM income statement data). Putian Communication Group 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 %, ROC % 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.

Putian Communication Group ROC % Related Terms

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Putian Communication Group (HKSE:01720) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Putian Communication Group Ltd (HKSE:01720) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

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Address

No. 8899 ChangDong Avenue, Hi-tech Development Zone, Jiangxi Province, Nanchang, CHN

Website

http://www.potel-group.com

Putian Communication Group Ltd, along with its subsidiaries, is a communication cable manufacturer and structured cabling system product provider. The company's products include optical Fiber, Optical cable, digital communication cables, security cables, panels, jumpers, cabinet chassis, and others. The operating segments of the group are Optical fibers and Optical fiber cables, Communication copper cables, and Structured cabling system products. It generates maximum revenue from the Communication copper cables segment. The group's revenue is derived from the PRC.

Executives

Arcenciel Capital Co., Ltd	2101 Beneficial owner
Wang Qiuping	2201 Interest of corporation controlled by you
Point Stone Capital Co., Ltd.	2101 Beneficial owner
Zhao Xiaobao	2201 Interest of corporation controlled by you
Zhong Hang Zi Ben Guo Ji Kong Gu You Xian Gong Si	2106 Person having a security interest in shares
Zhong Hang Zi Ben Kong Gu Gu Fen You Xian Gong Si	2201 Interest of corporation controlled by you

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