Stock Analysis
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Returns On Capital Are Showing Encouraging Signs At JCHX Mining ManagementLtd (SHSE:603979)
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at JCHX Mining ManagementLtd (SHSE:603979) and its trend of ROCE, we really liked what we saw.
Understanding Return On Capital Employed (ROCE)
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on JCHX Mining ManagementLtd is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.19 = CN¥2.1b ÷ (CN¥16b - CN¥4.9b) (Based on the trailing twelve months to September 2024).
Thus, JCHX Mining ManagementLtd has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Metals and Mining industry average of 6.7% it's much better.
View our latest analysis for JCHX Mining ManagementLtd
In the above chart we have measured JCHX Mining ManagementLtd's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering JCHX Mining ManagementLtd for free.
What Does the ROCE Trend For JCHX Mining ManagementLtd Tell Us?
Investors would be pleased with what's happening at JCHX Mining ManagementLtd. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 19%. The amount of capital employed has increased too, by 130%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.
Our Take On JCHX Mining ManagementLtd's ROCE
To sum it up, JCHX Mining ManagementLtd has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 357% to shareholders over the last five years, it looks like investors are recognizing these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
On a separate note, we've found 1 warning sign for JCHX Mining ManagementLtd you'll probably want to know about.
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About SHSE:603979
JCHX Mining ManagementLtd
Engages in mine engineering, development, and construction activities in the People’s Republic of China and internationally.