Chow Sang Sang Holdings International (HKG:116) Shareholders Will Want The ROCE Trajectory To Continue

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Speaking of which, we noticed some great changes in Chow Sang Sang Holdings International's (HKG:116) returns on capital, so let's have a look.

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Return On Capital Employed (ROCE): What Is It?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Chow Sang Sang Holdings International:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.11 = HK$1.6b ÷ (HK$21b - HK$6.3b) (Based on the trailing twelve months to June 2025).

Thus, Chow Sang Sang Holdings International has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 12% generated by the Luxury industry.

See our latest analysis for Chow Sang Sang Holdings International

Above you can see how the current ROCE for Chow Sang Sang Holdings International compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Chow Sang Sang Holdings International .

What The Trend Of ROCE Can Tell Us

The trends we've noticed at Chow Sang Sang Holdings International are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 11%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 22%. So we're very much inspired by what we're seeing at Chow Sang Sang Holdings International thanks to its ability to profitably reinvest capital.

Our Take On Chow Sang Sang Holdings International's ROCE

To sum it up, Chow Sang Sang Holdings International 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 116% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

Like most companies, Chow Sang Sang Holdings International does come with some risks, and we've found 2 warning signs that you should be aware of.

While Chow Sang Sang Holdings International may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.