EPI (Holdings) (HKG:689) Shareholders Will Want The ROCE Trajectory To Continue

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So on that note, EPI (Holdings) (HKG:689) looks quite promising in regards to its trends of return on capital.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for EPI (Holdings):

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

0.038 = HK$17m ÷ (HK$472m - HK$11m) (Based on the trailing twelve months to June 2025).

So, EPI (Holdings) has an ROCE of 3.8%. In absolute terms, that's a low return and it also under-performs the Oil and Gas industry average of 6.2%.

Check out our latest analysis for EPI (Holdings)

Historical performance is a great place to start when researching a stock so above you can see the gauge for EPI (Holdings)'s ROCE against it's prior returns. If you'd like to look at how EPI (Holdings) has performed in the past in other metrics, you can view this free graph of EPI (Holdings)'s past earnings, revenue and cash flow.

So How Is EPI (Holdings)'s ROCE Trending?

We're delighted to see that EPI (Holdings) is reaping rewards from its investments and has now broken into profitability. The company now earns 3.8% on its capital, because five years ago it was incurring losses. While returns have increased, the amount of capital employed by EPI (Holdings) has remained flat over the period. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

The Key Takeaway

In summary, we're delighted to see that EPI (Holdings) has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And since the stock has fallen 67% over the last five years, there might be an opportunity here. So researching this company further and determining whether or not these trends will continue seems justified.

If you want to know some of the risks facing EPI (Holdings) we've found 2 warning signs (1 can't be ignored!) that you should be aware of before investing here.

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.