San Miguel Brewery Hong Kong (HKG:236) Might Have The Makings Of A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at San Miguel Brewery Hong Kong (HKG:236) so let's look a bit deeper.

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

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 San Miguel Brewery Hong Kong is:

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

0.11 = HK$80m ÷ (HK$798m - HK$93m) (Based on the trailing twelve months to June 2025).

Therefore, San Miguel Brewery Hong Kong has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 13% generated by the Beverage industry.

Check out our latest analysis for San Miguel Brewery Hong Kong

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how San Miguel Brewery Hong Kong has performed in the past in other metrics, you can view this free graph of San Miguel Brewery Hong Kong's past earnings, revenue and cash flow.

What Can We Tell From San Miguel Brewery Hong Kong's ROCE Trend?

San Miguel Brewery Hong Kong has not disappointed with their ROCE growth. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 420% over the last five years. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

The Bottom Line

To sum it up, San Miguel Brewery Hong Kong is collecting higher returns from the same amount of capital, and that's impressive. And with a respectable 88% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it's worth looking further into this stock because if San Miguel Brewery Hong Kong can keep these trends up, it could have a bright future ahead.

Like most companies, San Miguel Brewery Hong Kong does come with some risks, and we've found 2 warning signs that you should be aware of.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.