Returns At BaWang International (Group) Holding (HKG:1338) Are On The Way Up

To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So on that note, BaWang International (Group) Holding (HKG:1338) looks quite promising in regards to its trends of return on capital.

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Understanding Return On Capital Employed (ROCE)

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 BaWang International (Group) Holding:

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

0.017 = CN¥2.5m ÷ (CN¥207m - CN¥64m) (Based on the trailing twelve months to June 2025).

So, BaWang International (Group) Holding has an ROCE of 1.7%. Ultimately, that's a low return and it under-performs the Personal Products industry average of 13%.

See our latest analysis for BaWang International (Group) Holding

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

So How Is BaWang International (Group) Holding's ROCE Trending?

BaWang International (Group) Holding has broken into the black (profitability) and we're sure it's a sight for sore eyes. While the business was unprofitable in the past, it's now turned things around and is earning 1.7% on its capital. While returns have increased, the amount of capital employed by BaWang International (Group) Holding 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. After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.

What We Can Learn From BaWang International (Group) Holding's ROCE

To sum it up, BaWang International (Group) Holding is collecting higher returns from the same amount of capital, and that's impressive. Given the stock has declined 56% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.

On a separate note, we've found 2 warning signs for BaWang International (Group) Holding you'll probably want to know about.

While BaWang International (Group) Holding isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.