These Return Metrics Don't Make BBMG (HKG:2009) Look Too Strong

When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital employed, that's often how a mature business shows signs of aging. This indicates the company is producing less profit from its investments and its total assets are decreasing. On that note, looking into BBMG (HKG:2009), we weren't too upbeat about how things were going.

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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. To calculate this metric for BBMG, this is the formula:

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

0.0013 = CN¥215m ÷ (CN¥272b - CN¥101b) (Based on the trailing twelve months to June 2025).

So, BBMG has an ROCE of 0.1%. In absolute terms, that's a low return and it also under-performs the Basic Materials industry average of 3.1%.

See our latest analysis for BBMG

In the above chart we have measured BBMG's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for BBMG .

What Can We Tell From BBMG's ROCE Trend?

In terms of BBMG's historical ROCE movements, the trend doesn't inspire confidence. About five years ago, returns on capital were 5.7%, however they're now substantially lower than that as we saw above. Meanwhile, capital employed in the business has stayed roughly the flat over the period. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on BBMG becoming one if things continue as they have.

The Bottom Line On BBMG's ROCE

In summary, it's unfortunate that BBMG is generating lower returns from the same amount of capital. Investors haven't taken kindly to these developments, since the stock has declined 18% from where it was five years ago. That being the case, unless the underlying trends revert to a more positive trajectory, we'd consider looking elsewhere.

BBMG does have some risks though, and we've spotted 3 warning signs for BBMG that you might be interested in.

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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.