HanJung Natural Connectivity System.co.Ltd (KOSDAQ:107640) Is Looking To Continue Growing Its Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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. So when we looked at HanJung Natural Connectivity System.co.Ltd (KOSDAQ:107640) and its trend of ROCE, we really liked what we saw.

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Understanding Return On Capital Employed (ROCE)

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. To calculate this metric for HanJung Natural Connectivity System.co.Ltd, this is the formula:

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

0.079 = ₩9.2b ÷ (₩160b - ₩43b) (Based on the trailing twelve months to March 2025).

Therefore, HanJung Natural Connectivity System.co.Ltd has an ROCE of 7.9%. Even though it's in line with the industry average of 7.9%, it's still a low return by itself.

View our latest analysis for HanJung Natural Connectivity System.co.Ltd

In the above chart we have measured HanJung Natural Connectivity System.co.Ltd's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for HanJung Natural Connectivity System.co.Ltd .

So How Is HanJung Natural Connectivity System.co.Ltd's ROCE Trending?

HanJung Natural Connectivity System.co.Ltd has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be pleased with this because the business was loss-making one year ago but is is now generating 7.9% on its capital. In addition to that, HanJung Natural Connectivity System.co.Ltd is employing 46% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

One more thing to note, HanJung Natural Connectivity System.co.Ltd has decreased current liabilities to 27% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

The Bottom Line On HanJung Natural Connectivity System.co.Ltd's ROCE

In summary, it's great to see that HanJung Natural Connectivity System.co.Ltd has managed to break into profitability and is continuing to reinvest in its business. And a remarkable 456% total return over the last five years tells us that investors are expecting more good things to come in the future. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

One more thing: We've identified 2 warning signs with HanJung Natural Connectivity System.co.Ltd (at least 1 which is concerning) , and understanding them would certainly be useful.

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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.