The Return Trends At ShinWon (KRX:009270) Look Promising

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in ShinWon's (KRX:009270) returns on capital, so let's have a look.

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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. Analysts use this formula to calculate it for ShinWon:

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

0.047 = ₩18b ÷ (₩669b - ₩291b) (Based on the trailing twelve months to June 2025).

Therefore, ShinWon has an ROCE of 4.7%. Ultimately, that's a low return and it under-performs the Luxury industry average of 6.7%.

View our latest analysis for ShinWon

Historical performance is a great place to start when researching a stock so above you can see the gauge for ShinWon's ROCE against it's prior returns. If you're interested in investigating ShinWon's past further, check out this free graph covering ShinWon's past earnings, revenue and cash flow.

What Does the ROCE Trend For ShinWon Tell Us?

We're delighted to see that ShinWon is reaping rewards from its investments and is now generating some pre-tax profits. About five years ago the company was generating losses but things have turned around because it's now earning 4.7% on its capital. In addition to that, ShinWon is employing 59% 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.

Another thing to note, ShinWon has a high ratio of current liabilities to total assets of 44%. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

In Conclusion...

To the delight of most shareholders, ShinWon has now broken into profitability. Since the stock has returned a solid 69% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. In light of that, we think it's worth looking further into this stock because if ShinWon can keep these trends up, it could have a bright future ahead.

On a final note, we've found 2 warning signs for ShinWon that we think you should be aware of.

While ShinWon may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.