Returns Are Gaining Momentum At OKins ElectronicsLtd (KOSDAQ:080580)

What are the early trends we should look for to identify a stock that could multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. So when we looked at OKins ElectronicsLtd (KOSDAQ:080580) and its trend of ROCE, we really liked what we saw.

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

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for OKins ElectronicsLtd:

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

0.10 = ₩5.4b ÷ (₩97b - ₩46b) (Based on the trailing twelve months to June 2025).

Thus, OKins ElectronicsLtd has an ROCE of 10%. On its own, that's a standard return, however it's much better than the 7.5% generated by the Semiconductor industry.

View our latest analysis for OKins ElectronicsLtd

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're interested in investigating OKins ElectronicsLtd's past further, check out this free graph covering OKins ElectronicsLtd's past earnings, revenue and cash flow.

What Can We Tell From OKins ElectronicsLtd's ROCE Trend?

We like the trends that we're seeing from OKins ElectronicsLtd. Over the last five years, returns on capital employed have risen substantially to 10%. The amount of capital employed has increased too, by 62%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

On a side note, OKins ElectronicsLtd's current liabilities are still rather high at 47% of total assets. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

Our Take On OKins ElectronicsLtd's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what OKins ElectronicsLtd has. Investors may not be impressed by the favorable underlying trends yet because over the last five years the stock has only returned 8.2% to shareholders. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.

OKins ElectronicsLtd does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

While OKins ElectronicsLtd 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.