C&G Hi Tech (KOSDAQ:264660) Has Some Way To Go To Become A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. 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, when we ran our eye over C&G Hi Tech's (KOSDAQ:264660) trend of ROCE, we liked what we saw.

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What Is 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 C&G Hi Tech, this is the formula:

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

0.16 = ₩22b ÷ (₩181b - ₩46b) (Based on the trailing twelve months to September 2025).

Thus, C&G Hi Tech has an ROCE of 16%. On its own, that's a standard return, however it's much better than the 7.3% generated by the Semiconductor industry.

See our latest analysis for C&G Hi Tech

Historical performance is a great place to start when researching a stock so above you can see the gauge for C&G Hi Tech's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of C&G Hi Tech.

So How Is C&G Hi Tech's ROCE Trending?

While the current returns on capital are decent, they haven't changed much. The company has employed 35% more capital in the last three years, and the returns on that capital have remained stable at 16%. 16% is a pretty standard return, and it provides some comfort knowing that C&G Hi Tech has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.

On a side note, C&G Hi Tech has done well to reduce current liabilities to 25% of total assets over the last three years. Effectively suppliers now fund less of the business, which can lower some elements of risk.

The Bottom Line On C&G Hi Tech's ROCE

The main thing to remember is that C&G Hi Tech has proven its ability to continually reinvest at respectable rates of return. Therefore it's no surprise that shareholders have earned a respectable 53% return if they held over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

On a separate note, we've found 1 warning sign for C&G Hi Tech you'll probably want to know about.

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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.