Lai Sun Development Co (HKSE:00488) ROC % : -0.23% (As of Jan. 2024)

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What is Lai Sun Development Co ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Lai Sun Development Co's annualized return on capital (ROC %) for the quarter that ended in Jan. 2024 was -0.23%.

As of today (2024-05-31), Lai Sun Development Co's WACC % is 4.21%. Lai Sun Development Co's ROC % is -2.42% (calculated using TTM income statement data). Lai Sun Development Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Lai Sun Development Co ROC % Historical Data

The historical data trend for Lai Sun Development Co's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Lai Sun Development Co ROC % Chart

Lai Sun Development Co Annual Data

Trend

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Jul23

ROC %

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-0.02

-1.59

-2.02

-2.68

-2.58

Lai Sun Development Co Semi-Annual Data
	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23	Jan24
ROC %	Get a 7-Day Free Trial															-1.23	-4.00	-0.82	-4.30	-0.23

Lai Sun Development Co ROC % Calculation

Lai Sun Development Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Jul. 2023 is calculated as:

	ROC % (A: Jul. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jul. 2022 )	+	Invested Capital (A: Jul. 2023 ))	/ count )
=	-1846.856 * ( 1 - 1.7% )	/	( (73164.887	+	67754.927)	/ 2 )
=	-1815.459448	/	70459.907
=	-2.58 %

where

	Invested Capital		(A: Jul. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	80895.634	-	2553.853	-	( 5176.894	-	max(0, 12498.726	-	20760.857	+	5176.894	))
=	73164.887

	Invested Capital		(A: Jul. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	73970.016	-	2440.874	-	( 3774.215	-	max(0, 11120.774	-	16410.094	+	3774.215	))
=	67754.927

Lai Sun Development Co's annualized Return on Capital (ROC %) for the quarter that ended in Jan. 2024 is calculated as:

	ROC % (Q: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2023 )	+	Invested Capital (Q: Jan. 2024 ))	/ count )
=	-145.952 * ( 1 - -5.7% )	/	( (67754.927	+	65059.941)	/ 2 )
=	-154.271264	/	66407.434
=	-0.23 %

where

	Invested Capital		(Q: Jul. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	73970.016	-	2440.874	-	( 3774.215	-	max(0, 11120.774	-	16410.094	+	3774.215	))
=	67754.927

	Invested Capital		(Q: Jan. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	71492.943	-	3335.84	-	( 3097.162	-	max(0, 6748.763	-	15494.156	+	3097.162	))
=	65059.941

Note: The Operating Income data used here is two times the semi-annual (Jan. 2024) data.

Lai Sun Development Co (HKSE:00488) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Lai Sun Development Co's WACC % is 4.21%. Lai Sun Development Co's ROC % is -2.42% (calculated using TTM income statement data). Lai Sun Development Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Lai Sun Development Co ROC % Related Terms

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Lai Sun Development Co (HKSE:00488) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » Real Estate » Lai Sun Development Co Ltd (HKSE:00488) » Definitions » ROC %

Traded in Other Exchanges

LVSDF:USA

Address

680 Cheung Sha Wan Road, 11th Floor, Lai Sun Commercial Centre, Kowloon, Hong Kong, HKG

Website

https://www.laisun.com

Lai Sun Development Co Ltd is an investment holding company. The company's operating segment includes property development and sales; property investment; hotel operation; restaurant operation; media and entertainment; film and TV programs; cinema operation; theme park operation and others. The property development and sales segment is engaged in property development and the sale of properties. Geographically, it derives a majority of its revenue from Hong Kong, Mainland China and Macau.

Executives

Lai Sun Garment (international) Limited	2201 Interest of corporation controlled by you
Lam Kin Ngok Peter	2201 Interest of corporation controlled by you
Yu Cheuk Yi	2103 Interests held jointly with another person
Yu Siu Yuk	2103 Interests held jointly with another person
Argyle Street Management Holdings Limited	2201 Interest of corporation controlled by you
Argyle Street Management Limited	2102 Investment manager
Asm Connaught House (master) Fund Iii Lp	2201 Interest of corporation controlled by you
Asm Connaught House General Partner Iii Limited	2102 Investment manager
Chan Kin	2201 Interest of corporation controlled by you
Haitong International Holdings Limited	2201 Interest of corporation controlled by you
Haitong International Securities Company Limited	2105 Underwriter
Haitong International Securities Group Limited	2201 Interest of corporation controlled by you
Haitong Securities Co., Ltd.	2201 Interest of corporation controlled by you
Jinlong Road Limited	2101 Beneficial owner
Tanah Abang Limited	2201 Interest of corporation controlled by you

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