Towngas Smart Energy Co (HKSE:01083) ROC % : 2.54% (As of Dec. 2023)

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What is Towngas Smart Energy 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 %. Towngas Smart Energy Co's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 2.54%.

As of today (2024-06-09), Towngas Smart Energy Co's WACC % is 5.28%. Towngas Smart Energy Co's ROC % is 2.55% (calculated using TTM income statement data). Towngas Smart Energy Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Towngas Smart Energy Co ROC % Historical Data

The historical data trend for Towngas Smart Energy 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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Towngas Smart Energy Co ROC % Chart

Towngas Smart Energy Co Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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3.52

3.21

2.89

2.10

2.49

Towngas Smart Energy Co Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial															2.60	2.60	0.56	2.57	2.54

Towngas Smart Energy Co ROC % Calculation

Towngas Smart Energy Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	1701.582 * ( 1 - 17.53% )	/	( (57854.75	+	54654.877)	/ 2 )
=	1403.2946754	/	56254.8135
=	2.49 %

where

	Invested Capital		(A: Dec. 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	))
=	52943.976	-	4681.727	-	( 4076.39	-	max(0, 17661.955	-	8069.454	+	4076.39	))
=	57854.75

	Invested Capital		(A: Dec. 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	))
=	53464.703	-	5191.253	-	( 4101.864	-	max(0, 14437.704	-	8056.277	+	4101.864	))
=	54654.877

Towngas Smart Energy Co's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	1701.874 * ( 1 - 19.62% )	/	( (52869.566	+	54654.877)	/ 2 )
=	1367.9663212	/	53762.2215
=	2.54 %

where

	Invested Capital		(Q: Jun. 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	))
=	54634.878	-	5243.301	-	( 4252.292	-	max(0, 16565.22	-	13087.231	+	4252.292	))
=	52869.566

	Invested Capital		(Q: Dec. 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	))
=	53464.703	-	5191.253	-	( 4101.864	-	max(0, 14437.704	-	8056.277	+	4101.864	))
=	54654.877

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Towngas Smart Energy Co (HKSE:01083) 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, Towngas Smart Energy Co's WACC % is 5.28%. Towngas Smart Energy Co's ROC % is 2.55% (calculated using TTM income statement data). Towngas Smart Energy 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.

Towngas Smart Energy Co ROC % Related Terms

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Towngas Smart Energy Co (HKSE:01083) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » Towngas Smart Energy Co Ltd (HKSE:01083) » Definitions » ROC %

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PGJ:Germany

Address

363 Java Road, North Point, 23rd Floor, Hong Kong, HKG

Website

https://www.towngaschina.com

Towngas Smart Energy Co Ltd is an investment holding company engaged in the sales of pipe gas and other types of energy, the construction of gas pipelines, the sale of gas appliances and related products, and other value-added services in the People's Republic of China. It has three operating segments; Sales of piped gas and energy including Sales of piped gas (mainly natural gas) and other types of energy, Gas connection include Construction of gas pipeline networks under gas connection contracts, and Extended business including Sales of gas-related household appliances and related products, and other related value-added services.

Executives

Henderson Development Limited	2201 Interest of corporation controlled by you
Planwise Properties Limited	2101 Beneficial owner
Towngas Investment Company Limited	2201 Interest of corporation controlled by you
Lee Ka Kit	2501 Other
Lee Shau Kee	2201 Interest of corporation controlled by you
Faxson Investment Limited	2201 Interest of corporation controlled by you
Towngas International Company Limited	2201 Interest of corporation controlled by you
Hong Kong & China Gas (china) Limited	2101 Beneficial owner
The Hong Kong And China Gas Company Limited	2201 Interest of corporation controlled by you
Rimmer (cayman) Limited	2301 Trustee
Riddick (cayman) Limited	2301 Trustee
Hopkins (cayman) Limited	2201 Interest of corporation controlled by you
Henderson Land Development Company Limited	2201 Interest of corporation controlled by you
Industrial And Commercial Bank Of China Limited	2201 Interest of corporation controlled by you
Tang Kok Yew	2201 Interest of corporation controlled by you

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