Lee & Man Paper Manufacturing (HKSE:02314) ROIC % : 3.36% (As of Dec. 2023)

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What is Lee & Man Paper Manufacturing ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Lee & Man Paper Manufacturing's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 3.36%.

As of today (2024-05-06), Lee & Man Paper Manufacturing's WACC % is 4.29%. Lee & Man Paper Manufacturing's ROIC % is 2.42% (calculated using TTM income statement data). Lee & Man Paper Manufacturing earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Lee & Man Paper Manufacturing ROIC % Historical Data

The historical data trend for Lee & Man Paper Manufacturing's ROIC % 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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Lee & Man Paper Manufacturing ROIC % Chart

Lee & Man Paper Manufacturing Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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8.32

8.94

7.01

2.34

2.43

Lee & Man Paper Manufacturing Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial															4.95	3.25	1.37	1.43	3.36

Competitive Comparison of Lee & Man Paper Manufacturing's ROIC %

For the Paper & Paper Products subindustry, Lee & Man Paper Manufacturing's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Lee & Man Paper Manufacturing's ROIC % Distribution in the Forest Products Industry

For the Forest Products industry and Basic Materials sector, Lee & Man Paper Manufacturing's ROIC % distribution charts can be found below:

* The bar in red indicates where Lee & Man Paper Manufacturing's ROIC % falls into.

Lee & Man Paper Manufacturing ROIC % Calculation

Lee & Man Paper Manufacturing's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROIC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	1422.148 * ( 1 - 18.3% )	/	( (46527.78	+	49206.096)	/ 2 )
=	1161.894916	/	47866.938
=	2.43 %

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	))
=	50325.685	-	3169.997	-	( 1798.317	-	max(0, 12292.979	-	12920.887	+	1798.317	))
=	46527.78

	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	))
=	54097.321	-	3374.076	-	( 1517.149	-	max(0, 11436.066	-	13141.193	+	1517.149	))
=	49206.096

Lee & Man Paper Manufacturing's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	2017.524 * ( 1 - 18.57% )	/	( (48575.793	+	49206.096)	/ 2 )
=	1642.8697932	/	48890.9445
=	3.36 %

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	))
=	53151.877	-	3844.72	-	( 2230.514	-	max(0, 12446.903	-	13178.267	+	2230.514	))
=	48575.793

	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	))
=	54097.321	-	3374.076	-	( 1517.149	-	max(0, 11436.066	-	13141.193	+	1517.149	))
=	49206.096

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

Lee & Man Paper Manufacturing (HKSE:02314) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Lee & Man Paper Manufacturing's WACC % is 4.29%. Lee & Man Paper Manufacturing's ROIC % is 2.42% (calculated using TTM income statement data).

Be Aware

Like ROE % and ROA %, ROIC % 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.

Lee & Man Paper Manufacturing ROIC % Related Terms

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Lee & Man Paper Manufacturing (HKSE:02314) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Forest Products » Lee & Man Paper Manufacturing Ltd (HKSE:02314) » Definitions » ROIC %

Traded in Other Exchanges

LMPMY:USA LMPMF:USA LMP:Germany

Address

169 Electric Road, 39/F, Lee & Man Commercial Center, North Point, Hong Kong, HKG

Website

https://www.leemanpaper.com

Lee & Man Paper Manufacturing Ltd is an investment holding company engaged in the manufacturing and trading of paper and pulp. Its segments are Packaging Paper, Pulp, and Tissue paper. The majority of the revenue is generated from the packaging paper segment that covers the production of kraft liner board, test liner board, coated duplex board, white top liner board, and strength corrugating medium. The People's Republic of China accounts for the majority of the revenue.

Lee & Man Paper Manufacturing (HKSE:02314) Headlines

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