China Three Gorges Renewables (Group) Co (SHSE:600905) ROIC % : 5.41% (As of Mar. 2024)

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What is China Three Gorges Renewables (Group) Co 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 %. China Three Gorges Renewables (Group) Co's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 5.41%.

As of today (2024-05-03), China Three Gorges Renewables (Group) Co's WACC % is 6.32%. China Three Gorges Renewables (Group) Co's ROIC % is 4.65% (calculated using TTM income statement data). China Three Gorges Renewables (Group) Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Three Gorges Renewables (Group) Co ROIC % Historical Data

The historical data trend for China Three Gorges Renewables (Group) Co'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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China Three Gorges Renewables (Group) Co ROIC % Chart

China Three Gorges Renewables (Group) Co Annual Data

Trend

Dec09

Dec10

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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5.10

4.75

4.97

5.33

4.50

China Three Gorges Renewables (Group) Co Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROIC %	Get a 7-Day Free Trial															5.87	5.51	3.14	4.50	5.41

Competitive Comparison of China Three Gorges Renewables (Group) Co's ROIC %

For the Utilities - Renewable subindustry, China Three Gorges Renewables (Group) Co'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.

China Three Gorges Renewables (Group) Co's ROIC % Distribution in the Utilities - Independent Power Producers Industry

For the Utilities - Independent Power Producers industry and Utilities sector, China Three Gorges Renewables (Group) Co's ROIC % distribution charts can be found below:

* The bar in red indicates where China Three Gorges Renewables (Group) Co's ROIC % falls into.

China Three Gorges Renewables (Group) Co ROIC % Calculation

China Three Gorges Renewables (Group) Co'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 )
=	12726.808 * ( 1 - 8.29% )	/	( (238150.102	+	281158.069)	/ 2 )
=	11671.7556168	/	259654.0855
=	4.50 %

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	))
=	262334.348	-	28481.131	-	( 10652.587	-	max(0, 47191.021	-	42894.136	+	10652.587	))
=	238150.102

	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	))
=	311707.561	-	29817.134	-	( 5099.666	-	max(0, 46740.829	-	47473.187	+	5099.666	))
=	281158.069

China Three Gorges Renewables (Group) Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROIC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	17248.748 * ( 1 - 10.7% )	/	( (281158.069	+	288781.778)	/ 2 )
=	15403.131964	/	284969.9235
=	5.41 %

where

	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	))
=	311707.561	-	29817.134	-	( 5099.666	-	max(0, 46740.829	-	47473.187	+	5099.666	))
=	281158.069

	Invested Capital		(Q: Mar. 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	))
=	324948.529	-	29583.172	-	( 6583.579	-	max(0, 42524.895	-	54197.54	+	6583.579	))
=	288781.778

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

China Three Gorges Renewables (Group) Co (SHSE:600905) 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, China Three Gorges Renewables (Group) Co's WACC % is 6.32%. China Three Gorges Renewables (Group) Co's ROIC % is 4.65% (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.

China Three Gorges Renewables (Group) Co ROIC % Related Terms

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China Three Gorges Renewables (Group) Co (SHSE:600905) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Independent Power Producers » China Three Gorges Renewables (Group) Co Ltd (SHSE:600905) » Definitions » ROIC %

Traded in Other Exchanges

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Address

No. 1, Gongyuan Street, Room 206-23, 2nd Floor, Building 1, Tongzhou District, Beijing, CHN, 101149

Website

https://www.ctgne.com

China Three Gorges Renewables, or CTGR, is one of China's largest renewable energy producers. The firm operates wind farms, photovoltaic power plants, hydro-electric power plants, and energy storage projects. CTGR has a total generation capacity of about 26.5 gigawatts as of the end of 2022. In particular, the firm is also one of the largest offshore wind farm operators in China, with 4.9 GW of installed capacity at the end of 2022, representing about 16% of China's total capacity. Parent company, China Three Gorges, a state-owned enterprise, owns approximately 52.4% of CTGR's issued shares as of the end of 2022.

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