Is Chengdu Xingrong Environment Co., Ltd. (SZSE:000598) A High Quality Stock To Own?
Is Chengdu Xingrong Environment Co., Ltd. (SZSE:000598) A High Quality Stock To Own?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Chengdu Xingrong Environment Co., Ltd. (SZSE:000598).
尽管一些投资者已经精通财务指标(帽子提示),但本文适用于那些想了解股本回报率(ROE)及其重要性的人。通过边干边学的方式,我们将研究投资回报率,以更好地了解成都兴荣环境股份有限公司(SZSE: 000598)。
ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
ROE或股本回报率是评估公司如何有效地从股东那里获得的投资中获得回报的有用工具。简而言之,它用于评估公司相对于其股权资本的盈利能力。
How Do You Calculate Return On Equity?
你如何计算股本回报率?
Return on equity can be calculated by using the formula:
股本回报率可以使用以下公式计算:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
股本回报率 = 净利润(来自持续经营业务)÷ 股东权益
So, based on the above formula, the ROE for Chengdu Xingrong Environment is:
因此,根据上述公式,成都兴荣环境的投资回报率为:
11% = CN¥2.0b ÷ CN¥18b (Based on the trailing twelve months to March 2024).
11% = 20元人民币 ÷ 180元人民币(基于截至2024年3月的过去十二个月)。
The 'return' is the yearly profit. One way to conceptualize this is that for each CN¥1 of shareholders' capital it has, the company made CN¥0.11 in profit.
“回报” 是每年的利润。对此进行概念化的一种方法是,该公司每拥有1元人民币的股本即可获得0.11元人民币的利润。
Does Chengdu Xingrong Environment Have A Good ROE?
成都兴荣环境的投资回报率好吗?
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. As is clear from the image below, Chengdu Xingrong Environment has a better ROE than the average (7.2%) in the Water Utilities industry.
确定公司股本回报率是否不错的一种简单方法是将其与该行业的平均水平进行比较。重要的是,这远非一个完美的衡量标准,因为各公司在相同的行业分类中差异很大。如下图所示,成都兴荣环境的投资回报率高于水务行业的平均水平(7.2%)。
![1724457235070](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240824/42820881-0-bd59d345eb0fc65f21efd71b31792460.webp/bigjpg)
That's what we like to see. Bear in mind, a high ROE doesn't always mean superior financial performance. Especially when a firm uses high levels of debt to finance its debt which may boost its ROE but the high leverage puts the company at risk. To know the 2 risks we have identified for Chengdu Xingrong Environment visit our risks dashboard for free.
这就是我们喜欢看到的。请记住,高投资回报率并不总是意味着卓越的财务业绩。尤其是当一家公司使用高额债务为其债务融资时,这可能会提高其投资回报率,但高杠杆率会使公司面临风险。要了解我们为成都兴荣环境确定的两种风险,请免费访问我们的风险仪表板。
How Does Debt Impact Return On Equity?
债务如何影响股本回报率?
Virtually all companies need money to invest in the business, to grow profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used.
几乎所有公司都需要资金来投资业务,增加利润。投资现金可以来自上一年的利润(留存收益)、发行新股或借款。对于第一和第二种选择,投资回报率将反映现金用于增长的这种用途。在后一种情况下,用于增长的债务将提高回报,但不会影响总资产。这将使投资回报率看起来比不使用债务时更好。
Chengdu Xingrong Environment's Debt And Its 11% ROE
成都兴荣环境的债务及其11%的投资回报率
Chengdu Xingrong Environment clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.04. The combination of a rather low ROE and significant use of debt is not particularly appealing. Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it.
成都兴荣环境显然使用大量债务来提高回报,因为其负债权益比率为1.04。相当低的投资回报率和大量使用债务相结合并不是特别有吸引力。债务确实会带来额外的风险,因此只有当公司从中获得可观的回报时,债务才是真正值得的。
Conclusion
结论
Return on equity is one way we can compare its business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
股本回报率是我们可以比较不同公司的业务质量的一种方式。能够在没有债务的情况下实现高股本回报率的公司可以被视为高质量的企业。如果两家公司的债务与股权比率大致相同,而一家公司的投资回报率更高,那么我通常更喜欢投资回报率更高的那家公司。
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So I think it may be worth checking this free report on analyst forecasts for the company.
话虽如此,尽管投资回报率是衡量业务质量的有用指标,但您必须考虑一系列因素才能确定购买股票的正确价格。与股票价格所反映的预期相比,利润增长率尤其需要考虑。因此,我认为可能值得查看这份关于分析师对公司的预测的免费报告。
Of course Chengdu Xingrong Environment may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt.
当然,成都兴荣环境可能不是最好的买入股票。因此,您不妨免费查看其他投资回报率高、负债率低的公司的名单。
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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.
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Simply Wall St的这篇文章本质上是笼统的。我们仅使用公正的方法根据历史数据和分析师的预测提供评论,我们的文章无意作为财务建议。它不构成买入或卖出任何股票的建议,也没有考虑到您的目标或财务状况。我们的目标是为您提供由基本数据驱动的长期重点分析。请注意,我们的分析可能不考虑最新的价格敏感型公司公告或定性材料。简而言之,华尔街没有持有任何上述股票的头寸。