Most readers would already be aware that C&D International Investment Group's (HKG:1908) stock increased significantly by 35% over the past three months. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Particularly, we will be paying attention to C&D International Investment Group's ROE today.
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. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
How To Calculate Return On Equity?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for C&D International Investment Group is:
7.0% = CN¥6.3b ÷ CN¥91b (Based on the trailing twelve months to December 2023).
The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every HK$1 worth of equity, the company was able to earn HK$0.07 in profit.
What Has ROE Got To Do With Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
A Side By Side comparison of C&D International Investment Group's Earnings Growth And 7.0% ROE
On the face of it, C&D International Investment Group's ROE is not much to talk about. Although a closer study shows that the company's ROE is higher than the industry average of 4.5% which we definitely can't overlook. Particularly, the substantial 26% net income growth seen by C&D International Investment Group over the past five years is impressive . Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. Therefore, the growth in earnings could also be the result of other factors. E.g the company has a low payout ratio or could belong to a high growth industry.
Next, on comparing with the industry net income growth, we found that C&D International Investment Group's growth is quite high when compared to the industry average growth of 0.2% in the same period, which is great to see.
Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is 1908 fairly valued? This infographic on the company's intrinsic value has everything you need to know.
Is C&D International Investment Group Efficiently Re-investing Its Profits?
C&D International Investment Group's three-year median payout ratio is a pretty moderate 42%, meaning the company retains 58% of its income. So it seems that C&D International Investment Group is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered.
Besides, C&D International Investment Group has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 45%. Regardless, the future ROE for C&D International Investment Group is predicted to rise to 14% despite there being not much change expected in its payout ratio.
Summary
Overall, we are quite pleased with C&D International Investment Group's performance. In particular, it's great to see that the company has seen significant growth in its earnings backed by a respectable ROE and a high reinvestment rate. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
C&D International Investment Group(HKG:1908)の株価が過去3ヶ月で35%増加したことは、ほとんどの読者がすでに知っているでしょう。同社の印象的なパフォーマンスを考慮すると、通常、長期的な企業の財務状態が市場の結果を決定するため、同社の財務指標を詳しく調べることにしました。特に、C&D International Investment GroupのROEに注目します。
C&D International Investment Groupの収益成長と7.0%ROEの横並びの比較
一見すると、C&D International Investment GroupのROEはあまり話題になりません。しかし、よく調べると、同社のROEは4.5%という業界平均を上回っているため、見落とすことはできません。特に、C&D International Investment Groupは過去5年間に26%の当期純利益成長を達成しました。ただし、同社のROEはやや低いことを念頭に置いておく必要があります。単に、業界ROEが低いためです。したがって、収益成長の背後には、低い配当率を持つ、あるいは高成長の業界に属するといった他の要因がある可能性があります。
次に、業界の当期純利益成長と比較した結果、C&D International Investment Groupの成長は業界平均成長率の0.2%と比較してかなり高いことがわかりました。これは素晴らしいことです。
C&D International Investment Groupがその利益を有効に再投資しているかどうかを知るために、3年間の中央値の配当比率を参考にすることができます。同社は収益の58%を保持しているため、配当比率はかなり穏健です。したがって、C&D International Investment Groupは、収益の成長(上で説明)に繋がり、配当金も十分にカバーしている方法で効率的に再投資していると言えます。
さらに、C&D International Investment Groupは、10年以上にわたり配当を支払っています。これは、同社が株主と利益を共有することに尽力していることを示しています。当社の最新のアナリストデータによると、今後3年間の同社の配当比率は、約45%になると予想されています。それにもかかわらず、同社の将来のROEは、配当比率の大幅な変化は期待されていませんが、14%に上昇すると予測されています。
総体的には、私たちはC&D International Investment Groupのパフォーマンスにかなり満足しています。特に、高いリインベストメント率を背景にした立派なROEと収益の大幅な成長を見て、良いと思っています。しかしながら、最新の業界アナリスト予測によると、同社の収益成長は鈍化すると予想されています。同社に関する最新のアナリスト予測については、こちらのアナリスト予測の視覚化をご覧ください。
要約
以上を総合すると、C&D International Investment Groupのパフォーマンスに非常に満足しています。特に、尊敬できるROEと高いリインベストメント率によって支えられた収益の著しい成長を見て、良いと思います。とは言え、最新の業界アナリスト予測によると、同社の収益成長は鈍化すると予想されています。詳細はこちらのアナリスト予測の視覚化をご覧ください。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。