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).
雖然一些投資者已經對財務指標非常熟悉(致敬),但本文是爲那些想要學習ROE和其重要性的人準備的。通過學以致用的方式,我們將通過觀察ROE來更好地了解成都興蓉環境股份有限公司(A股代碼: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或股東權益回報率是評估公司如何有效地從股東那裏獲得回報的有用工具。簡而言之,它用於評估公司相對於其權益資本的盈利能力。
How Do You Calculate Return On Equity?
怎樣計算ROE?
Return on equity can be calculated by using the formula:
股東權益報酬率可以使用以下公式計算:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
淨資產收益率 = 淨利潤(從持續經營中獲得)÷ 股東權益
So, based on the above formula, the ROE for Chengdu Xingrong Environment is:
因此,根據上述公式,成都興蓉環境的ROE爲:
11% = CN¥2.0b ÷ CN¥18b (Based on the trailing twelve months to March 2024).
11% = 20億元 ÷ 180億元(基於截至2024年3月的最近十二個月數據)。
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.
「回報」是每年的利潤,這可以從這方面來理解,即對於每CN¥1的股東資本,公司盈利CN¥ 0.11。
Does Chengdu Xingrong Environment Have A Good ROE?
興蓉環境的ROE好嗎?
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.
判斷一個公司的淨資產收益率是否高的一種簡單方法是與其所在行業的平均水平進行比較。但需要注意,這種方法並不完美,因爲同一行業中的公司存在顯著差異。如下圖所示,興蓉環境的ROE優於水務行業的平均水平(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.
這就是我們喜歡看到的。需要注意的是,高ROE並不總是意味着卓越的財務表現。特別是當公司利用大量債務來融資時,可能會提高其ROE,但高槓杆會使公司面臨風險。想要了解我們爲興蓉環境確定的兩個風險,請免費訪問我們的風險儀表板。
How Does Debt Impact Return On Equity?
債務如何影響股東回報率?
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.
幾乎所有公司都需要資金來投資業務以增加利潤。 投資的現金可以來自前年的利潤(留存收益),發行新股或借貸。 在前兩種選擇的情況下,roe將反映出這種用於增長的現金。 在後一種情況下,用於增長的債務將改善回報,但不會影響總股本。 這將使roe看起來比不使用債務的情況要好。
Chengdu Xingrong Environment's Debt And Its 11% ROE
興蓉環境的債務及其11%的roe
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.
興蓉環境明顯借入了大量債務來提高回報率,其負債與股本比率爲1.04。相對較低的roe和大量使用債務的組合並不特別令人感興趣。債務確實帶來了額外風險,所以只有當公司從中獲得了一些高回報時才真正值得。
Conclusion
結論
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.
ROE是我們可以比較不同公司業務質量的一種方式。沒有負債可以實現高ROE的公司可以被認爲是高質量的公司。如果兩家公司的負債與股本約同,並且一家公司的ROE更高,則我通常更喜歡ROE更高的公司。
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.
話雖如此,雖然ROE是業務質量的有用指標,但您需要研究各種因素來確定購買股票的正確價格。利潤增長速度與反映在股票價格中的預期是特別重要的考慮因素。因此,我認爲值得查看該公司分析師預測的免費報告。
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.
當然,興蓉環境可能不是最好的買入股票。所以您可能希望查看這些具有高roe和低債務的其他公司的免費名單。
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這篇文章是Simply Wall St的一般性文章。我們根據歷史數據和分析師預測提供評論,只使用公正的方法論,我們的文章並不意味着提供任何金融建議。文章不構成買賣任何股票的建議,也不考慮您的目標或您的財務狀況。我們的目標是帶給您基本數據驅動的長期關注分析。請注意,我們的分析可能不考慮最新的價格敏感公司公告或定性材料。Simply Wall St沒有任何股票頭寸。