Tag: MultiBagger

Alibaba Health Information Technology (HKG:241) Might Have The Makings Of A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it’s a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at Alibaba Health Information Technology (HKG:241) and its trend of ROCE, we really liked what we saw.

Return On Capital Employed (ROCE): What Is It?

For those that aren’t sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Alibaba Health Information Technology, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.015 = CN¥247m ÷ (CN¥21b – CN¥5.2b) (Based on the trailing twelve months to September 2023).

Therefore, Alibaba Health Information Technology has an ROCE of 1.5%. In absolute terms, that’s a low return and it also under-performs the Consumer Retailing industry average of 8.5%.

Check out our latest analysis for Alibaba Health Information Technology

roce
SEHK:241 Return on Capital Employed March 29th 2024

Above you can see how the current ROCE for Alibaba Health Information Technology compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’d like, you can check out the forecasts from the analysts covering Alibaba Health Information Technology for free.

What Can We Tell From Alibaba Health Information Technology’s ROCE Trend?

Alibaba Health Information Technology has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be

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