Returns On Capital Signal Tricky Times Ahead For ASMPT (HKG:522)

Simply Wall St.2023-11-24

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and ...

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Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/semiconductors/hkg-522/asmpt-shares/news/returns-on-capital-signal-tricky-times-ahead-for-asmpt-hkg52\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Returns On Capital Signal Tricky Times Ahead For ASMPT (HKG:522)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nReturns On Capital Signal Tricky Times Ahead For ASMPT (HKG:522)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-11-24 11:22 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/hk/semiconductors/hkg-522/asmpt-shares/news/returns-on-capital-signal-tricky-times-ahead-for-asmpt-hkg52><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>If you're looking for a multi-bagger, there's a few things to keep an eye out for.  Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/semiconductors/hkg-522/asmpt-shares/news/returns-on-capital-signal-tricky-times-ahead-for-asmpt-hkg52\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK1169","symbol_name":"半导体设备","start_time":0,"source_url":"https://simplywall.st/stocks/hk/semiconductors/hkg-522/asmpt-shares/news/returns-on-capital-signal-tricky-times-ahead-for-asmpt-hkg52","article_id":"2385604190","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/8211000-choice2-main-header/1585186947894"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2385604190","pubTimestamp":1700796154,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"If you're looking for a multi-bagger, there's a few things to keep an eye out for. Amongst other things, we'll want to...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK1169":"半导体设备","00522":"ASMPT","LU0348783233.USD":"安联东方收入型 CI A Dis美元","LU0417516571.SGD":"Allianz Oriental Income Cl AT Acc SGD","LU0348784397.USD":"ALLIANZ ORIENTAL INCOME \"A\" (USD) ACC","LU2039709279.SGD":"MANULIFE GF DRAGON GROWTH \"AA\" (SGDHDG) INC","BK1589":"北水核心资产"},"translate_title":"资本回报率预示着ASMPT未来的艰难时期（HKG：522）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"00522":1},"content_text":"If you're looking for a multi-bagger, there's a few things to keep an eye out for.  Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed.  Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return.    However, after investigating ASMPT (HKG:522), we don't think it's current trends fit the mold of a multi-bagger.     Understanding Return On Capital Employed (ROCE)  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 ASMPT, this is the formula:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.087 = HK$1.5b ÷ (HK$24b - HK$6.2b) (Based on the trailing twelve months to September 2023). Thus, ASMPT has an ROCE of 8.7%.  Ultimately, that's a low return and it under-performs the Semiconductor industry average of 12%.   See our latest analysis for ASMPT SEHK:522 Return on Capital Employed November 24th 2023 In the above chart we have measured ASMPT's prior ROCE against its prior performance, but the future is arguably more important.  If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.  What The Trend Of ROCE Can Tell Us  On the surface, the trend of ROCE at ASMPT doesn't inspire confidence.   Around  five years ago the returns on capital were 27%, but since then they've fallen to 8.7%.    Given the business is employing more capital while revenue has slipped, this is a bit concerning.   If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased.     On a side note, ASMPT has done well to pay down its current liabilities to 26% of total assets.   That could partly explain why the ROCE has dropped.   What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations.  Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE.     The Key Takeaway  In summary, we're somewhat concerned by ASMPT's diminishing returns on increasing amounts of capital.      Investors must expect better things on the horizon though because the stock has risen 16% in the last  five years.  Either way, we aren't huge fans of the current trends and so with that we think you might find better investments elsewhere.    One more thing, we've spotted   3 warning signs  facing ASMPT that you might find interesting.    If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity. Valuation is complex, but we're helping make it simple.Find out whether ASMPT is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave 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.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2385604190"}