CK Hutchison Holdings (HKG:1) May Have Issues Allocating Its Capital

Simply Wall St.11-05

When researching a stock for investment, what can tell us that the company is in decline? When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital ...

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When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/capital-goods/hkg-1/ck-hutchison-holdings-shares/news/ck-hutchison-holdings-hkg1-may-have-issues-allocating-its-ca-1\">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>CK Hutchison Holdings (HKG:1) May Have Issues Allocating Its Capital</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\">\nCK Hutchison Holdings (HKG:1) May Have Issues Allocating Its Capital\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-05 07:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/hk/capital-goods/hkg-1/ck-hutchison-holdings-shares/news/ck-hutchison-holdings-hkg1-may-have-issues-allocating-its-ca-1><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>When researching a stock for investment, what can tell us that the company is in decline?  When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital ...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/capital-goods/hkg-1/ck-hutchison-holdings-shares/news/ck-hutchison-holdings-hkg1-may-have-issues-allocating-its-ca-1\">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":"BK1500","symbol_name":"做空集合股","start_time":0,"source_url":"https://simplywall.st/stocks/hk/capital-goods/hkg-1/ck-hutchison-holdings-shares/news/ck-hutchison-holdings-hkg1-may-have-issues-allocating-its-ca-1","article_id":"2481107705","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/3061000-choice1-main-header/1585186603448"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481107705","pubTimestamp":1730763597,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"When researching a stock for investment, what can tell us that the company is in decline? When we see a declining...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK1500":"做空集合股","BK1569":"长和系","EBIT":"Harbor AlphaEdge Small Cap Earners ETF","BK1521":"挪威政府全球养老基金持仓","BK1230":"工业集团企业","LU1048588211.SGD":"Blackrock Asian Dragon A2 SGD-H","BK1601":"香港本地股","00001":"长和","LU0072462343.USD":"贝莱德亚洲巨龙基金","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC","IE0032431581.USD":"PINEBRIDGE GREATER CHINA EQUITY \"A\" (USD) ACC"},"translate_title":"长江和记实业（HKG：1）在资本分配方面可能存在问题","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"00001":1,"EBIT":1},"content_text":"When researching a stock for investment, what can tell us that the company is in decline?  When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital employed, that's often how a mature business shows signs of aging.  Basically the company is earning less on its investments and it is also reducing its total assets.  So after we looked into CK Hutchison Holdings (HKG:1), the trends above didn't look too great.   What Is Return On Capital Employed (ROCE)?  For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business.  The formula for this calculation on CK Hutchison Holdings is:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.03 = HK$29b ÷ (HK$1.1t - HK$167b) (Based on the trailing twelve months to June 2024). Thus, CK Hutchison Holdings has an ROCE of 3.0%.  On its own, that's a low figure but it's around the 3.6% average generated by the Industrials industry.   View our latest analysis for CK Hutchison Holdings SEHK:1 Return on Capital Employed November 4th 2024 Above you can see how the current ROCE for CK Hutchison Holdings 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 CK Hutchison Holdings  for free.  The Trend Of ROCE  In terms of CK Hutchison Holdings' historical ROCE movements, the trend doesn't inspire confidence.  About  five years ago, returns on capital were 4.3%, however they're now substantially lower than that as we saw above.  Meanwhile, capital employed in the business has stayed roughly the flat over the period.  Since returns are falling and the business has the same amount of assets employed, this can suggest it's a mature business that hasn't had much growth in the last  five years.   If these trends continue, we wouldn't expect CK Hutchison Holdings to turn into a multi-bagger.    Our Take On CK Hutchison Holdings' ROCE  All in all, the lower returns from the same amount of capital employed aren't exactly signs of a compounding machine.      Long term shareholders who've owned the stock over the last  five years have experienced a 27% depreciation in their investment, so it appears the market might not like these trends either.   With underlying trends that aren't great in these areas, we'd consider looking elsewhere.    On a separate note, we've found   1 warning sign for CK Hutchison Holdings   you'll probably want to know about.     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. New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave 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":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"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":"4.29.3","shortVersion":"4.29.3","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/2481107705"}