EC Healthcare (HKG:2138) Will Want To Turn Around Its Return Trends

Simply Wall St.11-13

What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a perfect world, we'd like to see a company investing more capital into its business and...

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In a perfect world, we'd like to see a company investing more capital into its business and...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/consumer-services/hkg-2138/ec-healthcare-shares/news/ec-healthcare-hkg2138-will-want-to-turn-around-its-return-tr-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>EC Healthcare (HKG:2138) Will Want To Turn Around Its Return Trends</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\">\nEC Healthcare (HKG:2138) Will Want To Turn Around Its Return Trends\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-13 09:20 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/hk/consumer-services/hkg-2138/ec-healthcare-shares/news/ec-healthcare-hkg2138-will-want-to-turn-around-its-return-tr-1><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>What trends should we look for it we want to identify stocks that can multiply in value over the long term?  In a perfect world, we'd like to see a company investing more capital into its business and...</p>\n\n<a href=\"https://simplywall.st/stocks/hk/consumer-services/hkg-2138/ec-healthcare-shares/news/ec-healthcare-hkg2138-will-want-to-turn-around-its-return-tr-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":"BK1215","symbol_name":"特殊消费者服务","start_time":0,"source_url":"https://simplywall.st/stocks/hk/consumer-services/hkg-2138/ec-healthcare-shares/news/ec-healthcare-hkg2138-will-want-to-turn-around-its-return-tr-1","article_id":"2483045834","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/3112800-choice2-main-header/1585186996564"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2483045834","pubTimestamp":1731460812,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK1215":"特殊消费者服务","HCSG":"医疗保健服务","EBIT":"Harbor AlphaEdge Small Cap Earners ETF","02138":"医思健康","EC":"哥伦比亚国家石油","BK4137":"综合支持服务","BK1511":"疑似财技股","BK1593":"医美概念股","BK4201":"综合性石油与天然气企业"},"translate_title":"EC Healthcare(HKG：2138)希望扭转其回报趋势","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"02138":1,"EBIT":1,"EC":1,"HCSG":1},"content_text":"What trends should we look for it we want to identify stocks that can multiply in value over the long term?  In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing.  This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns.    Although, when we looked at EC Healthcare (HKG:2138), it didn't seem to tick all of these boxes.     Understanding Return On Capital Employed (ROCE)  Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business.  Analysts use this formula to calculate it for EC Healthcare:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.028 = HK$109m ÷ (HK$5.4b - HK$1.4b) (Based on the trailing twelve months to March 2024). Therefore, EC Healthcare has an ROCE of 2.8%. In absolute terms, that's a low return and it also under-performs the Consumer Services industry average of 12%.   Check out our latest analysis for EC Healthcare SEHK:2138 Return on Capital Employed November 13th 2024 In the above chart we have measured EC Healthcare's prior ROCE against its prior performance, but the future is arguably more important.  If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for EC Healthcare .  What The Trend Of ROCE Can Tell Us  When we looked at the ROCE trend at EC Healthcare, we didn't gain much confidence.   Around  five years ago the returns on capital were 36%, but since then they've fallen to 2.8%.    However it looks like EC Healthcare might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months.  It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.     On a side note, EC Healthcare has done well to pay down its current liabilities to 27% 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 Bottom Line  Bringing it all together, while we're somewhat encouraged by EC Healthcare's reinvestment in its own business, we're aware that returns are shrinking.        And investors may be expecting the fundamentals to get a lot worse because the stock has crashed 87% over the last  five years.   In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.     While EC Healthcare doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our  FREE intrinsic value estimation for 2138  on our platform.     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 here to simplify it.Discover if EC Healthcare might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access 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":"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/2483045834"}