COSCO SHIPPING Ports (HKG:1199) Has More To Do To Multiply In Value Going Forward

Simply Wall St.
04 Jul

What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after investigating COSCO SHIPPING Ports (HKG:1199), we don't think it's current trends fit the mold of a multi-bagger.

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What Is 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 COSCO SHIPPING Ports, this is the formula:

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

0.023 = US$250m ÷ (US$12b - US$1.4b) (Based on the trailing twelve months to March 2025).

Thus, COSCO SHIPPING Ports has an ROCE of 2.3%. In absolute terms, that's a low return and it also under-performs the Infrastructure industry average of 5.2%.

Check out our latest analysis for COSCO SHIPPING Ports

SEHK:1199 Return on Capital Employed July 3rd 2025

In the above chart we have measured COSCO SHIPPING Ports' 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 COSCO SHIPPING Ports .

What The Trend Of ROCE Can Tell Us

There hasn't been much to report for COSCO SHIPPING Ports' returns and its level of capital employed because both metrics have been steady for the past five years. It's not uncommon to see this when looking at a mature and stable business that isn't re-investing its earnings because it has likely passed that phase of the business cycle. With that in mind, unless investment picks up again in the future, we wouldn't expect COSCO SHIPPING Ports to be a multi-bagger going forward. This probably explains why COSCO SHIPPING Ports is paying out 42% of its income to shareholders in the form of dividends. Given the business isn't reinvesting in itself, it makes sense to distribute a portion of earnings among shareholders.

What We Can Learn From COSCO SHIPPING Ports' ROCE

We can conclude that in regards to COSCO SHIPPING Ports' returns on capital employed and the trends, there isn't much change to report on. Since the stock has gained an impressive 65% over the last five years, investors must think there's better things to come. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward.

COSCO SHIPPING Ports does have some risks though, and we've spotted 1 warning sign for COSCO SHIPPING Ports that you might be interested in.

While COSCO SHIPPING Ports isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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Have 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.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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