Ausupreme International Holdings (HKG:2031) Is Looking To Continue Growing Its Returns On Capital

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Ausupreme International Holdings (HKG:2031) and its trend of ROCE, we really liked what we saw.

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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 Ausupreme International Holdings is:

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

0.17 = HK$34m ÷ (HK$228m - HK$30m) (Based on the trailing twelve months to March 2025).

So, Ausupreme International Holdings has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 11% generated by the Retail Distributors industry.

View our latest analysis for Ausupreme International Holdings

Historical performance is a great place to start when researching a stock so above you can see the gauge for Ausupreme International Holdings' ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Ausupreme International Holdings.

What Can We Tell From Ausupreme International Holdings' ROCE Trend?

Ausupreme International Holdings has not disappointed with their ROCE growth. The figures show that over the last five years, ROCE has grown 142% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

The Bottom Line

To bring it all together, Ausupreme International Holdings has done well to increase the returns it's generating from its capital employed. And with a respectable 91% awarded to those who held the stock over the last three years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Like most companies, Ausupreme International Holdings does come with some risks, and we've found 2 warning signs that you should be aware of.

While Ausupreme International Holdings 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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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.