Hangzhou SF Intra-city Industrial (HKG:9699) Is Looking To Continue Growing Its Returns On Capital

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Hangzhou SF Intra-city Industrial (HKG:9699) and its trend of ROCE, we really liked what we saw.

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What Is 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 Hangzhou SF Intra-city Industrial:

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

0.053 = CN¥164m ÷ (CN¥5.1b - CN¥2.0b) (Based on the trailing twelve months to June 2025).

So, Hangzhou SF Intra-city Industrial has an ROCE of 5.3%. On its own, that's a low figure but it's around the 6.5% average generated by the Logistics industry.

Check out our latest analysis for Hangzhou SF Intra-city Industrial

In the above chart we have measured Hangzhou SF Intra-city Industrial'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 Hangzhou SF Intra-city Industrial .

So How Is Hangzhou SF Intra-city Industrial's ROCE Trending?

Hangzhou SF Intra-city Industrial has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 5.3% on its capital. Not only that, but the company is utilizing 2,046% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 39%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.

In Conclusion...

Long story short, we're delighted to see that Hangzhou SF Intra-city Industrial's reinvestment activities have paid off and the company is now profitable. And with a respectable 79% 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. In light of that, we think it's worth looking further into this stock because if Hangzhou SF Intra-city Industrial can keep these trends up, it could have a bright future ahead.

Like most companies, Hangzhou SF Intra-city Industrial does come with some risks, and we've found 1 warning sign that you should be aware of.

While Hangzhou SF Intra-city Industrial may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.