Hanil Cement (KRX:300720) 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. 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Hanil Cement (KRX:300720) and its trend of ROCE, we really liked what we saw.
Understanding 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. To calculate this metric for Hanil Cement, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.066 = ₩151b ÷ (₩3.0t - ₩701b) (Based on the trailing twelve months to September 2025).
Therefore, Hanil Cement has an ROCE of 6.6%. On its own that's a low return, but compared to the average of 5.1% generated by the Basic Materials industry, it's much better.
View our latest analysis for Hanil Cement
While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Hanil Cement has performed in the past in other metrics, you can view this free graph of Hanil Cement's past earnings, revenue and cash flow.
What Does the ROCE Trend For Hanil Cement Tell Us?
Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 6.6%. Basically the business is earning more per dollar of capital invested and in addition to that, 25% more capital is being employed now too. So we're very much inspired by what we're seeing at Hanil Cement thanks to its ability to profitably reinvest capital.
What We Can Learn From Hanil Cement's ROCE
All in all, it's terrific to see that Hanil Cement is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Hanil Cement can keep these trends up, it could have a bright future ahead.
Hanil Cement does have some risks though, and we've spotted 2 warning signs for Hanil Cement that you might be interested in.
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.
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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.