Cheryong IndustrialLtd (KOSDAQ:147830) Might Have The Makings Of A Multi-Bagger
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at Cheryong IndustrialLtd (KOSDAQ:147830) and its trend of ROCE, we really liked what we saw.
Understanding Return On Capital Employed (ROCE)
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Cheryong IndustrialLtd:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.092 = ₩7.7b ÷ (₩96b - ₩13b) (Based on the trailing twelve months to September 2025).
Thus, Cheryong IndustrialLtd has an ROCE of 9.2%. On its own, that's a low figure but it's around the 9.7% average generated by the Electrical industry.
Check out our latest analysis for Cheryong IndustrialLtd
Historical performance is a great place to start when researching a stock so above you can see the gauge for Cheryong IndustrialLtd's ROCE against it's prior returns. If you'd like to look at how Cheryong IndustrialLtd has performed in the past in other metrics, you can view this free graph of Cheryong IndustrialLtd's past earnings, revenue and cash flow.
What Does the ROCE Trend For Cheryong IndustrialLtd 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 9.2%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 36%. So we're very much inspired by what we're seeing at Cheryong IndustrialLtd thanks to its ability to profitably reinvest capital.
The Bottom Line On Cheryong IndustrialLtd's ROCE
A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Cheryong IndustrialLtd has. And a remarkable 193% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.
Cheryong IndustrialLtd does have some risks though, and we've spotted 1 warning sign for Cheryong IndustrialLtd that you might be interested in.
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high 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.