MEDICINE

Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613) stock trending higher: does finance have a role to play?

Beijing Tong Ren Tang Chinese Medicine (HKG:3613) has had a great run in the stock market, with its shares jumping 7.3% last week. As most of us know, fundamentals are usually what guide market price movements over the long term, so look at today’s company’s key financial metrics to see if they play some role in recent price movements. I decided to judge whether it is fulfilling. In particular, today I will focus on the ROE of Beijing Dojindo Kanpo.

ROE or Return on Equity is a useful tool for evaluating how effectively a company is able to generate returns on the investment it receives from its shareholders. Simply put, it is used to assess a company’s profitability in relation to its equity capital.

check out opportunities and risks Within the HK Pharmaceuticals industry.

How do you calculate return on equity?

of Formula for Return on Equity teeth:

Return on Equity = Net Income (from Continuing Operations) ÷ Shareholders’ Equity

Therefore, based on the above formula, Beijing Dojinto Kampo Yaku’s ROE is:

17% = HK$599 million ÷ HK$3.5 billion (based on the last 12 months to June 2022).

“Return” refers to the company’s earnings for the last year. One way he conceptualizes this is that for every HKD 1 in shareholders’ equity, the company made a profit of HKD 0.17 for him.

Why ROE Is Important to Profit Growth

So far we have learned that ROE is a measure of a company’s profitability. Next, the company should assess how much of its earnings will be reinvested or “retained” for future growth. This will give you an idea about the company’s growth potential. Generally speaking, other things being equal, companies with high return on equity and earnings retention will have higher growth rates than companies that do not share these attributes.

Beijing Dojindo’s Herbal Medicine Revenue Growth And ROE Is 17%.

First of all, Beijing Tongren’s ROE looks acceptable. His ROE for the company is quite impressive, especially when compared to the industry average of 10%. But for some reason, the higher returns aren’t reflected in Beijing Tongren Tang Herbal Medicine’s average five-year net profit growth of just 2.7%. It’s a little surprising from a company that boasts such a high profit margin. Such a scenario can occur when a company pays out a large portion of its earnings in dividends or faces competitive pressure.

Next, when compared to the industry’s net profit growth, we find that Beijing Tongren Tang Herbal Medicine’s reported growth rate is lower than the industry’s growth rate of 8.8% over the same period.

SEHK:3613 Historical Revenue Growth Nov 5, 2022

Earnings growth is an important metric to consider when evaluating stocks. The next thing investors need to determine is whether expected earnings growth, or lack thereof, is already baked into the stock price. This helps determine whether the stock is positioned for a bright future or a dark future. If you’re in doubt about Beijing Tong Ren Tang Chinese Medicine’s valuation, check out this gauge of the price/earnings ratio compared to the industry.

Does Beijing Dojindo’s herbal medicine make effective use of internal reserves?

Despite a medium three-year median payout ratio of 37% (meaning the company retains the remaining 63% of its income), Beijing Dojindo Kampo Pharmaceutical’s earnings growth is was very low. So there may be another explanation for that point. For example, your company may be doing poorly.

In addition, Beijing Tongren Tang Herbal Medicine has paid dividends for nine years, which is a considerable period of time, and management must have realized that shareholders prefer dividends to earnings growth.

Overview

Overall, I feel that Beijing Tongrendang’s herbal medicines certainly have some positive factors to consider. is a pity. We believe there are several external factors that can adversely affect our business. As such, the latest analyst forecasts show that the company’s earnings will continue to grow.Learn more about the company’s future revenue growth projections here freedom For more information, see the company’s analyst forecasts report.

Valuation is complicated, but we’re here to help make it simple.

find out if Beijing Dojindo Chinese Medicine You may be overestimated or underestimated by checking out our comprehensive analysis including: Fair value estimates, risks and warnings, dividends, insider trading and financial health.

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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …

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