A Simply Wall St. expert hinted that China Investment Holdings Limited has weakened in the financial market. It was also suggested that its Return On Capital Employed (ROCE) might point that it could be a bad investment for this year.
An article published on Yahoo! Finance claimed that China Investment Holdings Limited may not be an attractive investment prospect for 2020. It indicated that renowned investment researcher Michael Mauboussin suggested that looking into a company's ROCE might give a hint of its profitability. Thus, the article looked into China Investments Holdings Limited ROCE to assess its strength in the market.
It was then suggested that comparing the company's ROCE with other similar players in the market and assessing its current liabilities would indicate the ROCE of China Investment Holdings Limited. The analyst then claimed that the company currently has a ROCE of 3.5 percent.
The article then compared the value to that of the hospitality industry, which was at 5.4 percent. It was suggested that China Investment Holdings Limited has a relatively low ROCE and that this indicated it is not deploying its capital as effectively as other players in the market. It was also highlighted that owning stocks of the company might be a high risk compared to investing in China's government bonds.
Next, the current liabilities of the company were reviewed. It was said that looking into the liabilities would show that China Investment Holdings might have less capital employed if its liabilities soared high and would unfairly boost one's ROCE.
China Investment Holdings Limited was revealed to have total liabilities amounting to 1.5 billion HKD while its total assets are at 4.6 billion HKD. It was then concluded that its total assets formed 32 percent of its total assets. Thus, the article suggested that the high rate of total liabilities is a bad sign and may indicate that China Investment Holdings Limited is a high-risk investment as of the moment.
According to Reuters, China Investment Holdings Limited is a Hong Kong-based investment holding company. It is a significant market player in the real estate and hotel-related ventures across China. It was also highlighted that the company runs three segments: property investment, wood processing, and the management and operation of hotels.
The report revealed that the current price to earnings of China Investment Holdings Limited price to earnings is at 7.68. Its prices to sales, price to book, and price to cash flow are at 4.27, 0.47, and 4.23, respectively. Its total debt-equity was reported to be at 290.58 while its return on investment and return on equity are at 4.17 and 2.51.
