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Iljeong IndustrialLtd (KRX:008500) Is Looking To Continue Growing Its Returns On Capital

Simply Wall St · 1d ago

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Iljeong IndustrialLtd (KRX:008500) looks quite promising in regards to its trends of return on capital.

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Return On Capital Employed (ROCE): What Is It?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Iljeong IndustrialLtd is:

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

0.043 = ₩808m ÷ (₩38b - ₩19b) (Based on the trailing twelve months to September 2025).

So, Iljeong IndustrialLtd has an ROCE of 4.3%. Ultimately, that's a low return and it under-performs the Luxury industry average of 6.5%.

See our latest analysis for Iljeong IndustrialLtd

roce
KOSE:A008500 Return on Capital Employed December 15th 2025

Historical performance is a great place to start when researching a stock so above you can see the gauge for Iljeong IndustrialLtd's ROCE against it's prior returns. If you're interested in investigating Iljeong IndustrialLtd's past further, check out this free graph covering Iljeong IndustrialLtd's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

We're delighted to see that Iljeong IndustrialLtd is reaping rewards from its investments and has now broken into profitability. Historically the company was generating losses but as we can see from the latest figures referenced above, they're now earning 4.3% on their capital employed. Additionally, the business is utilizing 56% less capital than it was five years ago, and taken at face value, that can mean the company needs less funds at work to get a return. This could potentially mean that the company is selling some of its assets.

For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 50% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses.

What We Can Learn From Iljeong IndustrialLtd's ROCE

In the end, Iljeong IndustrialLtd has proven it's capital allocation skills are good with those higher returns from less amount of capital. And since the stock has dived 82% over the last five years, there may be other factors affecting the company's prospects. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding.

One more thing: We've identified 4 warning signs with Iljeong IndustrialLtd (at least 3 which are a bit concerning) , and understanding them would certainly be useful.

While Iljeong IndustrialLtd 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.