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Rici Healthcare Holdings Limited's (HKG:1526) Stock's On An Uptrend: Are Strong Financials Guiding The Market?

Simply Wall St · 1d ago

Rici Healthcare Holdings' (HKG:1526) stock is up by a considerable 14% over the past week. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. In this article, we decided to focus on Rici Healthcare Holdings' ROE.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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How Do You Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Rici Healthcare Holdings is:

25% = CN¥347m ÷ CN¥1.4b (Based on the trailing twelve months to June 2025).

The 'return' is the income the business earned over the last year. That means that for every HK$1 worth of shareholders' equity, the company generated HK$0.25 in profit.

View our latest analysis for Rici Healthcare Holdings

What Has ROE Got To Do With Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

Rici Healthcare Holdings' Earnings Growth And 25% ROE

Firstly, we acknowledge that Rici Healthcare Holdings has a significantly high ROE. Additionally, the company's ROE is higher compared to the industry average of 6.9% which is quite remarkable. As a result, Rici Healthcare Holdings' exceptional 28% net income growth seen over the past five years, doesn't come as a surprise.

We then compared Rici Healthcare Holdings' net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 7.7% in the same 5-year period.

past-earnings-growth
SEHK:1526 Past Earnings Growth December 23rd 2025

Earnings growth is an important metric to consider when valuing a stock. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you're wondering about Rici Healthcare Holdings''s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Rici Healthcare Holdings Making Efficient Use Of Its Profits?

While the company did pay out a portion of its dividend in the past, it currently doesn't pay a regular dividend. This is likely what's driving the high earnings growth number discussed above.

Summary

On the whole, we feel that Rici Healthcare Holdings' performance has been quite good. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings.