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Investors Will Want TC MaterialsLtd's (KOSDAQ:125020) Growth In ROCE To Persist

Simply Wall St · 12/30/2025 23:15

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. With that in mind, we've noticed some promising trends at TC MaterialsLtd (KOSDAQ:125020) so let's look a bit deeper.

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Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for TC MaterialsLtd, this is the formula:

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

0.093 = ₩7.1b ÷ (₩96b - ₩19b) (Based on the trailing twelve months to September 2025).

So, TC MaterialsLtd has an ROCE of 9.3%. On its own, that's a low figure but it's around the 9.7% average generated by the Electrical industry.

View our latest analysis for TC MaterialsLtd

roce
KOSDAQ:A125020 Return on Capital Employed December 30th 2025

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating TC MaterialsLtd's past further, check out this free graph covering TC MaterialsLtd's past earnings, revenue and cash flow.

So How Is TC MaterialsLtd's ROCE Trending?

We're delighted to see that TC MaterialsLtd is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 9.3% which is a sight for sore eyes. Not only that, but the company is utilizing 95% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

The Bottom Line

In summary, it's great to see that TC MaterialsLtd has managed to break into profitability and is continuing to reinvest in its business. Since the stock has only returned 3.5% to shareholders over the last year, the promising fundamentals may not be recognized yet by investors. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.

If you'd like to know about the risks facing TC MaterialsLtd, we've discovered 3 warning signs that you should be aware of.

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