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Does The Market Have A Low Tolerance For Yee Hop Holdings Limited's (HKG:1662) Mixed Fundamentals?

Simply Wall St · 3d ago

It is hard to get excited after looking at Yee Hop Holdings' (HKG:1662) recent performance, when its stock has declined 41% over the past three months. It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. Specifically, we decided to study Yee Hop Holdings' ROE in this article.

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.

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How Is ROE Calculated?

The formula for ROE is:

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

So, based on the above formula, the ROE for Yee Hop Holdings is:

6.6% = HK$34m ÷ HK$513m (Based on the trailing twelve months to September 2025).

The 'return' is the yearly profit. So, this means that for every HK$1 of its shareholder's investments, the company generates a profit of HK$0.07.

Check out our latest analysis for Yee Hop 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. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.

Yee Hop Holdings' Earnings Growth And 6.6% ROE

When you first look at it, Yee Hop Holdings' ROE doesn't look that attractive. However, given that the company's ROE is similar to the average industry ROE of 6.0%, we may spare it some thought. But Yee Hop Holdings saw a five year net income decline of 9.9% over the past five years. Remember, the company's ROE is a bit low to begin with. Hence, this goes some way in explaining the shrinking earnings.

That being said, we compared Yee Hop Holdings' performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 0.9% in the same 5-year period.

past-earnings-growth
SEHK:1662 Past Earnings Growth January 7th 2026

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is Yee Hop Holdings fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Yee Hop Holdings Efficiently Re-investing Its Profits?

Summary

In total, we're a bit ambivalent about Yee Hop Holdings' performance. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 1 risk we have identified for Yee Hop Holdings by visiting our risks dashboard for free on our platform here.