The Return Trends At HanJung Natural Connectivity System.co.Ltd (KOSDAQ:107640) Look Promising

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. So when we looked at HanJung Natural Connectivity System.co.Ltd (KOSDAQ:107640) and its trend of ROCE, we really liked what we saw.

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What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for HanJung Natural Connectivity System.co.Ltd:

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

0.052 = ₩7.2b ÷ (₩227b - ₩88b) (Based on the trailing twelve months to September 2025).

So, HanJung Natural Connectivity System.co.Ltd has an ROCE of 5.2%. In absolute terms, that's a low return and it also under-performs the Auto Components industry average of 7.3%.

View our latest analysis for HanJung Natural Connectivity System.co.Ltd

Above you can see how the current ROCE for HanJung Natural Connectivity System.co.Ltd compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for HanJung Natural Connectivity System.co.Ltd .

What Does the ROCE Trend For HanJung Natural Connectivity System.co.Ltd Tell Us?

Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. Over the last one year, returns on capital employed have risen substantially to 5.2%. The amount of capital employed has increased too, by 35%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

Our Take On HanJung Natural Connectivity System.co.Ltd's ROCE

In summary, it's great to see that HanJung Natural Connectivity System.co.Ltd can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

HanJung Natural Connectivity System.co.Ltd does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those is significant...

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.