Should We Be Delighted With SDIC Power Holdings Co., Ltd's (SHSE:600886) ROE Of 11%?
Should We Be Delighted With SDIC Power Holdings Co., Ltd's (SHSE:600886) ROE Of 11%?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine SDIC Power Holdings Co., Ltd (SHSE:600886), by way of a worked example.
尽管一些投资者已经精通财务指标（帽子提示），但本文适用于那些想了解股本回报率（ROE）及其重要性的人。举一个有效的例子，我们将使用投资回报率来考察国投电力控股有限公司（上海证券交易所代码：600886）。
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
股本回报率或投资回报率是股东需要考虑的重要因素，因为它可以告诉他们资本再投资的有效性。简而言之，它用于评估公司相对于其股权资本的盈利能力。
Check out our latest analysis for SDIC Power Holdings
查看我们对国投电力控股的最新分析
How Do You Calculate Return On Equity?
你如何计算股本回报率？
The formula for ROE is:
ROE 的公式是：
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
股本回报率 = 净利润（来自持续经营业务）÷ 股东权益
So, based on the above formula, the ROE for SDIC Power Holdings is:
因此，根据上述公式，国投电力控股的投资回报率为：
11% = CN¥11b ÷ CN¥101b (Based on the trailing twelve months to September 2023).
11% = 110亿元人民币 ÷ 101亿元人民币（基于截至2023年9月的过去十二个月）。
The 'return' is the profit over the last twelve months. Another way to think of that is that for every CN¥1 worth of equity, the company was able to earn CN¥0.11 in profit.
“回报” 是过去十二个月的利润。另一种看法是，每持有价值1元人民币的股权，公司就能获得0.11元人民币的利润。
Does SDIC Power Holdings Have A Good ROE?
国投电力控股的投资回报率是否良好？
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. Pleasingly, SDIC Power Holdings has a superior ROE than the average (6.9%) in the Renewable Energy industry.
可以说，评估公司投资回报率的最简单方法是将其与行业平均水平进行比较。但是，这种方法仅在粗略检查时有用，因为各公司在相同的行业分类中确实存在很大差异。令人高兴的是，国投电力控股的投资回报率高于可再生能源行业的平均水平（6.9％）。
That is a good sign. However, bear in mind that a high ROE doesn't necessarily indicate efficient profit generation. Aside from changes in net income, a high ROE can also be the outcome of high debt relative to equity, which indicates risk. To know the 2 risks we have identified for SDIC Power Holdings visit our risks dashboard for free.
这是一个好兆头。但是，请记住，高投资回报率并不一定意味着有效的利润创造。除了净收入的变化外，较高的投资回报率也可能是高债务相对于股本的结果，这表明存在风险。要了解我们为国投电力控股确定的两种风险，请免费访问我们的风险仪表板。
How Does Debt Impact ROE?
债务如何影响投资回报率？
Companies usually need to invest money to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
公司通常需要投资资金来增加利润。投资现金可以来自上一年的利润（留存收益）、发行新股或借款。在第一和第二种情况下，投资回报率将反映现金用于企业投资的这种用途。在后一种情况下，债务的使用将提高回报，但不会改变股权。这将使投资回报率看起来比不使用债务时更好。
Combining SDIC Power Holdings' Debt And Its 11% Return On Equity
合并国投电力控股的债务及其11％的股本回报率
SDIC Power Holdings clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.43. Its ROE is quite low, even with the use of significant debt; that's not a good result, in our opinion. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it.
国投电力控股公司显然使用大量债务来提高回报，因为其负债权益比率为1.43。即使使用了巨额债务，其投资回报率也相当低；在我们看来，这不是一个好结果。债务会增加风险，减少公司未来的选择，因此您通常希望从使用债务中获得丰厚的回报。
Conclusion
结论
Return on equity is one way we can compare its business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt.
股本回报率是我们可以比较不同公司的业务质量的一种方式。能够在没有债务的情况下实现高股本回报率的公司可以被视为高质量的企业。如果两家公司的投资回报率相同，那么我通常更喜欢负债较少的公司。
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to check this FREE visualization of analyst forecasts for the company.
话虽如此，尽管投资回报率是衡量业务质量的有用指标，但你必须考虑一系列因素才能确定购买股票的正确价格。还必须考虑利润可能增长的速度，相对于当前价格所反映的利润增长预期。因此，您可能需要查看该公司的分析师预测的免费可视化效果。
But note: SDIC Power Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
但请注意：国投电力控股可能不是最好的买入股票。因此，来看看这份投资回报率高、债务低的有趣公司的免费清单。
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