Return Trends At K2 F&B Holdings (HKG:2108) Aren't Appealing

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after investigating K2 F&B Holdings (HKG:2108), we don't think it's current trends fit the mold of a multi-bagger.

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Understanding Return On Capital Employed (ROCE)

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for K2 F&B Holdings, this is the formula:

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

0.023 = S$4.0m ÷ (S$198m - S$20m) (Based on the trailing twelve months to June 2025).

Therefore, K2 F&B Holdings has an ROCE of 2.3%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 7.7%.

See our latest analysis for K2 F&B Holdings

Historical performance is a great place to start when researching a stock so above you can see the gauge for K2 F&B Holdings' ROCE against it's prior returns. If you're interested in investigating K2 F&B Holdings' past further, check out this free graph covering K2 F&B Holdings' past earnings, revenue and cash flow.

How Are Returns Trending?

In terms of K2 F&B Holdings' historical ROCE trend, it doesn't exactly demand attention. The company has consistently earned 2.3% for the last five years, and the capital employed within the business has risen 31% in that time. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don't provide a high return on capital.

The Bottom Line On K2 F&B Holdings' ROCE

In summary, K2 F&B Holdings has simply been reinvesting capital and generating the same low rate of return as before. Although the market must be expecting these trends to improve because the stock has gained 89% over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

One final note, you should learn about the 5 warning signs we've spotted with K2 F&B Holdings (including 2 which are a bit concerning) .

While K2 F&B Holdings may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.