Could The Market Be Wrong About TUHU Car Inc. (HKG:9690) Given Its Attractive Financial Prospects?

With its stock down 15% over the past three months, it is easy to disregard TUHU Car (HKG:9690). But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Specifically, we decided to study TUHU Car's ROE in this article. 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. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. How Do You Calculate Return On Equity? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for TUHU Car is:10% = CN¥504m ÷ CN¥5.0b (Based on the trailing twelve months to June 2025). The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each HK$1 of shareholders' capital it has, the company made HK$0.10 in profit. See our latest analysis for TUHU Car What Has ROE Got To Do With Earnings Growth? We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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. A Side By Side comparison of TUHU Car's Earnings Growth And 10% ROE When you first look at it, TUHU Car's ROE doesn't look that attractive. However, the fact that the company's ROE is higher than the average industry ROE of 8.1%, is definitely interesting. Particularly, the substantial 58% net income growth seen by TUHU Car over the past five years is impressive . Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. Therefore, the growth in earnings could also be the result of other factors. Such as- high earnings retention or the company belonging to a high growth industry. We then compared TUHU Car's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 3.6% in the same 5-year period. SEHK:9690 Past Earnings Growth January 23rd 2026 The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. If you're wondering about TUHU Car's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry. Is TUHU Car Using Its Retained Earnings Effectively? Given that TUHU Car doesn't pay any regular dividends to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business. Summary On the whole, we feel that TUHU Car's performance has been quite good. In particular, it's great to see that the company has seen significant growth in its earnings backed by a respectable ROE and a high reinvestment rate. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.