Returns On Capital At Hiap Teck Venture Berhad (KLSE:HIAPTEK) Paint A Concerning Picture
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For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Hiap Teck Venture Berhad:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.00092 = RM1.4m ÷ (RM2.0b - RM492m) (Based on the trailing twelve months to April 2025).
Therefore, Hiap Teck Venture Berhad has an ROCE of 0.09%. In absolute terms, that's a low return and it also under-performs the Metals and Mining industry average of 7.3%.
See our latest analysis for Hiap Teck Venture Berhad
Above you can see how the current ROCE for Hiap Teck Venture Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Hiap Teck Venture Berhad for free.
On the surface, the trend of ROCE at Hiap Teck Venture Berhad doesn't inspire confidence. Around five years ago the returns on capital were 4.2%, but since then they've fallen to 0.09%. And considering revenue has dropped while employing more capital, we'd be cautious. This could mean that the business is losing its competitive advantage or market share, because while more money is being put into ventures, it's actually producing a lower return - "less bang for their buck" per se.
In summary, we're somewhat concerned by Hiap Teck Venture Berhad's diminishing returns on increasing amounts of capital. Yet despite these concerning fundamentals, the stock has performed strongly with a 79% return over the last five years, so investors appear very optimistic. In any case, the current underlying trends don't bode well for long term performance so unless they reverse, we'd start looking elsewhere.
If you're still interested in Hiap Teck Venture Berhad it's worth checking out our to see if it's trading at an attractive price in other respects.
If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.
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