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15 minutes ago
- Yahoo
Citaglobal Berhad (KLSE:CITAGLB) On An Uptrend: Could Fundamentals Be Driving The Stock?
Citaglobal Berhad's (KLSE:CITAGLB) stock up by 2.5% over the past three months. As most would know, long-term fundamentals have a strong correlation with market price movements, so we decided to look at the company's key financial indicators today to determine if they have any role to play in the recent price movement. Specifically, we decided to study Citaglobal Berhad's ROE in this article. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. How Do You Calculate Return On Equity? ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Citaglobal Berhad is: 3.8% = RM15m ÷ RM399m (Based on the trailing twelve months to March 2025). The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.04 in profit. View our latest analysis for Citaglobal Berhad What Is The Relationship Between ROE And Earnings Growth? We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. 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 Citaglobal Berhad's Earnings Growth And 3.8% ROE It is hard to argue that Citaglobal Berhad's ROE is much good in and of itself. Not just that, even compared to the industry average of 9.0%, the company's ROE is entirely unremarkable. Despite this, surprisingly, Citaglobal Berhad saw an exceptional 51% net income growth over the past five years. Therefore, there could be other reasons behind this growth. Such as - high earnings retention or an efficient management in place. As a next step, we compared Citaglobal Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 22%. Earnings growth is an important metric to consider when valuing a stock. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Citaglobal Berhad is trading on a high P/E or a low P/E, relative to its industry. Is Citaglobal Berhad Using Its Retained Earnings Effectively? Citaglobal Berhad has a three-year median payout ratio of 28% (where it is retaining 72% of its income) which is not too low or not too high. This suggests that its dividend is well covered, and given the high growth we discussed above, it looks like Citaglobal Berhad is reinvesting its earnings efficiently. Moreover, Citaglobal Berhad is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Conclusion On the whole, we do feel that Citaglobal Berhad has some positive attributes. Even in spite of the low rate of return, the company has posted impressive earnings growth as a result of reinvesting heavily into its business. While we won't completely dismiss the company, what we would do, is try to ascertain how risky the business is to make a more informed decision around the company. You can see the 1 risk we have identified for Citaglobal Berhad by visiting our risks dashboard for free on our platform here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Sign in to access your portfolio
Yahoo
15 minutes ago
- Yahoo
China a critical partner to Europe, Xinhua says hours before leaders meet
BEIJING (Reuters) -China is a "critical partner" to Europe with a range of shared interests, state news agency Xinhua said in a commentary piece, downplaying Beijing's rivalry with the European Union bloc hours before a key summit between leaders of both sides on Thursday. "As the international landscape grows increasingly fraught, the anniversary offers a timely reminder: China is a critical partner to Europe, not a systemic rival," Xinhua wrote, underscoring the conciliatory tone China appeared to be willing to take during the summit if the EU corresponded. Xinhua said the distinction between partner and rival mattered, pointing out common interests including trade, climate, and global governance. "These areas of common ground should not be eclipsed by isolated points of friction," it said. European Commission President Ursula von der Leyen and European Council President António Costa are in Beijing for high-level meetings with China's President Xi Jinping and Premier Li Qiang. The summit, marking the 50th anniversary of diplomatic relations between the EU and China, will be dominated by trade tensions over electric vehicles, market access and Chinese industrial overcapacity. Expectations for the summit are low after weeks of escalating tensions over tit-for-tat trade disputes, hawkish rhetoric from EU leaders and wrangling over the format of the summit, which was abruptly shortened from two days to one at Beijing's request. "Like all major economic players, China and the EU do not agree on everything. But disagreement does not equal confrontation," Xinhua said, adding that the relationship needs more trust.
Yahoo
15 minutes ago
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Is Hong Leong Asia Ltd.'s (SGX:H22) Stock's Recent Performance Being Led By Its Attractive Financial Prospects?
Hong Leong Asia (SGX:H22) has had a great run on the share market with its stock up by a significant 55% over the last three months. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. In this article, we decided to focus on Hong Leong Asia's ROE. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. How To Calculate Return On Equity? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Hong Leong Asia is: 6.2% = S$152m ÷ S$2.5b (Based on the trailing twelve months to December 2024). The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every SGD1 worth of equity, the company was able to earn SGD0.06 in profit. See our latest analysis for Hong Leong Asia What Has ROE Got To Do With Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don't share these attributes. A Side By Side comparison of Hong Leong Asia's Earnings Growth And 6.2% ROE On the face of it, Hong Leong Asia's ROE is not much to talk about. Although a closer study shows that the company's ROE is higher than the industry average of 4.2% which we definitely can't overlook. Consequently, this likely laid the ground for the decent growth of 10% seen over the past five years by Hong Leong Asia. Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. So there might well be other reasons for the earnings to grow. Such as- high earnings retention or the company belonging to a high growth industry. As a next step, we compared Hong Leong Asia's net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 10% in the same period. Earnings growth is an important metric to consider when valuing a stock. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Hong Leong Asia is trading on a high P/E or a low P/E, relative to its industry. Is Hong Leong Asia Efficiently Re-investing Its Profits? Hong Leong Asia has a three-year median payout ratio of 27%, which implies that it retains the remaining 73% of its profits. This suggests that its dividend is well covered, and given the decent growth seen by the company, it looks like management is reinvesting its earnings efficiently. Besides, Hong Leong Asia has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 28%. Still, forecasts suggest that Hong Leong Asia's future ROE will rise to 11% even though the the company's payout ratio is not expected to change by much. Summary Overall, we are quite pleased with Hong Leong Asia's performance. 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. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. 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. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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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