Latest news with #PLYTECHoldingBerhad
Yahoo
7 days ago
- Business
- Yahoo
PLYTEC Holding Berhad's (KLSE:PLYTEC) Solid Profits Have Weak Fundamentals
PLYTEC Holding Berhad (KLSE:PLYTEC) announced strong profits, but the stock was stagnant. Our analysis suggests that shareholders have noticed something concerning in the numbers. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit. The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. This ratio tells us how much of a company's profit is not backed by free cashflow. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future". For the year to March 2025, PLYTEC Holding Berhad had an accrual ratio of 0.23. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. In the last twelve months it actually had negative free cash flow, with an outflow of RM32m despite its profit of RM12.4m, mentioned above. Coming off the back of negative free cash flow last year, we imagine some shareholders might wonder if its cash burn of RM32m, this year, indicates high risk. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of PLYTEC Holding Berhad. PLYTEC Holding Berhad didn't convert much of its profit to free cash flow in the last year, which some investors may consider rather suboptimal. Because of this, we think that it may be that PLYTEC Holding Berhad's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 48% EPS growth in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about PLYTEC Holding Berhad as a business, it's important to be aware of any risks it's facing. For instance, we've identified 3 warning signs for PLYTEC Holding Berhad (1 can't be ignored) you should be familiar with. Today we've zoomed in on a single data point to better understand the nature of PLYTEC Holding Berhad's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-05-2025
- Business
- Yahoo
PLYTEC Holding Berhad's (KLSE:PLYTEC) Earnings Are Weaker Than They Seem
PLYTEC Holding Berhad (KLSE:PLYTEC) announced strong profits, but the stock was stagnant. We did some digging, and we found some concerning factors in the details. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'. As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. That is not intended to imply we should worry about a positive accrual ratio, but it's worth noting where the accrual ratio is rather high. Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking. For the year to December 2024, PLYTEC Holding Berhad had an accrual ratio of 0.23. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. Even though it reported a profit of RM13.3m, a look at free cash flow indicates it actually burnt through RM27m in the last year. We also note that PLYTEC Holding Berhad's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of RM27m. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of PLYTEC Holding Berhad. PLYTEC Holding Berhad's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings. Because of this, we think that it may be that PLYTEC Holding Berhad's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 74% EPS growth in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about PLYTEC Holding Berhad as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for PLYTEC Holding Berhad (1 makes us a bit uncomfortable!) that we believe deserve your full attention. This note has only looked at a single factor that sheds light on the nature of PLYTEC Holding Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. 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.
