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Yahoo
31-05-2025
- Business
- Yahoo
We Think You Can Look Beyond Hibiscus Petroleum Berhad's (KLSE:HIBISCS) Lackluster Earnings
Soft earnings didn't appear to concern Hibiscus Petroleum Berhad's (KLSE:HIBISCS) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. This ratio tells us how much of a company's profit is not backed by free cashflow. That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. 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. 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 March 2025, Hibiscus Petroleum Berhad had an accrual ratio of -0.33. Therefore, its statutory earnings were very significantly less than its free cashflow. Indeed, in the last twelve months it reported free cash flow of RM1.0b, well over the RM151.6m it reported in profit. Hibiscus Petroleum Berhad's free cash flow improved over the last year, which is generally good to see. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. As we discussed above, Hibiscus Petroleum Berhad's accrual ratio indicates strong conversion of profit to free cash flow, which is a positive for the company. Based on this observation, we consider it possible that Hibiscus Petroleum Berhad's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Hibiscus Petroleum Berhad as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Hibiscus Petroleum Berhad has 2 warning signs and it would be unwise to ignore these bad boys. Today we've zoomed in on a single data point to better understand the nature of Hibiscus Petroleum 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful. 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
17-04-2025
- Business
- Yahoo
Kimlun Corporation Berhad (KLSE:KIMLUN) May Have Issues Allocating Its Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after briefly looking over the numbers, we don't think Kimlun Corporation Berhad (KLSE:KIMLUN) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Our free stock report includes 2 warning signs investors should be aware of before investing in Kimlun Corporation Berhad. Read for free now. For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on Kimlun Corporation Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.039 = RM41m ÷ (RM2.1b - RM1.0b) (Based on the trailing twelve months to December 2024). So, Kimlun Corporation Berhad has an ROCE of 3.9%. In absolute terms, that's a low return and it also under-performs the Construction industry average of 10.0%. View our latest analysis for Kimlun Corporation Berhad Above you can see how the current ROCE for Kimlun Corporation 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 Kimlun Corporation Berhad for free. On the surface, the trend of ROCE at Kimlun Corporation Berhad doesn't inspire confidence. Over the last five years, returns on capital have decreased to 3.9% from 10% five years ago. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance. On a separate but related note, it's important to know that Kimlun Corporation Berhad has a current liabilities to total assets ratio of 49%, which we'd consider pretty high. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks. In summary, despite lower returns in the short term, we're encouraged to see that Kimlun Corporation Berhad is reinvesting for growth and has higher sales as a result. Furthermore the stock has climbed 45% over the last five years, it would appear that investors are upbeat about the future. So while investors seem to be recognizing these promising trends, we would look further into this stock to make sure the other metrics justify the positive view. Kimlun Corporation Berhad does have some risks, we noticed 2 warning signs (and 1 which is a bit concerning) we think you should know about. While Kimlun Corporation Berhad 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. 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
17-04-2025
- Business
- Yahoo
NTPM Holdings Berhad's (KLSE:NTPM) Returns On Capital Not Reflecting Well On The Business
When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. When we see a declining return on capital employed (ROCE) in conjunction with a declining base of capital employed, that's often how a mature business shows signs of aging. Ultimately this means that the company is earning less per dollar invested and on top of that, it's shrinking its base of capital employed. In light of that, from a first glance at NTPM Holdings Berhad (KLSE:NTPM), we've spotted some signs that it could be struggling, so let's investigate. 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. 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. The formula for this calculation on NTPM Holdings Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.025 = RM14m ÷ (RM1.0b - RM459m) (Based on the trailing twelve months to January 2025). Thus, NTPM Holdings Berhad has an ROCE of 2.5%. In absolute terms, that's a low return and it also under-performs the Household Products industry average of 11%. View our latest analysis for NTPM Holdings Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for NTPM Holdings Berhad's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of NTPM Holdings Berhad. There is reason to be cautious about NTPM Holdings Berhad, given the returns are trending downwards. About five years ago, returns on capital were 4.1%, however they're now substantially lower than that as we saw above. Meanwhile, capital employed in the business has stayed roughly the flat over the period. Since returns are falling and the business has the same amount of assets employed, this can suggest it's a mature business that hasn't had much growth in the last five years. If these trends continue, we wouldn't expect NTPM Holdings Berhad to turn into a multi-bagger. Another thing to note, NTPM Holdings Berhad has a high ratio of current liabilities to total assets of 44%. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower. In summary, it's unfortunate that NTPM Holdings Berhad is generating lower returns from the same amount of capital. Long term shareholders who've owned the stock over the last five years have experienced a 30% depreciation in their investment, so it appears the market might not like these trends either. That being the case, unless the underlying trends revert to a more positive trajectory, we'd consider looking elsewhere. One more thing: We've identified 3 warning signs with NTPM Holdings Berhad (at least 2 which are a bit unpleasant) , and understanding them would certainly be useful. 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) 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.
Yahoo
27-03-2025
- Business
- Yahoo
Capital Allocation Trends At Fiamma Holdings Berhad (KLSE:FIAMMA) Aren't Ideal
If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. In light of that, when we looked at Fiamma Holdings Berhad (KLSE:FIAMMA) and its ROCE trend, we weren't exactly thrilled. For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Fiamma Holdings Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.048 = RM37m ÷ (RM1.0b - RM254m) (Based on the trailing twelve months to December 2024). Thus, Fiamma Holdings Berhad has an ROCE of 4.8%. Even though it's in line with the industry average of 4.8%, it's still a low return by itself. See our latest analysis for Fiamma Holdings Berhad While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Fiamma Holdings Berhad has performed in the past in other metrics, you can view this free graph of Fiamma Holdings Berhad's past earnings, revenue and cash flow. Unfortunately, the trend isn't great with ROCE falling from 8.0% five years ago, while capital employed has grown 32%. Usually this isn't ideal, but given Fiamma Holdings Berhad conducted a capital raising before their most recent earnings announcement, that would've likely contributed, at least partially, to the increased capital employed figure. The funds raised likely haven't been put to work yet so it's worth watching what happens in the future with Fiamma Holdings Berhad's earnings and if they change as a result from the capital raise. To conclude, we've found that Fiamma Holdings Berhad is reinvesting in the business, but returns have been falling. Yet to long term shareholders the stock has gifted them an incredible 174% return in the last five years, so the market appears to be rosy about its future. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high. Like most companies, Fiamma Holdings Berhad does come with some risks, and we've found 1 warning sign that you should be aware of. For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. 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.
Yahoo
27-03-2025
- Business
- Yahoo
Returns On Capital Are Showing Encouraging Signs At Southern Acids (M) Berhad (KLSE:SAB)
If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, we've noticed some promising trends at Southern Acids (M) Berhad (KLSE:SAB) so let's look a bit deeper. 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. 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. The formula for this calculation on Southern Acids (M) Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.08 = RM74m ÷ (RM1.0b - RM117m) (Based on the trailing twelve months to December 2024). Thus, Southern Acids (M) Berhad has an ROCE of 8.0%. Even though it's in line with the industry average of 8.0%, it's still a low return by itself. View our latest analysis for Southern Acids (M) Berhad While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Southern Acids (M) Berhad has performed in the past in other metrics, you can view this free graph of Southern Acids (M) Berhad's past earnings, revenue and cash flow. Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The data shows that returns on capital have increased substantially over the last five years to 8.0%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 32%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers. In summary, it's great to see that Southern Acids (M) Berhad can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has only returned 9.9% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term. If you'd like to know more about Southern Acids (M) Berhad, we've spotted 2 warning signs, and 1 of them doesn't sit too well with us. While Southern Acids (M) Berhad 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. 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
