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Yahoo
5 days ago
- Business
- Yahoo
Some Investors May Be Worried About Supercomnet Technologies Berhad's (KLSE:SCOMNET) Returns On Capital
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. However, after investigating Supercomnet Technologies Berhad (KLSE:SCOMNET), we don't think it's current trends fit the mold of a multi-bagger. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. 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. To calculate this metric for Supercomnet Technologies Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.082 = RM35m ÷ (RM447m - RM16m) (Based on the trailing twelve months to March 2025). Therefore, Supercomnet Technologies Berhad has an ROCE of 8.2%. Ultimately, that's a low return and it under-performs the Electrical industry average of 12%. Check out our latest analysis for Supercomnet Technologies Berhad Above you can see how the current ROCE for Supercomnet Technologies 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 Supercomnet Technologies Berhad for free. On the surface, the trend of ROCE at Supercomnet Technologies Berhad doesn't inspire confidence. To be more specific, ROCE has fallen from 15% over the last five years. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It may take some time before the company starts to see any change in earnings from these investments. Bringing it all together, while we're somewhat encouraged by Supercomnet Technologies Berhad's reinvestment in its own business, we're aware that returns are shrinking. Additionally, the stock's total return to shareholders over the last five years has been flat, which isn't too surprising. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere. Supercomnet Technologies Berhad could be trading at an attractive price in other respects, so you might find our on our platform quite valuable. While Supercomnet Technologies Berhad isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. 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
30-05-2025
- Business
- Yahoo
Does The Market Have A Low Tolerance For FCW Holdings Berhad's (KLSE:FCW) Mixed Fundamentals?
FCW Holdings Berhad (KLSE:FCW) has had a rough three months with its share price down 1.2%. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention. In this article, we decided to focus on FCW Holdings Berhad's ROE. 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. Put another way, it reveals the company's success at turning shareholder investments into profits. 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. 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 FCW Holdings Berhad is: 6.1% = RM16m ÷ RM264m (Based on the trailing twelve months to March 2025). The 'return' refers to a company's earnings over the last year. So, this means that for every MYR1 of its shareholder's investments, the company generates a profit of MYR0.06. See our latest analysis for FCW Holdings Berhad So far, we've learned that ROE is a measure of a company's profitability. 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 everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. At first glance, FCW Holdings Berhad's ROE doesn't look very promising. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 9.6% either. As a result, FCW Holdings Berhad's flat net income growth over the past five years doesn't come as a surprise given its lower ROE. We then compared FCW Holdings Berhad's net income growth with the industry and found that the average industry growth rate was 15% in the same 5-year 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). This then helps them determine if the stock is placed for a bright or bleak future. 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 FCW Holdings Berhad is trading on a high P/E or a low P/E, relative to its industry. Despite having a moderate three-year median payout ratio of 26% (meaning the company retains74% of profits) in the last three-year period, FCW Holdings Berhad's earnings growth was more or les flat. Therefore, there might be some other reasons to explain the lack in that respect. For example, the business could be in decline. Moreover, FCW Holdings Berhad has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. In total, we're a bit ambivalent about FCW Holdings Berhad's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. Up till now, we've only made a short study of the company's growth data. So it may be worth checking this free detailed graph of FCW Holdings Berhad's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance. 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
08-05-2025
- Business
- Yahoo
Sunmow Holding Berhad's (KLSE:SUNMOW) Weak Earnings May Only Reveal A Part Of The Whole Picture
A lackluster earnings announcement from Sunmow Holding Berhad (KLSE:SUNMOW) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings. 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. KLSE:SUNMOW Earnings and Revenue History May 8th 2025 A Closer Look At Sunmow Holding Berhad's Earnings 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. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. 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. 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". Over the twelve months to December 2024, Sunmow Holding Berhad recorded an accrual ratio of 0.34. Unfortunately, that means its free cash flow was a lot less than its statutory profit, which makes us doubt the utility of profit as a guide. Even though it reported a profit of RM7.19m, a look at free cash flow indicates it actually burnt through RM7.3m in the last year. It's worth noting that Sunmow Holding Berhad generated positive FCF of RM16m a year ago, so at least they've done it in the past. One positive for Sunmow Holding Berhad shareholders is that it's accrual ratio was significantly better last year, providing reason to believe that it may return to stronger cash conversion in the future. Shareholders should look for improved cashflow relative to profit in the current year, if that is indeed the case. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sunmow Holding Berhad. Our Take On Sunmow Holding Berhad's Profit Performance As we discussed above, we think Sunmow Holding Berhad's earnings were not supported by free cash flow, which might concern some investors. For this reason, we think that Sunmow Holding Berhad's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the good news is that its EPS growth over the last three years has been very impressive. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 4 warning signs for Sunmow Holding Berhad (of which 2 are a bit unpleasant!) you should know about.
Yahoo
13-04-2025
- Business
- Yahoo
Returns At Carlo Rino Group Berhad (KLSE:CARLORINO) Are On The Way Up
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Carlo Rino Group Berhad's (KLSE:CARLORINO) returns on capital, so let's have a look. 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. 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. To calculate this metric for Carlo Rino Group Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.14 = RM26m ÷ (RM202m - RM16m) (Based on the trailing twelve months to December 2024). Therefore, Carlo Rino Group Berhad has an ROCE of 14%. In absolute terms, that's a satisfactory return, but compared to the Specialty Retail industry average of 10% it's much better. Check out our latest analysis for Carlo Rino Group Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for Carlo Rino Group Berhad's ROCE against it's prior returns. If you'd like to look at how Carlo Rino Group Berhad has performed in the past in other metrics, you can view this free graph of Carlo Rino Group Berhad's past earnings, revenue and cash flow . Investors would be pleased with what's happening at Carlo Rino Group Berhad. The data shows that returns on capital have increased substantially over the last five years to 14%. 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 87%. 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 Carlo Rino Group 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 returned a staggering 343% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue. If you want to continue researching Carlo Rino Group Berhad, you might be interested to know about the 3 warning signs that our analysis has discovered. 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
08-04-2025
- Business
- Yahoo
OpenSys (M) Berhad (KLSE:OPENSYS) Is Reinvesting At Lower Rates Of Return
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Having said that, from a first glance at OpenSys (M) Berhad (KLSE:OPENSYS) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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. To calculate this metric for OpenSys (M) Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.15 = RM16m ÷ (RM127m - RM21m) (Based on the trailing twelve months to December 2024). Therefore, OpenSys (M) Berhad has an ROCE of 15%. On its own, that's a standard return, however it's much better than the 8.2% generated by the Tech industry. View our latest analysis for OpenSys (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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of OpenSys (M) Berhad . In terms of OpenSys (M) Berhad's historical ROCE movements, the trend isn't fantastic. Over the last five years, returns on capital have decreased to 15% from 20% five years ago. However it looks like OpenSys (M) Berhad might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line. To conclude, we've found that OpenSys (M) Berhad is reinvesting in the business, but returns have been falling. Although the market must be expecting these trends to improve because the stock has gained 54% over the last five years. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high. OpenSys (M) Berhad does have some risks though, and we've spotted 2 warning signs for OpenSys (M) Berhad that you might be interested in. While OpenSys (M) Berhad isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. 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.
