Latest news with #RM177m
Yahoo
29-04-2025
- Business
- Yahoo
Investors Could Be Concerned With GDB Holdings Berhad's (KLSE:GDB) Returns On Capital
If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at GDB Holdings Berhad (KLSE:GDB) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look. We've discovered 4 warning signs about GDB Holdings Berhad. View them for free. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for GDB Holdings Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.17 = RM33m ÷ (RM373m - RM177m) (Based on the trailing twelve months to December 2024). Therefore, GDB Holdings Berhad has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 10.0% generated by the Construction industry. View our latest analysis for GDB 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 GDB Holdings Berhad has performed in the past in other metrics, you can view this free graph of GDB Holdings Berhad's past earnings, revenue and cash flow. In terms of GDB Holdings Berhad's historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 27%, but since then they've fallen to 17%. And considering revenue has dropped while employing more capital, we'd be cautious. If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased. On a separate but related note, it's important to know that GDB Holdings Berhad has a current liabilities to total assets ratio of 47%, 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. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower. In summary, we're somewhat concerned by GDB Holdings Berhad's diminishing returns on increasing amounts of capital. Long term shareholders who've owned the stock over the last five years have experienced a 22% depreciation in their investment, so it appears the market might not like these trends either. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere. If you'd like to know more about GDB Holdings Berhad, we've spotted 4 warning signs, and 2 of them can't be ignored. While GDB Holdings 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
08-03-2025
- Business
- Yahoo
NCT Alliance Berhad's (KLSE:NCT) Soft Earnings Don't Show The Whole Picture
Soft earnings didn't appear to concern NCT Alliance Berhad's (KLSE:NCT) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem. View our latest analysis for NCT Alliance Berhad 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. The ratio shows us how much a company's profit exceeds its FCF. 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. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth. Over the twelve months to December 2024, NCT Alliance Berhad recorded an accrual ratio of -0.18. That indicates that its free cash flow quite significantly exceeded its statutory profit. In fact, it had free cash flow of RM177m in the last year, which was a lot more than its statutory profit of RM36.2m. NCT Alliance Berhad's free cash flow improved over the last year, which is generally good to see. Unfortunately for shareholders, the company has also been issuing new shares, diluting their share of future earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of NCT Alliance Berhad. One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. NCT Alliance Berhad expanded the number of shares on issue by 17% over the last year. That means its earnings are split among a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. Check out NCT Alliance Berhad's historical EPS growth by clicking on this link. NCT Alliance Berhad has improved its profit over the last three years, with an annualized gain of 7.3% in that time. But on the other hand, earnings per share actually fell by 54% per year. Net profit actually dropped by 4.5% in the last year. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 14%. So you can see that the dilution has had a bit of an impact on shareholders. In the long term, if NCT Alliance Berhad's earnings per share can increase, then the share price should too. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit. In conclusion, NCT Alliance Berhad has a strong cashflow relative to earnings, which indicates good quality earnings, but the dilution means its earnings per share are dropping faster than its profit. Considering all the aforementioned, we'd venture that NCT Alliance Berhad's profit result is a pretty good guide to its true profitability, albeit a bit on the conservative side. If you'd like to know more about NCT Alliance Berhad as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of NCT Alliance Berhad. In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.
