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Yahoo
20-05-2025
- Business
- Yahoo
Declining Stock and Solid Fundamentals: Is The Market Wrong About MCE Holdings Berhad (KLSE:MCEHLDG)?
It is hard to get excited after looking at MCE Holdings Berhad's (KLSE:MCEHLDG) recent performance, when its stock has declined 5.8% over the past three months. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Particularly, we will be paying attention to MCE Holdings Berhad's ROE today. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. 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. The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for MCE Holdings Berhad is: 13% = RM21m ÷ RM161m (Based on the trailing twelve months to January 2025). The 'return' is the income the business earned over the last year. Another way to think of that is that for every MYR1 worth of equity, the company was able to earn MYR0.13 in profit. View our latest analysis for MCE Holdings Berhad We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. 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. 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. To start with, MCE Holdings Berhad's ROE looks acceptable. On comparing with the average industry ROE of 7.7% the company's ROE looks pretty remarkable. Probably as a result of this, MCE Holdings Berhad was able to see an impressive net income growth of 61% over the last five years. We reckon that there could also be other factors at play here. Such as - high earnings retention or an efficient management in place. Next, on comparing with the industry net income growth, we found that MCE Holdings Berhad's growth is quite high when compared to the industry average growth of 42% in the same period, which is great to see. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you're wondering about MCE Holdings Berhad's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry. MCE Holdings Berhad's ' three-year median payout ratio is on the lower side at 21% implying that it is retaining a higher percentage (79%) of its profits. So it looks like MCE Holdings Berhad is reinvesting profits heavily to grow its business, which shows in its earnings growth. Besides, MCE Holdings Berhad has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Overall, we are quite pleased with MCE Holdings Berhad's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. If the company continues to grow its earnings the way it has, that could have a positive impact on its share price given how earnings per share influence long-term share prices. Not to forget, share price outcomes are also dependent on the potential risks a company may face. So it is important for investors to be aware of the risks involved in the business. You can see the 3 risks we have identified for MCE Holdings 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
04-05-2025
- Business
- Yahoo
Returns On Capital Signal Tricky Times Ahead For TMC Life Sciences Berhad (KLSE:TMCLIFE)
What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. 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 TMC Life Sciences Berhad (KLSE:TMCLIFE) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper 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. 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 TMC Life Sciences Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.02 = RM21m ÷ (RM1.1b - RM107m) (Based on the trailing twelve months to December 2024). Therefore, TMC Life Sciences Berhad has an ROCE of 2.0%. In absolute terms, that's a low return and it also under-performs the Healthcare industry average of 9.9%. View our latest analysis for TMC Life Sciences 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 TMC Life Sciences Berhad. On the surface, the trend of ROCE at TMC Life Sciences Berhad doesn't inspire confidence. Around five years ago the returns on capital were 4.1%, but since then they've fallen to 2.0%. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. 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 TMC Life Sciences Berhad is reinvesting in the business, but returns have been falling. And in the last five years, the stock has given away 12% so the market doesn't look too hopeful on these trends strengthening any time soon. Therefore based on the analysis done in this article, we don't think TMC Life Sciences Berhad has the makings of a multi-bagger. If you want to continue researching TMC Life Sciences Berhad, you might be interested to know about the 2 warning signs that our analysis has discovered. While TMC Life Sciences 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
10-04-2025
- Business
- Yahoo
Investors Shouldn't Overlook TAFI Industries Berhad's (KLSE:TAFI) Impressive Returns On Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. So when we looked at the ROCE trend of TAFI Industries Berhad (KLSE:TAFI) we really liked what we saw. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for TAFI Industries Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.21 = RM21m ÷ (RM248m - RM148m) (Based on the trailing twelve months to December 2024). So, TAFI Industries Berhad has an ROCE of 21%. In absolute terms that's a great return and it's even better than the Commercial Services industry average of 6.0%. Check out our latest analysis for TAFI Industries Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for TAFI Industries Berhad's ROCE against it's prior returns. If you're interested in investigating TAFI Industries Berhad's past further, check out this free graph covering TAFI Industries Berhad's past earnings, revenue and cash flow . The fact that TAFI Industries Berhad is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 21% on its capital. Not only that, but the company is utilizing 141% more capital than before, but that's to be expected from a company trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger. For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 60% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses. Long story short, we're delighted to see that TAFI Industries Berhad's reinvestment activities have paid off and the company is now profitable. Since the stock has returned a staggering 499% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if TAFI Industries Berhad can keep these trends up, it could have a bright future ahead. One final note, you should learn about the 2 warning signs we've spotted with TAFI Industries Berhad (including 1 which is a bit concerning) . High returns are a key ingredient to strong performance, so check out our free list ofstocks 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
08-04-2025
- 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.
Yahoo
07-03-2025
- Business
- Yahoo
PDZ Holdings Bhd (KLSE:PDZ) Strong Profits May Be Masking Some Underlying Issues
The recent earnings posted by PDZ Holdings Bhd (KLSE:PDZ) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see. See our latest analysis for PDZ Holdings Bhd Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. 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'. 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. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future". PDZ Holdings Bhd has an accrual ratio of 2.27 for the year to December 2024. As a general rule, that bodes poorly for future profitability. To wit, the company did not generate one whit of free cashflow in that time. Even though it reported a profit of RM8.38m, a look at free cash flow indicates it actually burnt through RM21m in the last year. We also note that PDZ Holdings Bhd's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of RM21m. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of PDZ Holdings Bhd. As we discussed above, we think PDZ Holdings Bhd's earnings were not supported by free cash flow, which might concern some investors. For this reason, we think that PDZ Holdings Bhd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. On the bright side, the company showed enough improvement to book a profit this year, after losing money 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. So while earnings quality is important, it's equally important to consider the risks facing PDZ Holdings Bhd at this point in time. Our analysis shows 4 warning signs for PDZ Holdings Bhd (3 shouldn't be ignored!) and we strongly recommend you look at them before investing. Today we've zoomed in on a single data point to better understand the nature of PDZ Holdings Bhd'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. 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.
