18-04-2025
Returns Are Gaining Momentum At Tien Wah Press Holdings Berhad (KLSE:TIENWAH)
If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Tien Wah Press Holdings Berhad (KLSE:TIENWAH) and its trend of ROCE, we really liked what we saw.
Our free stock report includes 2 warning signs investors should be aware of before investing in Tien Wah Press Holdings 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 Tien Wah Press Holdings Berhad is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.059 = RM24m ÷ (RM492m - RM84m) (Based on the trailing twelve months to December 2024).
Therefore, Tien Wah Press Holdings Berhad has an ROCE of 5.9%. On its own that's a low return on capital but it's in line with the industry's average returns of 6.0%.
Check out our latest analysis for Tien Wah Press Holdings Berhad
Historical performance is a great place to start when researching a stock so above you can see the gauge for Tien Wah Press 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 Tien Wah Press Holdings Berhad.
Tien Wah Press Holdings Berhad has broken into the black (profitability) and we're sure it's a sight for sore eyes. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 5.9%, which is always encouraging. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.
To sum it up, Tien Wah Press Holdings Berhad is collecting higher returns from the same amount of capital, and that's impressive. Considering the stock has delivered 12% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.
Like most companies, Tien Wah Press Holdings Berhad does come with some risks, and we've found 2 warning signs that you should be aware of.
While Tien Wah Press Holdings 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.
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