Latest news with #RM7.3m
Yahoo
10-05-2025
- Business
- Yahoo
We Think You Can Look Beyond Kucingko Berhad's (KLSE:KUCINGKO) Lackluster Earnings
Kucingko Berhad's (KLSE:KUCINGKO) stock was strong despite it releasing a soft earnings report last week. We think that investors might be looking at some positive factors beyond the earnings numbers. 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. 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. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. The ratio shows us how much a company's profit exceeds its FCF. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. 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. Over the twelve months to December 2024, Kucingko Berhad recorded an accrual ratio of -0.76. That indicates that its free cash flow quite significantly exceeded its statutory profit. In fact, it had free cash flow of RM7.3m in the last year, which was a lot more than its statutory profit of RM5.04m. Kucingko 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, Kucingko 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 Kucingko Berhad's statutory profit actually understates its earnings potential! And we are pleased to note that EPS is at least heading in the right direction over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 4 warning signs for Kucingko Berhad (of which 2 make us uncomfortable!) you should know about. Today we've zoomed in on a single data point to better understand the nature of Kucingko Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.
Yahoo
09-05-2025
- Business
- Yahoo
Impressive Earnings May Not Tell The Whole Story For Radiant Globaltech Berhad (KLSE:RGTECH)
Radiant Globaltech Berhad (KLSE:RGTECH) announced strong profits, but the stock was stagnant. Our analysis suggests that shareholders have noticed something concerning in the numbers. We've discovered 2 warning signs about Radiant Globaltech Berhad. View them for free. 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. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the 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 it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth. Radiant Globaltech Berhad has an accrual ratio of 0.27 for the year to December 2024. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. Even though it reported a profit of RM8.01m, a look at free cash flow indicates it actually burnt through RM7.3m in the last year. We saw that FCF was RM4.6m a year ago though, so Radiant Globaltech Berhad has at least been able to generate positive FCF in the past. 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 Radiant Globaltech Berhad. One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Radiant Globaltech Berhad increased the number of shares on issue by 5.8% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. Check out Radiant Globaltech Berhad's historical EPS growth by clicking on this link. Radiant Globaltech Berhad has improved its profit over the last three years, with an annualized gain of 9.2% in that time. And in the last year the company managed to bump profit up by 4.6%. On the other hand, earnings per share are only up 4.6% in that time. So you can see that the dilution has had a bit of an impact on shareholders. In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Radiant Globaltech Berhad can grow EPS persistently. 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. As it turns out, Radiant Globaltech Berhad couldn't match its profit with cashflow and its dilution means that earnings per share growth is lagging net income growth. Considering all this we'd argue Radiant Globaltech Berhad's profits probably give an overly generous impression of its sustainable level of profitability. So while earnings quality is important, it's equally important to consider the risks facing Radiant Globaltech Berhad at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Radiant Globaltech Berhad (including 1 which is concerning). Our examination of Radiant Globaltech Berhad has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. 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.
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
28-02-2025
- Business
- Yahoo
Wentel Engineering Holdings Berhad's (KLSE:WENTEL) Profits Appear To Have Quality Issues
The recent earnings posted by Wentel Engineering Holdings Berhad (KLSE:WENTEL) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders. View our latest analysis for Wentel Engineering Holdings 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. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. 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. Wentel Engineering Holdings Berhad has an accrual ratio of 0.26 for the year to December 2024. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. In the last twelve months it actually had negative free cash flow, with an outflow of RM7.3m despite its profit of RM15.0m, mentioned above. We also note that Wentel Engineering Holdings Berhad's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of RM7.3m. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Wentel Engineering Holdings Berhad. Wentel Engineering Holdings Berhad didn't convert much of its profit to free cash flow in the last year, which some investors may consider rather suboptimal. Because of this, we think that it may be that Wentel Engineering Holdings Berhad's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Wentel Engineering Holdings Berhad (of which 1 shouldn't be ignored!) you should know about. Today we've zoomed in on a single data point to better understand the nature of Wentel Engineering Holdings 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. 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. Sign in to access your portfolio
Yahoo
13-02-2025
- Business
- Yahoo
Capital Allocation Trends At SCC Holdings Berhad (KLSE:SCC) Aren't Ideal
When researching a stock for investment, what can tell us that the company is in decline? Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. This combination can tell you that not only is the company investing less, it's earning less on what it does invest. So after we looked into SCC Holdings Berhad (KLSE:SCC), the trends above didn't look too great. 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. Analysts use this formula to calculate it for SCC Holdings Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.027 = RM1.3m ÷ (RM56m - RM7.3m) (Based on the trailing twelve months to September 2024). Thus, SCC Holdings Berhad has an ROCE of 2.7%. In absolute terms, that's a low return and it also under-performs the Trade Distributors industry average of 7.1%. View our latest analysis for SCC Holdings Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for SCC Holdings Berhad's ROCE against it's prior returns. If you'd like to look at how SCC Holdings Berhad has performed in the past in other metrics, you can view this free graph of SCC Holdings Berhad's past earnings, revenue and cash flow. We are a bit worried about the trend of returns on capital at SCC Holdings Berhad. To be more specific, the ROCE was 15% five years ago, but since then it has dropped noticeably. On top of that, it's worth noting that the amount of capital employed within the business has remained relatively steady. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on SCC Holdings Berhad becoming one if things continue as they have. All in all, the lower returns from the same amount of capital employed aren't exactly signs of a compounding machine. It should come as no surprise then that the stock has fallen 51% over the last five years, so it looks like investors are recognizing these changes. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere. On a separate note, we've found 3 warning signs for SCC Holdings Berhad you'll probably want to know about. While SCC 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. 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
