26-07-2025
Returns On Capital At Suria Capital Holdings Berhad (KLSE:SURIA) Paint A Concerning Picture
What financial metrics can indicate to us that a company is maturing or even 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. Basically the company is earning less on its investments and it is also reducing its total assets. So after we looked into Suria Capital Holdings Berhad (KLSE:SURIA), the trends above didn't look too great.
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What Is Return On Capital Employed (ROCE)?
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. Analysts use this formula to calculate it for Suria Capital Holdings Berhad:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.025 = RM33m ÷ (RM1.4b - RM89m) (Based on the trailing twelve months to March 2025).
So, Suria Capital Holdings Berhad has an ROCE of 2.5%. In absolute terms, that's a low return and it also under-performs the Infrastructure industry average of 6.5%.
See our latest analysis for Suria Capital Holdings Berhad
In the above chart we have measured Suria Capital Holdings Berhad's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Suria Capital Holdings Berhad .
The Trend Of ROCE
There is reason to be cautious about Suria Capital Holdings Berhad, given the returns are trending downwards. About five years ago, returns on capital were 4.0%, however they're now substantially lower than that as we saw above. Meanwhile, capital employed in the business has stayed roughly the flat over the period. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. If these trends continue, we wouldn't expect Suria Capital Holdings Berhad to turn into a multi-bagger.
Our Take On Suria Capital Holdings Berhad's ROCE
In summary, it's unfortunate that Suria Capital Holdings Berhad is generating lower returns from the same amount of capital. Yet despite these poor fundamentals, the stock has gained a huge 106% over the last five years, so investors appear very optimistic. Regardless, we don't feel too comfortable with the fundamentals so we'd be steering clear of this stock for now.
Suria Capital Holdings Berhad could be trading at an attractive price in other respects, so you might find our on our platform quite valuable.
While Suria Capital 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.
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