Latest news with #SunmowHoldingBerhad
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
18-04-2025
- Business
- Yahoo
There's Been No Shortage Of Growth Recently For Sunmow Holding Berhad's (KLSE:SUNMOW) Returns On Capital
What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Sunmow Holding Berhad (KLSE:SUNMOW) looks quite promising in regards to its trends of return on capital. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. 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 Sunmow Holding Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.13 = RM8.7m ÷ (RM160m - RM91m) (Based on the trailing twelve months to December 2024). Thus, Sunmow Holding Berhad has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Construction industry average of 10.0% it's much better. See our latest analysis for Sunmow Holding Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for Sunmow Holding Berhad's ROCE against it's prior returns. If you'd like to look at how Sunmow Holding Berhad has performed in the past in other metrics, you can view this free graph of Sunmow Holding Berhad's past earnings, revenue and cash flow. The trends we've noticed at Sunmow Holding Berhad are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 13%. Basically the business is earning more per dollar of capital invested and in addition to that, 121% more capital is being employed now too. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers. Another thing to note, Sunmow Holding Berhad has a high ratio of current liabilities to total assets of 57%. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower. A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Sunmow Holding Berhad has. And with a respectable 38% awarded to those who held the stock over the last three years, you could argue that these developments are starting to get the attention they deserve. Therefore, we think it would be worth your time to check if these trends are going to continue. One final note, you should learn about the 4 warning signs we've spotted with Sunmow Holding Berhad (including 2 which are a bit concerning) . While Sunmow Holding 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. Sign in to access your portfolio
