Nextgreen Global Berhad Third Quarter 2022 Earnings: EPS: RM0.002 (vs RM0.002 in 3Q 2021)

Nextgreen Global Berhad (KLSE:NGGB) Third Quarter 2022 ResultsKey Financial Results Revenue: RM10.6m (down 40% from 3Q 2021). Net income: RM1.12m (down 22% from 3Q 2021). Profit margin: 11% (up from 8.2% in 3Q 2021). The increase in margin was driven by lower expenses. EPS: RM0.002 (in line with 3Q 2021).  KLSE:NGGB Earnings and Revenue History December 4th 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period Nextgreen Global Berhad's share price is broadly unchanged from a week ago.   Risk Analysis It is worth noting though that we have found 2 warning signs for Nextgreen Global Berhad (1 doesn't sit too well with us!) that you need to take into consideration. Valuation is complex, but we're helping make it simple.Find out whether Nextgreen Global Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


There's Reason For Concern Over Nextgreen Global Berhad's (KLSE:NGGB) Massive 48% Price Jump

The Nextgreen Global Berhad (KLSE:NGGB) share price has done very well over the last month, posting an excellent gain of 48%.    Notwithstanding the latest gain, the annual share price return of 10.0% isn't as impressive.    After such a large jump in price, Nextgreen Global Berhad's price-to-earnings (or "P/E") ratio of 64.3x might make it look like a strong sell right now compared to the market in Malaysia, where around half of the companies have P/E ratios below 13x and even P/E's below 8x are quite common.  However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.    For example, consider that Nextgreen Global Berhad's financial performance has been poor lately as it's earnings have been in decline.   One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future.  You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.     View our latest analysis for Nextgreen Global Berhad KLSE:NGGB Price Based on Past Earnings February 28th 2023 We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Nextgreen Global Berhad's earnings, revenue and cash flow.   How Is Nextgreen Global Berhad's Growth Trending?   There's an inherent assumption that a company should far outperform the market for P/E ratios like Nextgreen Global Berhad's to be considered reasonable.   If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 8.1%.   At least EPS has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth.  Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.     This is in contrast to the rest of the market, which is expected to grow by 11% over the next year, materially higher than the company's recent medium-term annualised growth rates.  In light of this, it's alarming that Nextgreen Global Berhad's P/E sits above the majority of other companies.  Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price.  Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh heavily on the share price eventually.    What We Can Learn From Nextgreen Global Berhad's P/E?  Shares in Nextgreen Global Berhad have built up some good momentum lately, which has really inflated its P/E.     While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.  Our examination of Nextgreen Global Berhad revealed its three-year earnings trends aren't impacting its high P/E anywhere near as much as we would have predicted, given they look worse than current market expectations.  When we see weak earnings with slower than market growth, we suspect the share price is at risk of declining, sending the high P/E lower.  Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.      Before you take the next step, you should know about the 2 warning signs for Nextgreen Global Berhad (1 shouldn't be ignored!) that we have uncovered.   You might be able to find a better investment than Nextgreen Global Berhad. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a P/E below 20x (but have proven they can grow earnings). Valuation is complex, but we're helping make it simple.Find out whether Nextgreen Global Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


We Think Nextgreen Global Berhad (KLSE:NGGB) Can Stay On Top Of Its Debt

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.'  So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is.  As with many other companies Nextgreen Global Berhad (KLSE:NGGB) makes use of debt.  But the more important question is: how much risk is that debt creating?  Why Does Debt Bring Risk?  Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow.  If things get really bad, the lenders can take control of the business.  However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders.  Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return.  The first step when considering a company's debt levels is to consider its cash and debt together.   Check out our latest analysis for Nextgreen Global Berhad  What Is Nextgreen Global Berhad's Net Debt?  You can click the graphic below for the historical numbers, but it shows that as of March 2022 Nextgreen Global Berhad had RM22.0m of debt, an increase on RM13.9m, over one year.    However, it does have RM7.97m in cash offsetting this, leading to net debt of about RM14.0m.  KLSE:NGGB Debt to Equity History August 22nd 2022 How Strong Is Nextgreen Global Berhad's Balance Sheet?  Zooming in on the latest balance sheet data, we can see that Nextgreen Global Berhad had liabilities of RM41.8m due within 12 months and liabilities of RM12.5m due beyond that.    On the other hand, it had cash of RM7.97m and RM60.6m worth of receivables due within a year.   So it can boast RM14.2m more liquid assets than total liabilities.   This short term liquidity is a sign that Nextgreen Global Berhad could probably pay off its debt with ease, as its balance sheet is far from stretched.    We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover).  The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).   Looking at its net debt to EBITDA of 1.00 and interest cover of 6.8 times, it seems to us that Nextgreen Global Berhad is probably using debt in a pretty reasonable way.  But the interest payments are certainly sufficient to have us thinking about how affordable its debt is.        Even more impressive was the fact that Nextgreen Global Berhad grew its EBIT by 149% over twelve months.  If maintained that growth will make the debt even more manageable in the years ahead.      When analysing debt levels, the balance sheet is the obvious place to start.  But you can't view debt in total isolation; since Nextgreen Global Berhad will need earnings to service that debt.  So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.  Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash.   So it's worth checking how much of that EBIT is backed by free cash flow.    During the last two years, Nextgreen Global Berhad burned a lot of cash.  While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.    Our View Happily, Nextgreen Global Berhad's impressive EBIT growth rate implies it has the upper hand on its debt.   But the stark truth is that we are concerned by its conversion of EBIT to free cash flow.      All these things considered, it appears that Nextgreen Global Berhad can comfortably handle its current debt levels.  Of course, while this leverage can enhance returns on equity, it does bring more risk, so it's worth keeping an eye on this one.    The balance sheet is clearly the area to focus on when you are analysing debt.  However, not all investment risk resides within the balance sheet - far from it.   These risks can be hard to spot. Every company has them, and we've spotted   2 warning signs for Nextgreen Global Berhad   (of which 1 is concerning!) you should know about.      At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free. Valuation is complex, but we're helping make it simple.Find out whether Nextgreen Global Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Are Strong Financial Prospects The Force That Is Driving The Momentum In Pelikan International Corporation Berhad's KLSE:PELIKAN) Stock?

Pelikan International Corporation Berhad (KLSE:PELIKAN) has had a great run on the share market with its stock up by a significant 54% over the last three months.   Since the market usually pay for a company’s long-term fundamentals, we decided to study the company’s key performance indicators to see if they could be influencing the market.      In this article, we decided to focus on Pelikan International Corporation Berhad's  ROE.    Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested.  Put another way, it reveals the company's success at turning shareholder investments into profits.  Check out our latest analysis for Pelikan International Corporation Berhad  How Do You Calculate Return On Equity?  The formula for ROE is:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Pelikan International Corporation Berhad is:11% = RM59m ÷ RM519m (Based on the trailing twelve months to December 2022). The 'return' is the amount earned after tax over the last twelve months.  That means that for every MYR1 worth of shareholders' equity, the company generated MYR0.11 in profit.   What Is The Relationship Between ROE And Earnings Growth?  Thus far, we have learned that ROE measures how efficiently a company is generating its profits.  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 everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.  Pelikan International Corporation Berhad's Earnings Growth And 11% ROE   At first glance, Pelikan International Corporation Berhad's ROE doesn't look very promising.   However, the fact that the its ROE is quite higher to the industry average of 9.2% doesn't go unnoticed by us.   Particularly, the substantial 51% net income growth seen by Pelikan International Corporation Berhad over the past five years is impressive .  Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower.  So, there might well be other reasons for the earnings to grow.  Such as- high earnings retention or the company belonging to a high growth industry.     As a next step, we compared Pelikan International Corporation Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 13%.   KLSE:PELIKAN Past Earnings Growth May 16th 2023 The basis for attaching value to a company is, to a great extent, tied to its earnings growth.  It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline).   This then helps them determine if the stock is placed for a bright or bleak future.    Is Pelikan International Corporation Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide.    Is Pelikan International Corporation Berhad Using Its Retained Earnings Effectively?    Pelikan International Corporation Berhad doesn't pay any dividend to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above.     Conclusion    On the whole, we feel that Pelikan International Corporation Berhad's performance has been quite good.      In particular, it's great to see that the company has seen significant growth in its earnings backed by a respectable ROE and a high reinvestment rate.        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.  Remember, the price of a stock is also dependent on the perceived risk. Therefore investors must keep themselves informed about the risks involved before investing in any company.    To know the 2 risks we have identified for Pelikan International Corporation Berhad visit our risks dashboard for free. Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Investors Shouldn't Overlook Pelikan International Corporation Berhad's (KLSE:PELIKAN) Impressive Returns On Capital

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics.  Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed.  If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities.    So when we looked at the ROCE trend of Pelikan International Corporation Berhad (KLSE:PELIKAN) we really liked what we saw.     Understanding Return On Capital Employed (ROCE)  If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business.  Analysts use this formula to calculate it for Pelikan International Corporation Berhad:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.23 = RM180m ÷ (RM1.2b - RM429m) (Based on the trailing twelve months to September 2022). Thus, Pelikan International Corporation Berhad has an ROCE of 23%.  That's a fantastic return and not only that, it outpaces the average of 10% earned by companies in a similar industry.     View our latest analysis for Pelikan International Corporation Berhad  KLSE:PELIKAN Return on Capital Employed January 19th 2023 Historical performance is a great place to start when researching a stock so above you can see the gauge for Pelikan International Corporation Berhad's ROCE against it's prior returns.  If you want to delve into the historical earnings, revenue and cash flow of Pelikan International Corporation Berhad, check out these free graphs here.  What Can We Tell From Pelikan International Corporation Berhad's ROCE Trend?  Pelikan International Corporation Berhad has not disappointed with their ROCE growth.   More specifically, while the company has kept capital employed relatively flat over the last  five years, the ROCE has climbed 166% in that same time.  Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies.  The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.     On a related note, the company's ratio of current liabilities to total assets has decreased to 35%, which basically reduces it's funding from the likes of short-term creditors or suppliers.  This tells us that Pelikan International Corporation Berhad has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.     In Conclusion...  As discussed above, Pelikan International Corporation Berhad appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up.       Since the total return from the stock has been almost flat over the last  five years, there might be an opportunity here if the valuation looks good.   That being the case, research into the company's current valuation metrics and future prospects seems fitting.     If you want to know some of the risks facing Pelikan International Corporation Berhad we've found 2 warning signs (1 shouldn't be ignored!) that you should be aware of before investing here.    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. Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Is Pelikan International Corporation Berhad (KLSE:PELIKAN) A Risky Investment?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.'  When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin.  Importantly, Pelikan International Corporation Berhad (KLSE:PELIKAN) does carry debt.  But should shareholders be worried about its use of debt?  Why Does Debt Bring Risk?  Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price.  Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers.  However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control.  Of course, plenty of companies use debt to fund growth, without any negative consequences.  When we examine debt levels, we first consider both cash and debt levels, together.   View our latest analysis for Pelikan International Corporation Berhad  What Is Pelikan International Corporation Berhad's Net Debt?  As you can see below, Pelikan International Corporation Berhad had RM141.0m of debt at September 2022, down from RM334.9m a year prior.    However, it also had RM54.3m in cash, and so its net debt is RM86.7m.  KLSE:PELIKAN Debt to Equity History February 15th 2023 How Healthy Is Pelikan International Corporation Berhad's Balance Sheet?  The latest balance sheet data shows that Pelikan International Corporation Berhad had liabilities of RM428.7m due within a year, and liabilities of RM310.4m falling due after that.   Offsetting these obligations, it had cash of RM54.3m as well as receivables valued at RM309.4m due within 12 months.   So its liabilities outweigh the sum of its cash and (near-term) receivables by RM375.5m.    When you consider that this deficiency exceeds the company's  RM319.7m market capitalization, you might well be inclined to review the balance sheet intently.  Hypothetically, extremely heavy dilution would be required if the company were forced to pay down its liabilities by raising capital at the current share price.    We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover).  This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.   Pelikan International Corporation Berhad has a low net debt to EBITDA ratio of only 0.43.  And its EBIT covers its interest expense a whopping 16.4 times over.  So you could argue it is no more threatened by its debt than an elephant is by a mouse.        Better yet, Pelikan International Corporation Berhad grew its EBIT by 361% last year, which is an impressive improvement.  If maintained that growth will make the debt even more manageable in the years ahead.      When analysing debt levels, the balance sheet is the obvious place to start.  But it is Pelikan International Corporation Berhad's earnings that will influence how the balance sheet holds up in the future.  So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.  Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it.   So it's worth checking how much of that EBIT is backed by free cash flow.    In the last three years, Pelikan International Corporation Berhad created free cash flow amounting to 19% of its EBIT, an uninspiring performance.  For us, cash conversion that low sparks a little paranoia about is ability to extinguish debt.    Our View Pelikan International Corporation Berhad's interest cover was a real positive on this analysis, as was its EBIT growth rate.   In contrast, our confidence was undermined by its apparent struggle to handle its total liabilities.       Looking at all this data makes us feel a little cautious about Pelikan International Corporation Berhad's debt levels.  While debt does have its upside in higher potential returns, we think shareholders should definitely consider how debt levels might make the stock more risky.    The balance sheet is clearly the area to focus on when you are analysing debt.  However, not all investment risk resides within the balance sheet - far from it.   For example Pelikan International Corporation Berhad has   2 warning signs  (and 1 which is potentially serious)  we think you should know about.     Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today. Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Pelikan International Corporation Berhad Full Year 2022 Earnings: EPS: RM0.095 (vs RM0.14 in FY 2021)

Pelikan International Corporation Berhad (KLSE:PELIKAN) Full Year 2022 ResultsKey Financial Results Revenue: RM1.12b (up 12% from FY 2021). Net income: RM57.4m (down 33% from FY 2021). Profit margin: 5.1% (down from 8.5% in FY 2021). The decrease in margin was driven by higher expenses. EPS: RM0.095 (down from RM0.14 in FY 2021).  KLSE:PELIKAN Earnings and Revenue History February 23rd 2023 All figures shown in the chart above are for the trailing 12 month (TTM) period Pelikan International Corporation Berhad shares are down 4.5% from a week ago.   Risk Analysis Be aware that  Pelikan International Corporation Berhad is showing  2 warning signs in our investment analysis that you should know about... Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Pelikan International Corporation Berhad's (KLSE:PELIKAN) three-year earnings growth trails the 70% YoY shareholder returns

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in.  But in contrast you can make much more than 100% if the company does well.  For example, the Pelikan International Corporation Berhad (KLSE:PELIKAN) share price has soared 202% in the last three years.  How nice for those who held the stock!    Also pleasing for shareholders was the 81% gain in the last three months.       Since it's been a strong week for Pelikan International Corporation Berhad shareholders, let's have a look at trend of the longer term fundamentals.    See our latest analysis for Pelikan International Corporation Berhad   To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine.  One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.   Pelikan International Corporation Berhad was able to grow its EPS at 92% per year over three years, sending the share price higher.   This EPS growth is higher than the 45% average annual increase in the share price.  Therefore, it seems the market has moderated its expectations for growth, somewhat.   We'd venture the lowish P/E ratio of 7.62 also reflects the negative sentiment around the stock.    You can see how EPS has changed over time in the image below (click on the chart to see the exact values). KLSE:PELIKAN Earnings Per Share Growth March 22nd 2023 Dive deeper into Pelikan International Corporation Berhad's key metrics by checking this interactive graph of Pelikan International Corporation Berhad's earnings, revenue and cash flow.  What About The Total Shareholder Return (TSR)? Investors should note that there's a difference between Pelikan International Corporation Berhad's total shareholder return (TSR) and its share price change, which we've covered above.  Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders.    Its history of dividend payouts mean that Pelikan International Corporation Berhad's TSR of 391% over the last 3 years is better than the share price return.    A Different Perspective It's good to see that Pelikan International Corporation Berhad has rewarded shareholders with a total shareholder return of 169% in the last twelve months.    That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately.  Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time.        It's always interesting to track share price performance over the longer term. But to understand Pelikan International Corporation Berhad better, we need to consider many other factors.   Consider for instance, the ever-present spectre of investment risk.   We've identified 3 warning signs  with Pelikan International Corporation Berhad , and understanding them should be part of your investment process.    But note: Pelikan International Corporation Berhad may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


retail investors who own 39% along with institutions invested in Pelikan International Corporation Berhad (KLSE:PELIKAN) saw increase in their holdings value last week

Key Insights  Pelikan International Corporation Berhad's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public   A total of 4 investors have a majority stake in the company with 54% ownership    20% of Pelikan International Corporation Berhad is held by insiders   Every investor in Pelikan International Corporation Berhad (KLSE:PELIKAN) should be aware of the most powerful shareholder groups.  The group holding the most number of shares in the company, around 39% to be precise, is retail investors.   That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).  While retail investors were the group that reaped the most benefits after last week’s 12% price gain, institutions also received a 27% cut.      Let's delve deeper into each type of owner of Pelikan International Corporation Berhad, beginning with the chart below.  See our latest analysis for Pelikan International Corporation Berhad KLSE:PELIKAN Ownership Breakdown April 27th 2023 What Does The Institutional Ownership Tell Us About Pelikan International Corporation Berhad? Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.   As you can see, institutional investors have a fair amount of stake in Pelikan International Corporation Berhad.  This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong.  If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Pelikan International Corporation Berhad's earnings history below. Of course, the future is what really matters. KLSE:PELIKAN Earnings and Revenue Growth April 27th 2023  Pelikan International Corporation Berhad is not owned by hedge funds.      The company's largest shareholder is Urusharta Jamaah Sdn Bhd, with ownership of 26%.       For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 9.1% by the third-largest shareholder.     Hooi Loo, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.        On looking further, we found that 54% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.     While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing.   As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.  Insider Ownership Of Pelikan International Corporation Berhad The definition of an insider can differ slightly between different countries, but members of the board of directors always count.  The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.  I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.   Our most recent data indicates that insiders own a reasonable proportion of Pelikan International Corporation Berhad.   It has a market capitalization of just RM495m, and insiders have RM97m worth of shares in their own names.  It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.   General Public Ownership The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored.   While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.  Private Company Ownership Our data indicates that Private Companies hold 15%, of the company's shares.   It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.   Next Steps: While it is well worth considering the different groups that own a company, there are other factors that are even more important.    Case in point: We've spotted   2 warning signs for Pelikan International Corporation Berhad  you should be aware of.      Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.  NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.Valuation is complex, but we're helping make it simple.Find out whether Pelikan International Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Here's Why Progressive Impact Corporation Berhad (KLSE:PICORP) Can Manage Its Debt Responsibly

Warren Buffett famously said, 'Volatility is far from synonymous with risk.'  When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin.  We note that Progressive Impact Corporation Berhad (KLSE:PICORP) does have debt on its balance sheet.  But should shareholders be worried about its use of debt?  When Is Debt A Problem?  Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy.  In the worst case scenario, a company can go bankrupt if it cannot pay its creditors.  However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders.  Of course, debt can be an important tool in businesses, particularly capital heavy businesses.  When we examine debt levels, we first consider both cash and debt levels, together.   Check out our latest analysis for Progressive Impact Corporation Berhad  What Is Progressive Impact Corporation Berhad's Net Debt?  The image below, which you can click on for greater detail, shows that at December 2022 Progressive Impact Corporation Berhad had debt of RM57.3m, up from RM54.2m in one year.    However, because it has a cash reserve of RM50.8m, its net debt is less, at about RM6.56m.  KLSE:PICORP Debt to Equity History April 25th 2023 A Look At Progressive Impact Corporation Berhad's Liabilities  The latest balance sheet data shows that Progressive Impact Corporation Berhad had liabilities of RM86.1m due within a year, and liabilities of RM5.93m falling due after that.   Offsetting these obligations, it had cash of RM50.8m as well as receivables valued at RM40.5m due within 12 months.   So these liquid assets roughly match the total liabilities.   This state of affairs indicates that Progressive Impact Corporation Berhad's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets.  So it's very unlikely that the RM59.0m company is short on cash, but still worth keeping an eye on the balance sheet.    In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover).  This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.   Given net debt is only 0.69 times EBITDA, it is initially surprising to see that Progressive Impact Corporation Berhad's EBIT has low interest coverage of 0.31 times.  So one way or the other, it's clear the debt levels are not trivial.        Importantly, Progressive Impact Corporation Berhad's EBIT fell a jaw-dropping 83% in the last twelve months.  If that earnings trend continues then paying off its debt will be about as easy as herding cats on to a roller coaster.      The balance sheet is clearly the area to focus on when you are analysing debt.  But it is Progressive Impact Corporation Berhad's earnings that will influence how the balance sheet holds up in the future.  So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.  Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash.   So we always check how much of that EBIT is translated into free cash flow.    During the last three years, Progressive Impact Corporation Berhad generated free cash flow amounting to a very robust 88% of its EBIT, more than we'd expect.  That positions it well to pay down debt if desirable to do so.    Our View We weren't impressed with Progressive Impact Corporation Berhad's interest cover, and its EBIT growth rate made us cautious.   But like a ballerina ending on a perfect pirouette, it has not trouble converting EBIT to free cash flow.       When we consider all the factors mentioned above, we do feel a bit cautious about Progressive Impact Corporation Berhad's use of debt.  While we appreciate debt can enhance returns on equity, we'd suggest that shareholders keep close watch on its debt levels, lest they increase.    There's no doubt that we learn most about debt from the balance sheet.  However, not all investment risk resides within the balance sheet - far from it.   For example, we've discovered 3 warning signs for Progressive Impact Corporation Berhad (2 are significant!) that you should be aware of before investing here.     Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today. Valuation is complex, but we're helping make it simple.Find out whether Progressive Impact Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Progressive Impact Corporation Berhad Full Year 2022 Earnings: RM0.015 loss per share (vs RM0.009 loss in FY 2021)

Progressive Impact Corporation Berhad (KLSE:PICORP) Full Year 2022 ResultsKey Financial Results Revenue: RM90.4m (down 1.8% from FY 2021). Net loss: RM9.75m (loss widened by 59% from FY 2021). RM0.015 loss per share (further deteriorated from RM0.009 loss in FY 2021).  KLSE:PICORP Earnings and Revenue History March 1st 2023 All figures shown in the chart above are for the trailing 12 month (TTM) period Progressive Impact Corporation Berhad shares are down 7.4% from a week ago.   Risk Analysis It's necessary to consider the ever-present spectre of investment risk.   We've identified 2 warning signs  with Progressive Impact Corporation Berhad (at least 1 which is a bit unpleasant), and understanding these should be part of your investment process. Valuation is complex, but we're helping make it simple.Find out whether Progressive Impact Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Progressive Impact Corporation Berhad (KLSE:PICORP) May Have Issues Allocating Its Capital

When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble.  A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining.  This indicates the company is producing less profit from its investments and its total assets are decreasing.  So after glancing at the trends within Progressive Impact Corporation Berhad (KLSE:PICORP), we weren't too hopeful.   Return On Capital Employed (ROCE): What Is It?  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 Progressive Impact Corporation Berhad, this is the formula:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.015 = RM1.3m ÷ (RM176m - RM85m) (Based on the trailing twelve months to March 2023). So, Progressive Impact Corporation Berhad has an ROCE of 1.5%.  In absolute terms, that's a low return and it also under-performs the Commercial Services industry average of 7.4%.   See our latest analysis for Progressive Impact Corporation Berhad KLSE:PICORP Return on Capital Employed June 9th 2023 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'd like to look at how Progressive Impact Corporation Berhad has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.  SWOT Analysis for Progressive Impact Corporation BerhadStrength Debt is well covered by cash flow. Balance sheet summary for PICORP. WeaknessInterest payments on debt are not well covered.  Key risks with investing in PICORP. Opportunity Has sufficient cash runway for more than 3 years based on current free cash flows. Trading below our estimate of fair value by more than 20%. Lack of analyst coverage makes it difficult to determine PICORP's earnings prospects.ThreatNo apparent threats visible for PICORP.  How Are Returns Trending?  We are a bit anxious about the trends of ROCE at Progressive Impact Corporation Berhad.  The company used to generate 8.1% on its capital  five years ago but it has since fallen noticeably.  What's equally concerning is that the amount of capital deployed in the business has shrunk by 23% over that same period.  When you see both ROCE and capital employed diminishing, it can often be a sign of a mature and shrinking business that might be in structural decline.  If these underlying trends continue, we wouldn't be too optimistic going forward.    On a side note, Progressive Impact Corporation Berhad's current liabilities have increased over the last  five years to 48% of total assets, effectively distorting the ROCE to some degree.  If current liabilities hadn't increased as much as they did, the ROCE could actually be even lower.   What this means is that in reality, a rather large portion of the business is being funded by the likes of the company's suppliers or short-term creditors, which can bring some risks of its own.      The Key Takeaway  In summary, it's unfortunate that Progressive Impact Corporation Berhad is shrinking its capital base and also generating lower returns.      Investors haven't taken kindly to these developments, since the stock has declined 36% from where it was  five years ago.   Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere.    Progressive Impact Corporation Berhad does have some risks, we noticed   3 warning signs  (and 2 which don't sit too well with us)  we think you should know about.    For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. Valuation is complex, but we're helping make it simple.Find out whether Progressive Impact Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Are Investors Undervaluing Ramssol Group Berhad (KLSE:RAMSSOL) By 40%?

Key Insights The projected fair value for Ramssol Group Berhad is RM0.64 based on 2 Stage Free Cash Flow to Equity   Current share price of RM0.38 suggests Ramssol Group Berhad is potentially 40% undervalued   Does the February share price for Ramssol Group Berhad (KLSE:RAMSSOL) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by estimating the company's future cash flows and discounting them to their present value.  We will take advantage of the Discounted Cash Flow (DCF) model for this purpose.  Believe it or not, it's not too difficult to follow, as you'll see from our example!  Remember though, that there are many ways to estimate a company's value, and a DCF is just one method.  Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.  Check out our latest analysis for Ramssol Group Berhad  Step By Step Through The Calculation   We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.  To start off with, we need to estimate the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.   A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,  so we discount the value of these future cash flows to their estimated value in today's dollars:  10-year free cash flow (FCF) estimate  2023 2024 2025 2026 2027 2028 2029 2030 2031 2032  Levered FCF (MYR, Millions)  RM2.76m RM5.09m RM7.08m RM9.09m RM11.0m RM12.7m RM14.3m RM15.6m RM16.9m RM18.0m Growth Rate Estimate Source Analyst x2 Analyst x2 Est @ 39.16% Est @ 28.48% Est @ 21.01% Est @ 15.78% Est @ 12.12% Est @ 9.55% Est @ 7.76% Est @ 6.50%  Present Value (MYR, Millions) Discounted @ 11%  RM2.5 RM4.2 RM5.2 RM6.1 RM6.6 RM7.0 RM7.1 RM7.0 RM6.8 RM6.6 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM59m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 11%. Terminal Value (TV)= FCF2032 × (1 + g) ÷ (r – g) = RM18m× (1 + 3.6%) ÷ (11%– 3.6%) = RM264mPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= RM264m÷ ( 1 + 11%)10= RM96m The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is RM155m.  To get the intrinsic value per share, we divide this by the total number of shares outstanding.  Compared to the current share price of RM0.4, the company appears   quite good value    at a 40% discount to where the stock price trades currently.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. KLSE:RAMSSOL Discounted Cash Flow February 25th 2023  The Assumptions  We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.  You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Ramssol Group Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 11%, which is based on a levered beta of 0.879. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.  SWOT Analysis for Ramssol Group BerhadStrength Debt is well covered by earnings. Balance sheet summary for RAMSSOL. Weakness Earnings declined over the past year. Shareholders have been diluted in the past year.Opportunity Annual earnings are forecast to grow faster than the Malaysian market. Trading below our estimate of fair value by more than 20%. ThreatDebt is not well covered by operating cash flow. Is RAMSSOL well equipped to handle threats?  Looking Ahead:  Whilst important, the DCF calculation  shouldn't be the only metric you look at when researching a company.  It's not possible to obtain a foolproof valuation with a DCF model.  Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.   Can we work out why the company is trading at a discount to intrinsic value?   For Ramssol Group Berhad, we've compiled three  relevant  elements  you should explore:   Risks: For example, we've discovered 4 warning signs for Ramssol Group Berhad (1 is a bit concerning!) that you should be aware of before investing here.  Future Earnings: How does RAMSSOL's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!   PS. Simply Wall St updates its DCF calculation for every Malaysian stock every day, so if you want to find the intrinsic value of any other stock just search here.Valuation is complex, but we're helping make it simple.Find out whether Ramssol Group Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Ramssol Group Berhad First Quarter 2023 Earnings: EPS: RM0.009 (vs RM0.006 in 1Q 2022)

Ramssol Group Berhad (KLSE:RAMSSOL) First Quarter 2023 ResultsKey Financial Results Revenue: RM6.45m (down 23% from 1Q 2022). Net income: RM2.10m (up 102% from 1Q 2022). Profit margin: 33% (up from 12% in 1Q 2022). The increase in margin was driven by lower expenses. EPS: RM0.009 (up from RM0.006 in 1Q 2022).  KLSE:RAMSSOL Earnings and Revenue History April 30th 2023 All figures shown in the chart above are for the trailing 12 month (TTM) period Ramssol Group Berhad Earnings Insights  Looking ahead, revenue is forecast to grow 21% p.a. on average during the next 3 years, compared to a 11% growth forecast for the Professional Services industry in Asia.    Performance of the market in Malaysia.  The company's shares are up 8.2% from a week ago.   Risk Analysis Before you take the next step you should know about the 4 warning signs for Ramssol Group Berhad (1 can't be ignored!) that we have uncovered. Valuation is complex, but we're helping make it simple.Find out whether Ramssol Group Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Ramssol Group Berhad's (KLSE:RAMSSOL) Stock Has Shown Weakness Lately But Financial Prospects Look Decent: Is The Market Wrong?

With its stock down 20% over the past month, it is easy to disregard Ramssol Group Berhad (KLSE:RAMSSOL).   However, the company's fundamentals look pretty decent, and long-term financials are usually aligned with future market price movements.     Specifically, we decided to study Ramssol Group Berhad's  ROE in this article.    ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders.  Simply put, it is used to assess the profitability of a company in relation to its equity capital.  Check out our latest analysis for Ramssol Group Berhad  How To Calculate Return On Equity?  ROE can be calculated by using the formula:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Ramssol Group Berhad is:7.9% = RM4.3m ÷ RM54m (Based on the trailing twelve months to March 2023). The 'return' is the amount earned after tax over the last twelve months.  Another way to think of that is that for every MYR1 worth of equity, the company was able to earn MYR0.08 in profit.   Why Is ROE Important For Earnings Growth?  Thus far, we have learned that ROE measures how efficiently a company is generating its profits.  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.  Ramssol Group Berhad's Earnings Growth And 7.9% ROE  On the face of it, Ramssol Group Berhad's ROE is not much to talk about.   We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 11%.   Ramssol Group Berhad was still able to see a decent net income growth of 13% over the past five years.  So, the growth in the company's earnings could probably have been caused by other variables.  Such as - high earnings retention or an efficient management in place.     We then performed a comparison between Ramssol Group Berhad's net income growth with the industry, which revealed that the company's growth is similar to the average industry growth of 13% in the same period.   KLSE:RAMSSOL Past Earnings Growth May 30th 2023 Earnings growth is a huge factor in stock valuation.  It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline).   This then helps them determine if the stock is placed for a bright or bleak future.    If you're wondering about Ramssol Group Berhad's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.    Is Ramssol Group Berhad Efficiently Re-investing Its Profits?   Ramssol Group Berhad doesn't pay any dividend, meaning that all of its profits are being reinvested in the business, which explains the fair bit of earnings growth the company has seen.     Conclusion    Overall, we feel that Ramssol Group Berhad certainly does have some positive factors to consider.      Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth.       With that said, the latest industry analyst forecasts reveal that the company's earnings are expected to accelerate.     Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Valuation is complex, but we're helping make it simple.Find out whether Ramssol Group Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Returns On Capital Signal Tricky Times Ahead For Ramssol Group Berhad (KLSE:RAMSSOL)

To find a multi-bagger stock, what are the underlying trends we should look for in a business?  Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed.  Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return.    Although, when we looked at Ramssol Group Berhad (KLSE:RAMSSOL), it didn't seem to tick all of these boxes.     Understanding Return On Capital Employed (ROCE)  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 Ramssol Group Berhad, this is the formula:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.071 = RM4.1m ÷ (RM62m - RM4.3m) (Based on the trailing twelve months to December 2022). Thus, Ramssol Group Berhad has an ROCE of 7.1%.  In absolute terms, that's a low return and it also under-performs the Professional Services industry average of 9.7%.   See our latest analysis for Ramssol Group Berhad KLSE:RAMSSOL Return on Capital Employed April 13th 2023 Above you can see how the current ROCE for Ramssol Group Berhad compares to its prior returns on capital, but there's only so much you can tell from the past.  If you'd like to see what analysts are forecasting going forward, you should check out our free report for Ramssol Group Berhad.   So How Is Ramssol Group Berhad's ROCE Trending?  In terms of Ramssol Group Berhad's historical ROCE movements, the trend isn't fantastic.   Around  five years ago the returns on capital were 9.8%, but since then they've fallen to 7.1%.    And considering revenue has dropped while employing more capital, we'd be cautious.  If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased.     On a related note, Ramssol Group Berhad has decreased its current liabilities to 7.0% of total assets.   So we could link some of this to the decrease in ROCE.   What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations.  Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE.     Our Take On Ramssol Group Berhad's ROCE  We're a bit apprehensive about Ramssol Group Berhad because despite more capital being deployed in the business, returns on that capital and sales have both fallen.       Long term shareholders who've owned the stock over the last year have experienced a 29% depreciation in their investment, so it appears the market might not like these trends either.   With underlying trends that aren't great in these areas, we'd consider looking elsewhere.    One final note, you should learn about the   3 warning signs  we've spotted with Ramssol Group Berhad (including 1 which is a bit concerning) .    For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. Valuation is complex, but we're helping make it simple.Find out whether Ramssol Group Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Scicom (MSC) Berhad (KLSE:SCICOM) Will Pay A Dividend Of MYR0.02

Scicom (MSC) Berhad (KLSE:SCICOM) has announced that it will pay a dividend of MYR0.02 per share on the 28th of June.      This makes the dividend yield 6.2%, which will augment investor returns quite nicely.    View our latest analysis for Scicom (MSC) Berhad  Scicom (MSC) Berhad's Earnings Easily Cover The Distributions  Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.     However, prior to this announcement, Scicom (MSC) Berhad's dividend was comfortably covered by both cash flow and earnings.  This means that most of what the business earns is being used to help it grow.    Over the next year, EPS is forecast to expand by 26.2%.   Assuming the dividend continues along recent trends, we think the payout ratio could be 69% by next year, which is in a pretty sustainable range.     KLSE:SCICOM Historic Dividend May 31st 2023 Dividend Volatility  The company's dividend history has been marked by instability, with at least one cut in the last 10 years.      Since 2013, the dividend has gone from MYR0.025 total annually to MYR0.07.      This means that it has been growing its distributions at 11% per annum over that time.     Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.     The Dividend's Growth Prospects Are Limited  With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future.      In the last five years, Scicom (MSC) Berhad's earnings per share has shrunk at approximately 2.4% per annum.  Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.   However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.     In Summary  In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Scicom (MSC) Berhad's payments, as there could be some issues with sustaining them into the future.       The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great.      We don't think Scicom (MSC) Berhad is a great stock to add to your portfolio if income is your focus.   Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one.  At the same time, there are other factors our readers should be conscious of before pouring capital into a stock.   For example, we've picked out 2 warning signs for Scicom (MSC) Berhad that investors should know about before committing capital to this stock.   Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers. Valuation is complex, but we're helping make it simple.Find out whether Scicom (MSC) Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Should Income Investors Look At Scicom (MSC) Berhad (KLSE:SCICOM) Before Its Ex-Dividend?

Scicom (MSC) Berhad (KLSE:SCICOM) is about to trade ex-dividend in the next four days.  The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend.  The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend.   In other words, investors can purchase Scicom (MSC) Berhad's shares before the 13th of June in order to be eligible for the dividend, which will be paid on the 28th of June.   The company's next dividend payment will be RM0.02 per share. Last year, in total, the company distributed RM0.07 to shareholders.  Calculating the last year's worth of payments shows that Scicom (MSC) Berhad has a trailing yield of 6.2% on the current share price of MYR1.13.    Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid.  That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.  See our latest analysis for Scicom (MSC) Berhad  If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation.   Its dividend payout ratio is 85% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth.  We'd be worried about the risk of a drop in earnings.     Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution.     It paid out more than half (53%) of its free cash flow in the past year, which is within an average range for most companies.      It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.   Click here to see the company's payout ratio, plus analyst estimates of its future dividends. KLSE:SCICOM Historic Dividend June 8th 2023 Have Earnings And Dividends Been Growing? Companies with falling earnings are riskier for dividend shareholders.   If earnings fall far enough, the company could be forced to cut its dividend.     With that in mind, we're discomforted by Scicom (MSC) Berhad's 5.8% per annum decline in earnings in the past five years.  Such a sharp decline casts doubt on the future sustainability of the dividend.       Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time.     Since the start of our data, 10 years ago, Scicom (MSC) Berhad has lifted its dividend by approximately 11% a year on average.       That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits.  Scicom (MSC) Berhad is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.     To Sum It Up  From a dividend perspective, should investors buy or avoid Scicom (MSC) Berhad?      While earnings per share are shrinking, it's encouraging to see that at least Scicom (MSC) Berhad's dividend appears sustainable, with earnings and cashflow payout ratios that are within reasonable bounds.        With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Scicom (MSC) Berhad.    Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Scicom (MSC) Berhad.     For example - Scicom (MSC) Berhad has 2 warning signs we think you should be aware of.   Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers. Valuation is complex, but we're helping make it simple.Find out whether Scicom (MSC) Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


Is TAFI Industries Berhad's (KLSE:TAFI) Stock's Recent Performance Being Led By Its Attractive Financial Prospects?

TAFI Industries Berhad (KLSE:TAFI) has had a great run on the share market with its stock up by a significant 35% over the last three months.   Since the market usually pay for a company’s long-term fundamentals, we decided to study the company’s key performance indicators to see if they could be influencing the market.      Particularly, we will be paying attention to TAFI Industries Berhad's  ROE today.    Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital.  In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.   Our analysis indicates that TAFI is potentially overvalued!   How Do You Calculate Return On Equity?  Return on equity can be calculated by using the formula:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for TAFI Industries Berhad is:11% = RM7.7m ÷ RM72m (Based on the trailing twelve months to June 2022). The 'return' is the amount earned after tax over the last twelve months.  One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.11 in profit.   What Has ROE Got To Do With Earnings Growth?  So far, we've learned that ROE is a measure of a company's profitability.  We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company.  Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.  TAFI Industries Berhad's Earnings Growth And 11% ROE   On the face of it, TAFI Industries Berhad's ROE is not much to talk about.   Although a closer study shows that the company's ROE is higher than the industry average of 7.2% which we definitely can't overlook.   Particularly, the substantial 23% net income growth seen by TAFI Industries Berhad over the past five years is impressive .  Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower.  So, there might well be other reasons for the earnings to grow.  For example, it is possible that the broader industry is going through a high growth phase, or that the company has a low payout ratio.     As a next step, we compared TAFI Industries Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 1.7%.   KLSE:TAFI Past Earnings Growth October 28th 2022 Earnings growth is an important metric to consider when valuing a stock.   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.    Is TAFI Industries Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide.    Is TAFI Industries Berhad Efficiently Re-investing Its Profits?   Given that TAFI Industries Berhad doesn't pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.     Summary    Overall, we are quite pleased with TAFI Industries Berhad's performance.      In particular, it's great to see that the company has seen significant growth in its earnings backed by a respectable ROE and a high reinvestment rate.        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.  Let's not forget, business risk is also one of the factors that affects the price of the stock. So this is also an important area that investors need to pay attention to before making a decision on any business.     Our risks dashboard would have the 3 risks we have identified for TAFI Industries Berhad.    Valuation is complex, but we're helping make it simple.Find out whether TAFI Industries Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


TAFI Industries Berhad Third Quarter 2022 Earnings: EPS: RM0.019 (vs RM0.005 in 3Q 2021)

TAFI Industries Berhad (KLSE:TAFI) Third Quarter 2022 ResultsKey Financial Results Revenue: RM17.9m (up 86% from 3Q 2021). Net income: RM7.24m (up 277% from 3Q 2021). Profit margin: 40% (up from 20% in 3Q 2021). The increase in margin was driven by higher revenue. EPS: RM0.019 (up from RM0.005 in 3Q 2021).  KLSE:TAFI Earnings and Revenue History November 17th 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period TAFI Industries Berhad shares are down 1.6% from a week ago.   Risk Analysis Before we wrap up, we've discovered 3 warning signs for TAFI Industries Berhad (1 is significant!) that you should be aware of. Valuation is complex, but we're helping make it simple.Find out whether TAFI Industries Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.


TAFI Industries Berhad's (KLSE:TAFI) Earnings Are Of Questionable Quality

TAFI Industries Berhad's (KLSE:TAFI) robust earnings report didn't manage to move the market for its stock.  Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.     View our latest analysis for TAFI Industries Berhad KLSE:TAFI Earnings and Revenue History September 4th 2022  A Closer Look At TAFI Industries Berhad's Earnings  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.  The ratio shows us how much a company's profit exceeds its FCF.  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.  That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.  TAFI Industries Berhad has an accrual ratio of 0.79 for the year to June 2022.   Statistically speaking, that's a real negative for future earnings.  And indeed, during the period the company didn't produce any free cash flow whatsoever.    Even though it reported a profit of RM7.73m, a look at free cash flow indicates it actually burnt through RM31m in the last year.    Coming off the back of negative free cash flow last year, we imagine some shareholders might wonder if its cash burn of RM31m, this year, indicates high risk.    The good news for shareholders is that TAFI Industries Berhad's accrual ratio was much better last year, so this year's poor reading might simply be a case of a short term mismatch between profit and FCF.  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 TAFI Industries Berhad.  Our Take On TAFI Industries Berhad's Profit Performance As we discussed above, we think TAFI Industries Berhad's earnings were not supported by free cash flow, which might concern some investors.      For this reason, we think that TAFI Industries 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.    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.    If you want to do dive deeper into TAFI Industries Berhad, you'd also look into what risks it is currently facing.    Our analysis shows 4 warning signs for TAFI Industries Berhad (2 are potentially serious!) and we strongly recommend you look at these before investing.   Today we've zoomed in on a single data point to better understand the nature of TAFI Industries Berhad's profit.   But there are plenty of other ways to inform your opinion of a company.  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.  So you may wish to see this free  collection of companies boasting high return on equity, or  this list of stocks that insiders are buying. Valuation is complex, but we're helping make it simple.Find out whether TAFI Industries Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This 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.