Are Robust Financials Driving The Recent Rally In MCE Holdings Berhad's (KLSE:MCEHLDG) Stock?

MCE Holdings Berhad's (KLSE:MCEHLDG) stock is up by a considerable 71% over the past three months.   Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance.      Specifically, we decided to study MCE Holdings Berhad's  ROE in this article.    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.  View our latest analysis for MCE Holdings Berhad  How Is ROE Calculated?  The formula for return on equity is:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for MCE Holdings Berhad is:13% = RM13m ÷ RM99m (Based on the trailing twelve months to October 2022). The 'return' refers to a company's earnings over the last year.  Another way to think of that is that for every MYR1 worth of equity, the company was able to earn MYR0.13 in profit.   What Has ROE Got To Do With Earnings Growth?  Thus far, we have learned that ROE measures how efficiently a company is generating its profits.  Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits.  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.  MCE Holdings Berhad's Earnings Growth And 13% ROE  To start with, MCE Holdings Berhad's ROE looks acceptable.   Especially when compared to the industry average of 7.0% the company's ROE looks pretty impressive.   Probably as a result of this, MCE Holdings Berhad was able to see an impressive net income growth of 35% over the last five years.  We believe that there might also be other aspects that are positively influencing the company's earnings growth.  Such as - high earnings retention or an efficient management in place.     We then compared MCE Holdings Berhad's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 13% in the same period.   KLSE:MCEHLDG Past Earnings Growth February 10th 2023 Earnings growth is a huge factor in stock valuation.  The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in.   This then helps them determine if the stock is placed for a bright or bleak future.    If you're wondering about MCE Holdings Berhad's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.    Is MCE Holdings Berhad Making Efficient Use Of Its Profits?    MCE Holdings 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.     Summary    Overall, we are quite pleased with MCE Holdings Berhad's performance.      Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings.        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.    To know the 1 risk we have identified for MCE Holdings Berhad visit our risks dashboard for free. Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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.


MCE Holdings Berhad First Quarter 2023 Earnings: EPS: RM0.062 (vs RM0.033 loss in 1Q 2022)

MCE Holdings Berhad (KLSE:MCEHLDG) First Quarter 2023 ResultsKey Financial Results Revenue: RM38.6m (up 130% from 1Q 2022). Net income: RM3.50m (up from RM1.70m loss in 1Q 2022). Profit margin: 9.1% (up from net loss in 1Q 2022). The move to profitability was driven by higher revenue. EPS: RM0.062 (up from RM0.033 loss in 1Q 2022).  KLSE:MCEHLDG Earnings and Revenue History December 23rd 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period MCE Holdings Berhad shares are up 2.4% from a week ago.   Risk Analysis What about risks? Every company has them, and we've spotted   1 warning sign for MCE Holdings Berhad   you should know about.  Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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.


MCE Holdings Berhad's (KLSE:MCEHLDG) Solid Profits Have Weak Fundamentals

MCE Holdings Berhad (KLSE:MCEHLDG) announced strong profits, but the stock was stagnant.  Our analysis suggests that shareholders have noticed something concerning in the numbers.     See our latest analysis for MCE Holdings Berhad KLSE:MCEHLDG Earnings and Revenue History April 5th 2023  To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests.  As it happens, MCE Holdings Berhad issued 10.0% more new shares over the last year.  As a result, its net income is now split between a greater number of shares.  To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value.  You can see a chart of MCE Holdings Berhad's EPS by clicking here.  A Look At The Impact Of MCE Holdings Berhad's Dilution On Its Earnings Per Share (EPS)  MCE Holdings Berhad was losing money three years ago.    And even focusing only on the last twelve months, we don't have a meaningful growth rate because it made a loss a year ago, too.  What we do know is that while it's great to see a profit over the last twelve months, that profit would have been better, on a per share basis, if the company hadn't needed to issue shares.     Therefore, the dilution is having a noteworthy influence on shareholder returns.    If MCE Holdings Berhad's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction.   But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving.  For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.  Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of MCE Holdings Berhad.  Our Take On MCE Holdings Berhad's Profit Performance MCE Holdings Berhad issued shares during the year, and that means its EPS performance lags its net income growth.      Because of this, we think that it may be that MCE Holdings Berhad's statutory profits are better than its underlying earnings power.    On the bright side, the company showed enough improvement to book a profit this year, after losing money last year.     Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors.     In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved.    At Simply Wall St, we found 2 warning signs for MCE Holdings Berhad and we think they deserve your attention.   Today we've zoomed in on a single data point to better understand the nature of MCE Holdings Berhad's profit.   But there are plenty of other ways to inform your opinion of a company.  Some people consider a high return on equity to be a good sign of a quality business.  While it might take a little research on your behalf, you may find this free  collection of companies boasting high return on equity, or  this list of stocks that insiders are buying to be useful.  Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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 You Buy MCE Holdings Berhad (KLSE:MCEHLDG) For Its Upcoming Dividend?

Readers hoping to buy MCE Holdings Berhad (KLSE:MCEHLDG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend.  Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend.  The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date.   Therefore, if you purchase MCE Holdings Berhad's shares on or after the 13th of June, you won't be eligible to receive the dividend, when it is paid on the 23rd of June.   The company's next dividend payment will be RM0.025 per share. Last year, in total, the company distributed RM0.05 to shareholders.  Based on the last year's worth of payments, MCE Holdings Berhad stock has a trailing yield of around 2.6% on the current share price of MYR1.9.    Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends.  So we need to check whether the dividend payments are covered, and if earnings are growing.  Check out our latest analysis for MCE Holdings Berhad  Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable.   MCE Holdings Berhad paid out just 9.9% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.    MCE Holdings Berhad paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.    Click here to see how much of its profit MCE Holdings Berhad paid out over the last 12 months. KLSE:MCEHLDG Historic Dividend June 11th 2023 Have Earnings And Dividends Been Growing? Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share.   Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time.     It's encouraging to see MCE Holdings Berhad has grown its earnings rapidly, up 52% a year for the past five years.     Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time.     MCE Holdings Berhad's dividend payments per share have declined at 1.8% per year on average over the past 10 years, which is uninspiring.      Final Takeaway  Is MCE Holdings Berhad an attractive dividend stock, or better left on the shelf?      Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business.  Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business.        In summary, MCE Holdings Berhad appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.    So while MCE Holdings Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock.     Every company has risks, and we've spotted 3 warning signs for MCE Holdings Berhad you should know about.   A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks. Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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.


These 4 Measures Indicate That MCE Holdings Berhad (KLSE:MCEHLDG) Is Using Debt Reasonably Well

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.'  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 MCE Holdings Berhad (KLSE:MCEHLDG) makes use of debt.  But the more important question is: how much risk is that debt creating?  What Risk Does Debt Bring?  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.  Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers.  While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price.  By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return.  The first step when considering a company's debt levels is to consider its cash and debt together.   View our latest analysis for MCE Holdings Berhad  What Is MCE Holdings Berhad's Net Debt?  You can click the graphic below for the historical numbers, but it shows that as of October 2022 MCE Holdings Berhad had RM20.4m of debt, an increase on RM19.0m, over one year.    On the flip side, it has RM7.65m in cash leading to net debt of about RM12.7m.  KLSE:MCEHLDG Debt to Equity History March 18th 2023 How Healthy Is MCE Holdings Berhad's Balance Sheet?  We can see from the most recent balance sheet that MCE Holdings Berhad had liabilities of RM35.5m falling due within a year, and liabilities of RM14.1m due beyond that.   Offsetting these obligations, it had cash of RM7.65m as well as receivables valued at RM26.5m due within 12 months.   So its liabilities outweigh the sum of its cash and (near-term) receivables by RM15.4m.    Since publicly traded MCE Holdings Berhad shares are worth a total of RM104.5m, it seems unlikely that this level of liabilities would be a major threat.  Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse.    We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short).  Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.   MCE Holdings Berhad's net debt is only 0.62 times its EBITDA.  And its EBIT covers its interest expense a whopping 16.5 times over.  So you could argue it is no more threatened by its debt than an elephant is by a mouse.       It was also good to see that despite losing money on the EBIT line last year, MCE Holdings Berhad turned things around in the last 12 months, delivering and EBIT of RM16m.     There's no doubt that we learn most about debt from the balance sheet.  But it is MCE Holdings 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, a company can only pay off debt with cold hard cash, not accounting profits.   So it is important to check how much of its earnings before interest and tax (EBIT) converts to actual free cash flow.    Over the last year, MCE Holdings Berhad reported free cash flow worth 2.6% of its EBIT, which is really quite low.  That limp level of cash conversion undermines its ability to manage and pay down debt.    Our View On our analysis MCE Holdings Berhad's interest cover should signal that it won't have too much trouble with its debt.  But the other factors we noted above weren't so encouraging.   In particular, conversion of EBIT to free cash flow gives us cold feet.       When we consider all the elements mentioned above, it seems to us that MCE Holdings Berhad is managing its debt quite well.  Having said that, the load is sufficiently heavy that we would recommend any shareholders keep a close eye on it.     The balance sheet is clearly the area to focus on when you are analysing debt.  But ultimately, every company can contain risks that exist outside of the balance sheet.      We've identified 1 warning sign  with MCE Holdings Berhad , and understanding them should be part of your investment process.     When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now. Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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 Like These Underlying Return On Capital Trends At MCE Holdings Berhad (KLSE:MCEHLDG)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for?  Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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.    With that in mind, we've noticed some promising trends at MCE Holdings Berhad (KLSE:MCEHLDG) so let's look a bit deeper.     What Is 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.  The formula for this calculation on MCE Holdings Berhad is:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.16 = RM19m ÷ (RM152m - RM35m) (Based on the trailing twelve months to January 2023). So, MCE Holdings Berhad has an ROCE of 16%.  On its own, that's a standard return, however it's much better than the 5.9% generated by the Auto Components industry.   Check out our latest analysis for MCE Holdings Berhad KLSE:MCEHLDG Return on Capital Employed May 16th 2023 Above you can see how the current ROCE for MCE Holdings Berhad compares to its prior returns on capital, but there's only so much you can tell from the past.  If you'd like, you can check out the forecasts from the analysts covering MCE Holdings Berhad here  for free.   The Trend Of ROCE  Investors would be pleased with what's happening at MCE Holdings Berhad.   The data shows that returns on capital have increased substantially over the last  five years to 16%.  The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 27%.   So we're very much inspired by what we're seeing at MCE Holdings Berhad thanks to its ability to profitably reinvest capital.     On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities.  The current liabilities has increased to 23% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors.   Keep an eye out for future increases because when the ratio of current liabilities to total assets gets particularly high, this can introduce some new risks for the business.      The Key Takeaway  All in all, it's terrific to see that MCE Holdings Berhad is reaping the rewards from prior investments and is growing its capital base.       And a remarkable 174% total return over the last  five years tells us that investors are expecting more good things to come in the future.   So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.    Like most companies, MCE Holdings Berhad does come with some risks, and we've found 2 warning signs  that you should be aware of.    If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity. Valuation is complex, but we're helping make it simple.Find out whether MCE Holdings 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.


A Look At The Intrinsic Value Of New Hoong Fatt Holdings Berhad (KLSE:NHFATT)

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of New Hoong Fatt Holdings Berhad (KLSE:NHFATT) as an investment opportunity  by estimating the company's future cash flows and discounting them to their present value.  One way to achieve this is by employing the Discounted Cash Flow (DCF) model.  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.  If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.   Our analysis indicates that NHFATT is potentially undervalued!    The Model   We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  To begin with, we have to get estimates of the next ten years of cash flows.   Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last 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.   Generally we assume that a dollar today is more valuable than a dollar in the future,  and so the sum of these future cash flows is then discounted to today's value:  10-year free cash flow (FCF) forecast  2023 2024 2025 2026 2027 2028 2029 2030 2031 2032  Levered FCF (MYR, Millions)  RM28.4m RM27.5m RM27.1m RM27.1m RM27.5m RM28.0m RM28.6m RM29.4m RM30.3m RM31.2m Growth Rate Estimate Source Est @ -6.36% Est @ -3.39% Est @ -1.31% Est @ 0.15% Est @ 1.17% Est @ 1.88% Est @ 2.38% Est @ 2.73% Est @ 2.98% Est @ 3.15%  Present Value (MYR, Millions) Discounted @ 12%  RM25.4 RM22.0 RM19.4 RM17.4 RM15.8 RM14.4 RM13.2 RM12.1 RM11.2 RM10.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM161m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.6%. We discount the terminal cash flows to today's value at a cost of equity of 12%. Terminal Value (TV)= FCF2032 × (1 + g) ÷ (r – g) = RM31m× (1 + 3.6%) ÷ (12%– 3.6%) = RM398mPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= RM398m÷ ( 1 + 12%)10= RM132m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is RM293m.  The last step is to then divide the equity value by the number of shares outstanding.  Compared to the current share price of RM3.0, the company appears   about fair value    at a 16% 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:NHFATT Discounted Cash Flow November 24th 2022  The Assumptions  Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows.  Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions.  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 New Hoong Fatt Holdings 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 12%, which is based on a levered beta of 1.241. 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 New Hoong Fatt Holdings BerhadStrength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Dividends are covered by earnings and cash flows.  Dividend information for NHFATT. Weakness Dividend is low compared to the top 25% of dividend payers in the Auto Components market.  Key risks with investing in NHFATT. Opportunity  Current share price is below our estimate of fair value. Lack of analyst coverage makes it difficult to determine NHFATT's earnings prospects.ThreatNo apparent threats visible for NHFATT.  Moving On:  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.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result.  For New Hoong Fatt Holdings Berhad, we've compiled three  pertinent  items  you should further research:   Risks: Take risks, for example - New Hoong Fatt Holdings Berhad has   3 warning signs  (and 1 which makes us a bit uncomfortable)  we think you should know about.   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!  Other Top Analyst Picks: Interested to see what the analysts are thinking? Take a look at our interactive list of analysts' top stock picks to find out what they feel might have an attractive future outlook!   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 New Hoong Fatt Holdings 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.


New Hoong Fatt Holdings Berhad Third Quarter 2022 Earnings: EPS: RM0.11 (vs RM0.002 in 3Q 2021)

New Hoong Fatt Holdings Berhad (KLSE:NHFATT) Third Quarter 2022 ResultsKey Financial Results Revenue: RM77.1m (up 83% from 3Q 2021). Net income: RM9.28m (up by RM9.13m from 3Q 2021). Profit margin: 12% (up from 0.4% in 3Q 2021). The increase in margin was driven by higher revenue. EPS: RM0.11 (up from RM0.002 in 3Q 2021).  KLSE:NHFATT Earnings and Revenue History November 24th 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period New Hoong Fatt Holdings Berhad shares are up 18% from a week ago.   Risk Analysis We should say that we've discovered 3 warning signs for New Hoong Fatt Holdings Berhad (1 is a bit concerning!) that you should be aware of before investing here. Valuation is complex, but we're helping make it simple.Find out whether New Hoong Fatt Holdings 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.


Does Oriental Holdings Berhad (KLSE:ORIENT) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, '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.  We can see that Oriental Holdings Berhad (KLSE:ORIENT) does use debt in its business.  But the real question is whether this debt is making the company risky.  When Is Debt A Problem?  Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow.   If things get really bad, the lenders can take control of the business.  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.  The first step when considering a company's debt levels is to consider its cash and debt together.   See our latest analysis for Oriental Holdings Berhad  What Is Oriental Holdings Berhad's Net Debt?  As you can see below, Oriental Holdings Berhad had RM1.70b of debt at June 2022, down from RM2.04b a year prior.    However, it does have RM4.90b in cash offsetting this, leading to net cash of RM3.20b.  KLSE:ORIENT Debt to Equity History August 30th 2022 How Strong Is Oriental Holdings Berhad's Balance Sheet?  Zooming in on the latest balance sheet data, we can see that Oriental Holdings Berhad had liabilities of RM1.99b due within 12 months and liabilities of RM319.7m due beyond that.    Offsetting this, it had RM4.90b in cash and RM408.2m in receivables that were due within 12 months.   So it actually has RM2.99b more liquid assets than total liabilities.    This surplus strongly suggests that Oriental Holdings Berhad has a rock-solid balance sheet (and the debt is of no concern whatsoever).   On this view, lenders should feel as safe as the beloved of a black-belt karate master.    Succinctly put, Oriental Holdings Berhad boasts net cash, so it's fair to say it does not have a heavy debt load!     Even more impressive was the fact that Oriental Holdings Berhad grew its EBIT by 119% over twelve months.  If maintained that growth will make the debt even more manageable in the years ahead.      The balance sheet is clearly the area to focus on when you are analysing debt.  But you can't view debt in total isolation; since Oriental Holdings Berhad will need earnings to service that debt.  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.   Oriental Holdings Berhad may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt.    Looking at the most recent three years, Oriental Holdings Berhad recorded free cash flow of 44% of its EBIT, which is weaker than we'd expect.  That weak cash conversion makes it more difficult to handle indebtedness.    Summing Up While we empathize with investors who find debt concerning, you should keep in mind that Oriental Holdings Berhad has net cash of RM3.20b, as well as more liquid assets than liabilities.     And we liked the look of last year's 119% year-on-year EBIT growth.     So we don't think Oriental Holdings Berhad's use of debt is risky.    When analysing debt levels, the balance sheet is the obvious place to start.  However, not all investment risk resides within the balance sheet - far from it.   For example, we've discovered 2 warning signs for Oriental Holdings Berhad (1 is significant!) that you should be aware of before investing here.     If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet. Valuation is complex, but we're helping make it simple.Find out whether Oriental Holdings 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 one-year returns in Oriental Holdings Berhad (KLSE:ORIENT) have grown faster than the company's underlying earnings growth

Passive investing in index funds can generate returns that roughly match the overall market.  But one can do better than that by picking better than average stocks (as part of a diversified portfolio).  For example, the Oriental Holdings Berhad (KLSE:ORIENT) share price is up 30% in the last 1 year, clearly besting the market decline of around 12% (not including dividends).  If it can keep that out-performance up over the long term, investors will do very well!    Having said that, the longer term returns aren't so impressive, with stock gaining just 2.0% in three years.      While this past week has detracted from the company's one-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.   Though if you're not interested in researching what drove ORIENT's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!  In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business.  By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.   Oriental Holdings Berhad was able to grow EPS by 109% in the last twelve months.   It's fair to say that the share price gain of 30% did not keep pace with the EPS growth.  So it seems like the market has cooled on Oriental Holdings Berhad, despite the growth. Interesting.   This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.24.    You can see how EPS has changed over time in the image below (click on the chart to see the exact values). KLSE:ORIENT Earnings Per Share Growth September 30th 2022 It's probably worth noting that the CEO is paid less than the median at similar sized companies.  It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years.  Dive deeper into the earnings by checking this interactive graph of Oriental Holdings Berhad's earnings, revenue and cash flow.  What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock.  The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested.  Arguably, the TSR gives a more comprehensive picture of the return generated by a stock.  In the case of Oriental Holdings Berhad, it has a TSR of 39% for the last 1 year. That exceeds its share price return that we previously mentioned.  And there's no prize for guessing that the dividend payments largely explain the divergence!  A Different Perspective It's nice to see that Oriental Holdings Berhad shareholders have received a total shareholder return of 39% over the last year.   And that does include the dividend.     That's better than the annualised return of 6% over half a decade, implying that the company is doing better recently.  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 Oriental Holdings Berhad better, we need to consider many other factors.   Case in point: We've spotted   2 warning signs for Oriental Holdings Berhad  you should be aware of, and 1 of them shouldn't be ignored.     If you are like me, then you will not want to miss this free list of growing companies that insiders are buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY exchanges.Valuation is complex, but we're helping make it simple.Find out whether Oriental Holdings 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.


Oriental Holdings Berhad Third Quarter 2022 Earnings: EPS: RM0.17 (vs RM0.11 in 3Q 2021)

Oriental Holdings Berhad (KLSE:ORIENT) Third Quarter 2022 ResultsKey Financial Results Revenue: RM960.3m (up 36% from 3Q 2021). Net income: RM102.3m (up 49% from 3Q 2021). Profit margin: 11% (up from 9.7% in 3Q 2021). The increase in margin was driven by higher revenue. EPS: RM0.17 (up from RM0.11 in 3Q 2021).  KLSE:ORIENT Earnings and Revenue History November 27th 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period Oriental Holdings Berhad shares are up 1.4% from a week ago.   Risk Analysis We don't want to rain on the parade too much, but we did also find 2 warning signs for Oriental Holdings Berhad (1 is a bit unpleasant!) that you need to be mindful of. Valuation is complex, but we're helping make it simple.Find out whether Oriental Holdings 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.


Oriental Holdings Berhad's (KLSE:ORIENT) Returns On Capital Are Heading Higher

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for?  One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed.  This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns.    Speaking of which, we noticed some great changes in Oriental Holdings Berhad's (KLSE:ORIENT) returns on capital, so let's have a look.     What Is Return On Capital Employed (ROCE)?  For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business.  To calculate this metric for Oriental Holdings Berhad, this is the formula:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.094 = RM783m ÷ (RM11b - RM2.3b) (Based on the trailing twelve months to March 2022). So, Oriental Holdings Berhad has an ROCE of 9.4%.  On its own, that's a low figure but it's around the 8.0% average generated by the Auto industry.   View our latest analysis for Oriental Holdings Berhad KLSE:ORIENT Return on Capital Employed July 29th 2022 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 want to delve into the historical earnings, revenue and cash flow of Oriental Holdings Berhad, check out these free graphs here.  What The Trend Of ROCE Can Tell Us  Oriental Holdings Berhad's ROCE growth is quite impressive.   More specifically, while the company has kept capital employed relatively flat over the last  five years, the ROCE has climbed 51% in that same time.  So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments.  On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.    The Key Takeaway  In summary, we're delighted to see that Oriental Holdings Berhad has been able to increase efficiencies and earn higher rates of return on the same amount of capital.      Considering the stock has delivered 32% to its stockholders over the last  five years, it may be fair to think that investors aren't fully aware of the promising trends yet.  Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.    If you'd like to know more about Oriental Holdings Berhad, we've spotted   2 warning signs,  and 1 of them is significant.     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 Oriental Holdings 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.


Oriental Holdings Berhad's (KLSE:ORIENT) Upcoming Dividend Will Be Larger Than Last Year's

The board of Oriental Holdings Berhad (KLSE:ORIENT) has announced that it will be paying its dividend of MYR0.20 on the 13th of July, an increased payment from last year's comparable dividend.       This makes the dividend yield 5.9%, which is above the industry average.    See our latest analysis for Oriental Holdings Berhad  Oriental Holdings Berhad's Dividend Is Well Covered By Earnings  A big dividend yield for a few years doesn't mean much if it can't be sustained.     Before making this announcement, Oriental Holdings Berhad was paying out quite a large proportion of both earnings and cash flow, with the dividend being 99% of cash flows.  Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.    EPS is set to fall by 3.1% over the next 12 months if recent trends continue.  If recent patterns in the dividend continue, we could see the payout ratio reaching 89% in the next 12 months which is on the higher end of the range we would say is sustainable.    KLSE:ORIENT Historic Dividend June 1st 2023 Dividend Volatility  The company has a long dividend track record, but it doesn't look great with cuts in the past.      Since 2013, the annual payment back then was MYR0.08, compared to the most recent full-year payment of MYR0.40.      This means that it has been growing its distributions at 17% per annum over that time.     Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.     Oriental Holdings Berhad May Find It Hard To Grow The Dividend  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.      Over the past five years, it looks as though Oriental Holdings Berhad's EPS has declined at around 3.1% a year.  If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.    Oriental Holdings Berhad's Dividend Doesn't Look Sustainable  Overall, this is probably not a great income stock, even though the dividend is being raised at the moment.      The payments are bit high to be considered sustainable, and the track record isn't the best.     This company is not in the top tier of income providing stocks.   It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one.  However, there are other things to consider for investors when analysing stock performance.   For example, we've identified 3 warning signs for Oriental Holdings Berhad (1 makes us a bit uncomfortable!) that you should be aware of before investing.   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 Oriental Holdings 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 Ran A Stock Scan For Earnings Growth And Oriental Holdings Berhad (KLSE:ORIENT) Passed With Ease

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit.  But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.  Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.  Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Oriental Holdings Berhad (KLSE:ORIENT). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.   Our analysis indicates that ORIENT is potentially undervalued!    How Fast Is Oriental Holdings Berhad Growing?  The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually.  Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS.   Oriental Holdings Berhad managed to grow EPS by 13% per year, over three years.   That's a good rate of growth, if it can be sustained.    Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market.    We note that while EBIT margins have improved from 12% to 27%, the company has actually reported a fall in revenue by 2.8%.  That's not a good look.    The chart below shows how the company's bottom and top lines have progressed over time.  For finer detail, click on the image. KLSE:ORIENT Earnings and Revenue History October 21st 2022  While profitability drives the upside, prudent investors always check the balance sheet, too. Are Oriental Holdings Berhad Insiders Aligned With All Shareholders?  It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests.  Shareholders will be pleased by the fact that insiders own Oriental Holdings Berhad shares worth a considerable sum.     Holding RM260m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders.   This should keep them focused on creating long term value for shareholders.     It's good to see that insiders are invested in the company, but are remuneration levels reasonable?  A brief analysis of the CEO compensation suggests they are.    The median total compensation for CEOs of companies similar in size to Oriental Holdings Berhad, with market caps between RM1.9b and RM7.6b, is around RM1.9m.   Oriental Holdings Berhad's CEO only received compensation totalling RM109k in the year to December 2021.  This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign.   While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind.  It can also be a sign of a culture of integrity, in a broader sense.   Does Oriental Holdings Berhad Deserve A Spot On Your Watchlist?  One positive for Oriental Holdings Berhad is that it is growing EPS. That's nice to see.   Earnings growth might be the main attraction for Oriental Holdings Berhad, but the fun does not stop there.  Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least.     Before you take the next step you should know about the 2 warning signs for Oriental Holdings Berhad (1 is significant!) that we have uncovered.   The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.Valuation is complex, but we're helping make it simple.Find out whether Oriental Holdings 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.


Pasdec Holdings Berhad Full Year 2022 Earnings: EPS: RM0.003 (vs RM0.007 loss in FY 2021)

Pasdec Holdings Berhad (KLSE:PASDEC) Full Year 2022 ResultsKey Financial Results Revenue: RM21.7m (down 45% from FY 2021). Net income: RM1.37m (up from RM2.85m loss in FY 2021). Profit margin: 6.3% (up from net loss in FY 2021). The move to profitability was driven by lower expenses. EPS: RM0.003 (up from RM0.007 loss in FY 2021).  KLSE:PASDEC Earnings and Revenue History March 3rd 2023 All figures shown in the chart above are for the trailing 12 month (TTM) period Pasdec Holdings Berhad shares are down 4.4% from a week ago.   Risk Analysis You should always think about risks. Case in point, we've spotted   3 warning signs for Pasdec Holdings Berhad  you should be aware of.  Valuation is complex, but we're helping make it simple.Find out whether Pasdec Holdings 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.


Pasdec Holdings Berhad (KLSE:PASDEC) Has Debt But No Earnings; Should You Worry?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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.  We note that Pasdec Holdings Berhad (KLSE:PASDEC) does have debt on its balance sheet.  But the more important question is: how much risk is that debt creating?  What Risk Does Debt Bring?  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.  If things get really bad, the lenders can take control of the business.  While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price.  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.   Our analysis indicates that PASDEC is potentially undervalued!    What Is Pasdec Holdings Berhad's Debt?  As you can see below, Pasdec Holdings Berhad had RM11.7m of debt at September 2022, down from RM16.2m a year prior.    But it also has RM25.7m in cash to offset that, meaning it has RM14.0m net cash.  KLSE:PASDEC Debt to Equity History December 9th 2022 How Healthy Is Pasdec Holdings Berhad's Balance Sheet?  We can see from the most recent balance sheet that Pasdec Holdings Berhad had liabilities of RM33.4m falling due within a year, and liabilities of RM8.00m due beyond that.   On the other hand, it had cash of RM25.7m and RM14.2m worth of receivables due within a year.   So its liabilities total RM1.48m more than the combination of its cash and short-term receivables.   This state of affairs indicates that Pasdec Holdings 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 RM132.1m company is short on cash, but still worth keeping an eye on the balance sheet.    Despite its noteworthy liabilities, Pasdec Holdings Berhad boasts net cash, so it's fair to say it does not have a heavy debt load!      When analysing debt levels, the balance sheet is the obvious place to start.  But you can't view debt in total isolation; since Pasdec Holdings 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.   In the last year Pasdec Holdings Berhad had a loss before interest and tax, and actually shrunk its revenue by 42%, to RM28m.   To be frank that doesn't bode well.    So How Risky Is Pasdec Holdings Berhad? Although Pasdec Holdings Berhad had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of RM2.2m.  So taking that on face value, and considering the cash, we don't think its very risky in the near term.     With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business.     When analysing debt levels, the balance sheet is the obvious place to start.  But ultimately, every company can contain risks that exist outside of the balance sheet.   Case in point: We've spotted   3 warning signs for Pasdec Holdings Berhad  you should be aware of.      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 Pasdec Holdings 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 Robust Financials Driving The Recent Rally In Pecca Group Berhad's (KLSE:PECCA) Stock?

Pecca Group Berhad (KLSE:PECCA) has had a great run on the share market with its stock up by a significant 32% over the last three months.   Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes.      In this article, we decided to focus on Pecca Group Berhad's  ROE.    Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money.  In simpler terms, it measures the profitability of a company in relation to shareholder's equity.  See our latest analysis for Pecca Group Berhad  How To 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 Pecca Group Berhad is:12% = RM23m ÷ RM190m (Based on the trailing twelve months to June 2022). The 'return' is the income the business earned over the last year.  One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.12 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.  A Side By Side comparison of Pecca Group Berhad's Earnings Growth And 12% ROE  At first glance, Pecca Group Berhad seems to have a decent ROE.   Especially when compared to the industry average of 1.3% the company's ROE looks pretty impressive.   This certainly adds some context to Pecca Group Berhad's decent 7.1% net income growth seen over the past five years.     We then compared Pecca Group Berhad's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 0.9% in the same period.   KLSE:PECCA Past Earnings Growth September 23rd 2022 Earnings growth is an important metric to consider when valuing a stock.   The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in.  By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await.    If you're wondering about Pecca Group Berhad's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.    Is Pecca Group Berhad Making Efficient Use Of Its Profits?    Pecca Group Berhad has a significant three-year median payout ratio of 66%, meaning that it is left with only 34% to reinvest into its business. This implies that the company has been able to achieve decent earnings growth despite returning most of its profits to shareholders.      Additionally, Pecca Group Berhad has paid dividends over a period of six years which means that the company is pretty serious about sharing its profits with shareholders.      Our latest analyst data shows that the future payout ratio of the company is expected to drop to 44% over the next three years.   However, the company's ROE is not expected to change by much despite the lower expected payout ratio.      Summary    On the whole, we feel that Pecca Group Berhad's performance has been quite good.      In particular, its high ROE is quite noteworthy and also the probable explanation behind its considerable earnings growth. Yet, the company is retaining a small portion of its profits. Which means that the company has been able to grow its earnings in spite of it, so that's not too bad.       The latest industry analyst forecasts show that the company is expected to maintain its current growth rate.     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 Pecca 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.


Pecca Group Berhad Full Year 2022 Earnings: Beats Expectations

Pecca Group Berhad (KLSE:PECCA) Full Year 2022 ResultsKey Financial Results Revenue: RM164.4m (up 14% from FY 2021). Net income: RM22.9m (up 19% from FY 2021). Profit margin: 14% (in line with FY 2021). EPS: RM0.031 (up from RM0.027 in FY 2021).  KLSE:PECCA Earnings and Revenue History October 29th 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period Pecca Group Berhad Revenues and Earnings Beat Expectations  Revenue exceeded analyst estimates by 6.9%.  Earnings per share (EPS) also surpassed analyst estimates by 1.1%.      The company's shares are up 2.4% from a week ago.   Risk Analysis It is worth noting though that we have found 2 warning signs for Pecca Group Berhad (1 can't be ignored!) that you need to take into consideration.Valuation is complex, but we're helping make it simple.Find out whether Pecca 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.


What Does Pecca Group Berhad's (KLSE:PECCA) Share Price Indicate?

Pecca Group Berhad (KLSE:PECCA), might not be a large cap stock, but it     saw a double-digit share price rise of over 10% in the past couple of months on the KLSE.    Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value?  Let’s examine Pecca Group Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.     See our latest analysis for Pecca Group Berhad  What's The Opportunity In Pecca Group Berhad?  Pecca Group Berhad appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average.  I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 37.26x is currently well-above the industry average of 22.21x, meaning that it is trading at a more expensive price relative to its peers.   Furthermore, Pecca Group Berhad’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.      What kind of growth will Pecca Group Berhad generate? KLSE:PECCA Earnings and Revenue Growth July 28th 2022 Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.   Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price.    Pecca Group Berhad's earnings over the next few years are expected to increase by 84%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.    What This Means For You Are you a shareholder? It seems like the market has well and truly priced in PECCA’s positive outlook,  with shares trading above industry price multiples.  However, this brings up another question – is now the right time to sell?  If you believe PECCA should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed. Are you a potential investor? If you’ve been  keeping tabs on PECCA for some time,  now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the  positive outlook  is encouraging for PECCA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.   If you'd like to know more about Pecca Group Berhad as a business, it's important to be aware of any risks it's facing.   For example - Pecca Group Berhad has 1 warning sign we think you should be aware of.    If you are no longer interested in Pecca Group Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Valuation is complex, but we're helping make it simple.Find out whether Pecca 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.


Sapura Industrial Berhad Full Year 2023 Earnings: EPS: RM0.12 (vs RM0.052 loss in FY 2022)

Sapura Industrial Berhad (KLSE:SAPIND) Full Year 2023 ResultsKey Financial Results Revenue: RM254.8m (up 66% from FY 2022). Net income: RM9.02m (up from RM3.78m loss in FY 2022). Profit margin: 3.5% (up from net loss in FY 2022). The move to profitability was driven by higher revenue. EPS: RM0.12 (up from RM0.052 loss in FY 2022).  KLSE:SAPIND Earnings and Revenue History April 4th 2023 All figures shown in the chart above are for the trailing 12 month (TTM) period Sapura Industrial Berhad shares are down 2.5% from a week ago.   Risk Analysis Before we wrap up, we've discovered 3 warning signs for Sapura Industrial Berhad (1 makes us a bit uncomfortable!) that you should be aware of. Valuation is complex, but we're helping make it simple.Find out whether Sapura Industrial 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.


These 4 Measures Indicate That Sapura Industrial Berhad (KLSE:SAPIND) Is Using Debt Reasonably Well

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.'  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.  As with many other companies Sapura Industrial Berhad (KLSE:SAPIND) makes use of debt.  But is this debt a concern to shareholders?  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.  Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing.  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.  By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return.  When we think about a company's use of debt, we first look at cash and debt together.   See our latest analysis for Sapura Industrial Berhad  What Is Sapura Industrial Berhad's Debt?  As you can see below, at the end of October 2022, Sapura Industrial Berhad had RM34.5m of debt, up from RM28.9m a year ago. Click the image for more detail.    On the flip side, it has RM34.5m in cash leading to net debt of about RM47.0k.  KLSE:SAPIND Debt to Equity History February 15th 2023 How Strong Is Sapura Industrial Berhad's Balance Sheet?  Zooming in on the latest balance sheet data, we can see that Sapura Industrial Berhad had liabilities of RM58.4m due within 12 months and liabilities of RM34.8m due beyond that.    Offsetting this, it had RM34.5m in cash and RM42.1m in receivables that were due within 12 months.   So its liabilities total RM16.7m more than the combination of its cash and short-term receivables.   Sapura Industrial Berhad has a market capitalization of RM63.0m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose.  However, it is still worthwhile taking a close look at its ability to pay off debt.    Carrying virtually no net debt, Sapura Industrial Berhad has a very light debt load indeed.    Although Sapura Industrial Berhad made a loss at the EBIT level, last year, it was also good to see that it generated RM13m in EBIT over the last twelve months.     There's no doubt that we learn most about debt from the balance sheet.  But you can't view debt in total isolation; since Sapura Industrial 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.  But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash.   So it is important to check how much of its earnings before interest and tax (EBIT) converts to actual free cash flow.    During the last year, Sapura Industrial Berhad generated free cash flow amounting to a very robust 95% of its EBIT, more than we'd expect.  That positions it well to pay down debt if desirable to do so.    Our View The good news is that Sapura Industrial Berhad's demonstrated ability to convert EBIT to free cash flow delights us like a fluffy puppy does a toddler.   And the good news does not stop there, as its net debt to EBITDA also supports that impression!      When we consider the range of factors above, it looks like Sapura Industrial Berhad is pretty sensible with its use of debt.  That means they are taking on a bit more risk, in the hope of boosting shareholder returns.    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, we've discovered 3 warning signs for Sapura Industrial Berhad (1 is concerning!) 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 Sapura Industrial 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.


Robust Earnings May Not Tell The Whole Story For SMIS Corporation Berhad (KLSE:SMISCOR)

SMIS Corporation Berhad's (KLSE:SMISCOR) robust earnings report didn't manage to move the market for its stock.  We did some digging, and we found some concerning factors in the details.      Our analysis indicates that SMISCOR is potentially undervalued!   KLSE:SMISCOR Earnings and Revenue History November 29th 2022  A Closer Look At SMIS Corporation Berhad's Earnings  As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit.  In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period.  The ratio shows us how much a company's profit exceeds its FCF.  As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative.  While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio.  Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking.  Over the twelve months to September 2022, SMIS Corporation Berhad recorded an accrual ratio of 0.24.   We can therefore deduce that its free cash flow fell well short of covering its statutory profit.    To wit, it produced free cash flow of RM118k during the period, falling well short of its reported profit of RM19.5m.    Given that SMIS Corporation Berhad had negative free cash flow in the prior corresponding period, the trailing twelve month resul of RM118k would seem to be a step in the right direction.    The good news for shareholders is that SMIS Corporation 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.  As a result, some shareholders may be looking for stronger cash conversion in the current year.   Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of SMIS Corporation Berhad.  Our Take On SMIS Corporation Berhad's Profit Performance SMIS Corporation Berhad's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings.      Therefore, it seems possible to us that SMIS Corporation Berhad's true underlying earnings power is actually less than its statutory profit.    The good news is that it earned a profit in the last twelve months, despite its previous loss.     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.    So while earnings quality is important, it's equally important to consider the risks facing SMIS Corporation Berhad at this point in time.    Every company has risks, and we've spotted 2 warning signs for SMIS Corporation Berhad you should know about.   Today we've zoomed in on a single data point to better understand the nature of SMIS Corporation Berhad's profit.   But there are plenty of other ways to inform your opinion of a company.  Some people consider a high return on equity to be a good sign of a quality business.  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 SMIS 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.


SMIS Corporation Berhad (KLSE:SMISCOR) Is Achieving High Returns On Its Capital

Did you know there are some financial metrics that can provide clues of a potential multi-bagger?  Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed.  This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns.    So when we looked at the ROCE trend of SMIS Corporation Berhad (KLSE:SMISCOR) we really liked what we saw.     Return On Capital Employed (ROCE): What Is It?  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 SMIS Corporation Berhad:  Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.23 = RM22m ÷ (RM118m - RM23m) (Based on the trailing twelve months to March 2023). Thus, SMIS Corporation Berhad has an ROCE of 23%.  In absolute terms that's a great return and it's even better than the Auto Components industry average of 9.7%.   View our latest analysis for SMIS Corporation Berhad KLSE:SMISCOR Return on Capital Employed June 20th 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 want to delve into the historical earnings, revenue and cash flow of SMIS Corporation Berhad, check out these free graphs here.   What The Trend Of ROCE Can Tell Us  We're delighted to see that SMIS Corporation Berhad is reaping rewards from its investments and has now broken into profitability.  The company now earns 23% on its capital, because  five years ago it was incurring losses.  On top of that, what's interesting is that the amount of capital being employed has remained steady, so the business hasn't needed to put any additional money to work to generate these higher returns.  That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward.  Because in the end, a business can only get so efficient.     One more thing to note, SMIS Corporation Berhad has decreased current liabilities to 19% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors.  This tells us that SMIS Corporation Berhad has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.     In Conclusion...  To bring it all together, SMIS Corporation Berhad has done well to increase the returns it's generating from its capital employed.      Since the stock has returned a staggering 101% to shareholders over the last  five years, it looks like investors are recognizing these changes.   So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.    Like most companies, SMIS Corporation Berhad does come with some risks, and we've found 2 warning signs  that you should be aware of.    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 SMIS 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.


SMIS Corporation Berhad Third Quarter 2022 Earnings: EPS: RM0.40 (vs RM0.051 loss in 3Q 2021)

SMIS Corporation Berhad (KLSE:SMISCOR) Third Quarter 2022 ResultsKey Financial Results Revenue: RM41.1m (up 159% from 3Q 2021). Net income: RM16.9m (up from RM2.13m loss in 3Q 2021). Profit margin: 41% (up from net loss in 3Q 2021). The move to profitability was driven by higher revenue. EPS: RM0.40 (up from RM0.051 loss in 3Q 2021).  KLSE:SMISCOR Earnings and Revenue History November 23rd 2022 All figures shown in the chart above are for the trailing 12 month (TTM) period SMIS Corporation Berhad shares are up 2.3% from a week ago.   Risk Analysis You still need to take note of risks, for example - SMIS Corporation Berhad has   2 warning signs   we think you should be aware of. Valuation is complex, but we're helping make it simple.Find out whether SMIS 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.