Kobay Technology Bhd (KLSE: KOBAY) aims to further increase its return on investment


When we want to find a potential multi-excavator, there are often underlying trends that can provide clues. First, let’s see a proven one return on the capital employed (ROCE) rising, and secondly an expanding base of the capital employed. This shows us that it is a compounding machine that is capable of continually reinvesting its earnings in the business and generating higher returns. Speaking of which, we’ve made some great changes in Kobay Technology Bhds (KLSE: KOBAY) ROI, so let’s take a look.

Understanding return on investment (ROCE)

For those unsure of what ROCE is, it measures the amount of pre-tax profit a company can make from the capital invested in its business. Analysts use this formula to calculate it for Kobay Technology Bhd:

Return on capital employed = earnings before interest and taxes (EBIT) ÷ (total assets – current liabilities)

0.11 = RM28m ÷ (RM298m – RM50m) (Based on the last twelve months through March 2021).

Therefore, Kobay Technology Bhd has a ROCE of 11%. That’s a satisfactory return in absolute terms, but it’s much better compared to the industry average of 9.3%.

See our latest analysis for Kobay Technology Bhd

KLSE: KOBAY Return on Capital Employed June 29, 2021

Historical performance is a good place to start when researching a stock. So, above, you can see the measure of Kobay Technology Bhd’s ROCE compared to its past returns. If you are interested in learning more about Kobay Technology Bhd’s historical revenue, earnings, and cash flow, then check this out free Graphics here.

What can we say about Kobay Technology Bhd’s ROCE trend?

Kobay Technology Bhd shows some positive trends. The figures show that the return on capital employed has risen significantly to 11% over the past five years. The capital employed has also increased by 60%. So we are very inspired by what we see at Kobay Technology Bhd thanks to its ability to reinvest capital at a profit.

The conclusion on ROCE from Kobay Technology Bhd

In conclusion, it is great to see Kobay Technology Bhd can increase returns by consistently reinvesting capital with increasing returns as these are some of the key components of these sought-after multi-excavators. With the stock repaid a staggering 960% to shareholders over the past five years, it looks like investors will recognize these changes. Nonetheless, given the promising fundamentals, we believe the company deserves further due diligence.

One more thing to note, we’ve identified it 1 warning sign with Kobay Technology Bhd and understanding it should be part of your investment process.

If you are looking to find solid, big revenue companies, check this out free List of companies with good balance sheets and impressive returns on equity.

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This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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