If we wish to discover a potential multi-bagger, typically there are underlying tendencies that may present clues. Amongst different issues, we’ll wish to see two issues; firstly, a rising return on capital employed (ROCE) and secondly, an enlargement within the firm’s quantity of capital employed. In case you see this, it sometimes means it is an organization with an amazing enterprise mannequin and loads of worthwhile reinvestment alternatives. Nonetheless, after briefly wanting over the numbers, we do not assume Aurelius Applied sciences Berhad (KLSE:ATECH) has the makings of a multi-bagger going ahead, however let’s take a look at why that could be.
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Simply to make clear if you happen to’re not sure, ROCE is a metric for evaluating how a lot pre-tax earnings (in share phrases) an organization earns on the capital invested in its enterprise. Analysts use this method to calculate it for Aurelius Applied sciences Berhad:
Return on Capital Employed = Earnings Earlier than Curiosity and Tax (EBIT) ÷ (Whole Belongings – Present Liabilities)
0.12 = RM62m ÷ (RM660m – RM155m) (Based mostly on the trailing twelve months to December 2024).
Due to this fact, Aurelius Applied sciences Berhad has an ROCE of 12%. That is a fairly customary return and it is consistent with the business common of 12%.
See our latest analysis for Aurelius Technologies Berhad
Above you may see how the present ROCE for Aurelius Applied sciences Berhad compares to its prior returns on capital, however there’s solely a lot you may inform from the previous. In case you’re , you may view the analysts predictions in our free analyst report for Aurelius Technologies Berhad .
We weren’t thrilled with the pattern as a result of Aurelius Applied sciences Berhad’s ROCE has decreased by 61% during the last 5 years, whereas the enterprise employed 346% extra capital. Often this is not best, however given Aurelius Applied sciences Berhad carried out a capital elevating earlier than their most up-to-date earnings announcement, that may’ve probably contributed, not less than partially, to the elevated capital employed determine. The funds raised probably have not been put to work but so it is value watching what occurs sooner or later with Aurelius Applied sciences Berhad’s earnings and if they modify consequently from the capital increase.
On a aspect be aware, Aurelius Applied sciences Berhad has executed nicely to pay down its present liabilities to 23% of complete property. So we might hyperlink a few of this to the lower in ROCE. What’s extra, this could cut back some elements of danger to the enterprise as a result of now the corporate’s suppliers or short-term collectors are funding much less of its operations. Some would declare this reduces the enterprise’ effectivity at producing ROCE since it’s now funding extra of the operations with its personal cash.
