Stock Analysis

Returns On Capital At Feytech Holdings Berhad (KLSE:FEYTECH) Paint A Concerning Picture

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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. Having said that, from a first glance at Feytech Holdings Berhad (KLSE:FEYTECH) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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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. Analysts use this formula to calculate it for Feytech Holdings Berhad:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.079 = RM24m ÷ (RM317m - RM17m) (Based on the trailing twelve months to June 2025).

Thus, Feytech Holdings Berhad has an ROCE of 7.9%. Even though it's in line with the industry average of 8.3%, it's still a low return by itself.

View our latest analysis for Feytech Holdings Berhad

roce
KLSE:FEYTECH Return on Capital Employed October 13th 2025

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 , check out these free graphs detailing revenue and cash flow performance of Feytech Holdings Berhad.

The Trend Of ROCE

On the surface, the trend of ROCE at Feytech Holdings Berhad doesn't inspire confidence. Over the last four years, returns on capital have decreased to 7.9% from 29% four years ago. Given the business is employing more capital while revenue has slipped, this is a bit concerning. If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased.

On a side note, Feytech Holdings Berhad has done well to pay down its current liabilities to 5.3% of total assets. So we could link some of this to the decrease in ROCE. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE.

The Key Takeaway

In summary, we're somewhat concerned by Feytech Holdings Berhad's diminishing returns on increasing amounts of capital. Long term shareholders who've owned the stock over the last year have experienced a 64% depreciation in their investment, so it appears the market might not like these trends either. With underlying trends that aren't great in these areas, we'd consider looking elsewhere.

On a separate note, we've found 3 warning signs for Feytech Holdings Berhad you'll probably want to know about.

While Feytech Holdings Berhad isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.