Returns At Hap Seng Consolidated Berhad (KLSE:HAPSENG) Appear To Be Weighed Down

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. In light of that, when we looked at Hap Seng Consolidated Berhad (KLSE:HAPSENG) and its ROCE trend, we weren't exactly thrilled.

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Understanding Return On Capital Employed (ROCE)

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Hap Seng Consolidated Berhad:

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

0.077 = RM1.2b ÷ (RM19b - RM3.7b) (Based on the trailing twelve months to June 2025).

Thus, Hap Seng Consolidated Berhad has an ROCE of 7.7%. On its own, that's a low figure but it's around the 7.0% average generated by the Industrials industry.

View our latest analysis for Hap Seng Consolidated Berhad

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're interested in investigating Hap Seng Consolidated Berhad's past further, check out this free graph covering Hap Seng Consolidated Berhad's past earnings, revenue and cash flow.

What Can We Tell From Hap Seng Consolidated Berhad's ROCE Trend?

There hasn't been much to report for Hap Seng Consolidated Berhad's returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Hap Seng Consolidated Berhad to be a multi-bagger going forward.

What We Can Learn From Hap Seng Consolidated Berhad's ROCE

We can conclude that in regards to Hap Seng Consolidated Berhad's returns on capital employed and the trends, there isn't much change to report on. And in the last five years, the stock has given away 50% so the market doesn't look too hopeful on these trends strengthening any time soon. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

One final note, you should learn about the 2 warning signs we've spotted with Hap Seng Consolidated Berhad (including 1 which makes us a bit uncomfortable) .

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.

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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.