Mitrajaya Holdings Berhad (KLSE:MITRA) Is Doing The Right Things To Multiply Its Share Price

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. Speaking of which, we noticed some great changes in Mitrajaya Holdings Berhad's (KLSE:MITRA) returns on capital, so let's have a look.

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Understanding Return On Capital Employed (ROCE)

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for Mitrajaya Holdings Berhad:

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

0.074 = RM60m ÷ (RM1.1b - RM290m) (Based on the trailing twelve months to June 2025).

Therefore, Mitrajaya Holdings Berhad has an ROCE of 7.4%. Ultimately, that's a low return and it under-performs the Construction industry average of 9.9%.

View our latest analysis for Mitrajaya Holdings 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'd like to look at how Mitrajaya Holdings Berhad has performed in the past in other metrics, you can view this free graph of Mitrajaya Holdings Berhad's past earnings, revenue and cash flow.

So How Is Mitrajaya Holdings Berhad's ROCE Trending?

Shareholders will be relieved that Mitrajaya Holdings Berhad has broken into profitability. The company now earns 7.4% on its capital, because five years ago it was incurring losses. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.

The Bottom Line On Mitrajaya Holdings Berhad's ROCE

To sum it up, Mitrajaya Holdings Berhad is collecting higher returns from the same amount of capital, and that's impressive. And a remarkable 283% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Mitrajaya Holdings Berhad can keep these trends up, it could have a bright future ahead.

One more thing to note, we've identified 1 warning sign with Mitrajaya Holdings Berhad and understanding this should be part of your investment process.

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.

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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.