Is SSF Home Group Berhad's (KLSE:SSF) Recent Performance Underpinned By Weak Financials?

editorial-team@simplywallst.com (Simply Wall St)

Wed, May 14, 2025, 6:19 PM 4 min read

With its banal down 6.3% implicit the past 3 months, it is casual to disregard SSF Home Group Berhad (KLSE:SSF). To determine if this inclination could continue, we decided to look astatine its anemic fundamentals arsenic they signifier the semipermanent marketplace trends. Specifically, we decided to survey SSF Home Group Berhad's ROE successful this article.

Return connected equity oregon ROE is an important origin to beryllium considered by a shareholder due to the fact that it tells them however efficaciously their superior is being reinvested. In simpler terms, it measures the profitability of a institution successful narration to shareholder's equity.

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The formula for ROE is:

Return connected Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based connected the supra formula, the ROE for SSF Home Group Berhad is:

3.9% = RM6.2m ÷ RM160m (Based connected the trailing 12 months to January 2025).

The 'return' is the magnitude earned aft taxation implicit the past 12 months. One mode to conceptualize this is that for each MYR1 of shareholders' superior it has, the institution made MYR0.04 successful profit.

View our latest investigation for SSF Home Group Berhad

We person already established that ROE serves arsenic an businesslike profit-generating gauge for a company's aboriginal earnings. Depending connected however overmuch of these profits the institution reinvests oregon "retains", and however efficaciously it does so, we are past capable to measure a company’s net maturation potential. Generally speaking, different things being equal, firms with a precocious instrumentality connected equity and nett retention, person a higher maturation complaint than firms that don’t stock these attributes.

It is rather wide that SSF Home Group Berhad's ROE is alternatively low. Not conscionable that, adjacent compared to the manufacture mean of 9.3%, the company's ROE is wholly unremarkable. For this reason, SSF Home Group Berhad's 5 twelvemonth nett income diminution of 19% is not astonishing fixed its little ROE. However, determination could besides beryllium different factors causing the net to decline. Such arsenic - debased net retention oregon mediocre allocation of capital.

However, erstwhile we compared SSF Home Group Berhad's maturation with the manufacture we recovered that portion the company's net person been shrinking, the manufacture has seen an net maturation of 22% successful the aforesaid period. This is rather worrisome.