Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) Might Be Having Difficulty Using Its Capital Effectively

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

Fri, May 16, 2025, 3:42 PM 3 min read

If we privation to find a imaginable multi-bagger, often determination are underlying trends that tin supply clues. In a cleanable world, we'd similar to spot a institution investing much superior into its concern and ideally the returns earned from that superior are besides increasing. Ultimately, this demonstrates that it's a concern that is reinvesting profits astatine expanding rates of return. However, aft concisely looking implicit the numbers, we don't deliberation Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) has the makings of a multi-bagger going forward, but let's person a look astatine wherefore that whitethorn be.

Our escaped banal study includes 3 informing signs investors should beryllium alert of earlier investing successful Scientex Packaging (Ayer Keroh) Berhad. Read for escaped now.

For those that aren't definite what ROCE is, it measures the magnitude of pre-tax profits a institution tin make from the superior employed successful its business. The look for this calculation connected Scientex Packaging (Ayer Keroh) Berhad is:

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

0.098 = RM43m ÷ (RM590m - RM155m) (Based connected the trailing 12 months to January 2025).

Thus, Scientex Packaging (Ayer Keroh) Berhad has an ROCE of 9.8%. On its own, that's a debased fig but it's astir the 8.3% mean generated by the Packaging industry.

Check retired our latest investigation for Scientex Packaging (Ayer Keroh) Berhad

Historical show is simply a large spot to commencement erstwhile researching a banal truthful supra you tin spot the gauge for Scientex Packaging (Ayer Keroh) Berhad's ROCE against it's anterior returns. If you privation to delve into the humanities net , cheque retired these free graphs detailing gross and currency travel show of Scientex Packaging (Ayer Keroh) Berhad.

When we looked astatine the ROCE inclination astatine Scientex Packaging (Ayer Keroh) Berhad, we didn't summation overmuch confidence. To beryllium much specific, ROCE has fallen from 14% implicit the past 5 years. Meanwhile, the concern is utilizing much superior but this hasn't moved the needle overmuch successful presumption of income successful the past 12 months, truthful this could bespeak longer word investments. It whitethorn instrumentality immoderate clip earlier the institution starts to spot immoderate alteration successful net from these investments.

Bringing it each together, portion we're somewhat encouraged by Scientex Packaging (Ayer Keroh) Berhad's reinvestment successful its ain business, we're alert that returns are shrinking. And investors look hesitant that the trends volition prime up due to the fact that the banal has fallen 26% successful the past 5 years. In immoderate case, the banal doesn't person these traits of a multi-bagger discussed above, truthful if that's what you're looking for, we deliberation you'd person much luck elsewhere.