MyTech Group Berhad (KLSE:MYTECH) Is Looking To Continue Growing Its Returns On Capital
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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 MyTech Group Berhad's (KLSE:MYTECH) returns on capital, so let's have a look.
What Is 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. The formula for this calculation on MyTech Group Berhad is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.079 = RM4.3m ÷ (RM54m - RM305k) (Based on the trailing twelve months to September 2025).
Thus, MyTech Group Berhad has an ROCE of 7.9%. In absolute terms, that's a low return but it's around the Machinery industry average of 8.9%.
View our latest analysis for MyTech Group Berhad
Historical performance is a great place to start when researching a stock so above you can see the gauge for MyTech Group Berhad's ROCE against it's prior returns. If you're interested in investigating MyTech Group Berhad's past further, check out this free graph covering MyTech Group Berhad's past earnings, revenue and cash flow.
So How Is MyTech Group Berhad's ROCE Trending?
We're delighted to see that MyTech Group Berhad is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 7.9% on its capital. Not only that, but the company is utilizing 46% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.
The Key Takeaway
In summary, it's great to see that MyTech Group Berhad has managed to break into profitability and is continuing to reinvest in its business. And a remarkable 152% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.
One more thing: We've identified 4 warning signs with MyTech Group Berhad (at least 2 which are a bit unpleasant) , and understanding these would certainly be useful.
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.