Slowing Rates Of Return At BLD Plantation Bhd (KLSE:BLDPLNT) Leave Little Room For Excitement
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. However, after briefly looking over the numbers, we don't think BLD Plantation Bhd (KLSE:BLDPLNT) has the makings of a multi-bagger going forward, but let's have a look at why that may be.
What Is 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 BLD Plantation Bhd:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.085 = RM84m ÷ (RM1.2b - RM249m) (Based on the trailing twelve months to September 2025).
Thus, BLD Plantation Bhd has an ROCE of 8.5%. In absolute terms, that's a low return but it's around the Food industry average of 10%.
Check out our latest analysis for BLD Plantation Bhd
Historical performance is a great place to start when researching a stock so above you can see the gauge for BLD Plantation Bhd's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of BLD Plantation Bhd.
So How Is BLD Plantation Bhd's ROCE Trending?
The returns on capital haven't changed much for BLD Plantation Bhd in recent years. Over the past five years, ROCE has remained relatively flat at around 8.5% and the business has deployed 26% more capital into its operations. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don't provide a high return on capital.
One more thing to note, even though ROCE has remained relatively flat over the last five years, the reduction in current liabilities to 20% of total assets, is good to see from a business owner's perspective. Effectively suppliers now fund less of the business, which can lower some elements of risk.
The Bottom Line
As we've seen above, BLD Plantation Bhd's returns on capital haven't increased but it is reinvesting in the business. Although the market must be expecting these trends to improve because the stock has gained 77% over the last five years. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.
One more thing to note, we've identified 2 warning signs with BLD Plantation Bhd and understanding them should be part of your investment process.
While BLD Plantation Bhd isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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.