Kawan Food Berhad (klse:kawan) Might Have The Makings Of A Multi-bagger

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

Mon, Apr 7, 2025, 2:27 PM 2 min read

To find a multi-bagger stock, what are nan underlying trends we should look for successful a business? Amongst different things, we'll want to spot 2 things; firstly, a increasing return connected superior employed (ROCE) and secondly, an description successful nan company's amount of superior employed. Ultimately, this demonstrates that it's a business that is reinvesting profits astatine expanding rates of return. So connected that note, Kawan Food Berhad (KLSE:KAWAN) looks rather promising successful regards to its trends of return connected capital.

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For those that aren't judge what ROCE is, it measures nan magnitude of pre-tax profits a institution tin make from nan superior employed successful its business. The look for this calculation connected Kawan Food Berhad is:

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

0.09 = RM37m ÷ (RM458m - RM52m) (Based connected nan trailing 12 months to December 2024).

Thus, Kawan Food Berhad has an ROCE of 9.0%. On its own, that's a debased fig but it's astir nan 9.7% mean generated by nan Food industry.

See our latest study for Kawan Food Berhad

In nan supra floor plan we person measured Kawan Food Berhad's anterior ROCE against its anterior performance, but nan early is arguably much important. If you'd for illustration to spot what analysts are forecasting going forward, you should cheque retired our free expert study for Kawan Food Berhad .

Kawan Food Berhad is showing committedness fixed that its ROCE is trending up and to nan right. The figures show that complete nan past 5 years, ROCE has grown 109% whilst employing astir nan aforesaid magnitude of capital. Basically nan business is generating higher returns from nan aforesaid magnitude of superior and that is impervious that location are improvements successful nan company's efficiencies. It's worthy looking deeper into this though because while it's awesome that nan business is much efficient, it mightiness besides mean that going guardant nan areas to put internally for nan integrated maturation are lacking.

As discussed above, Kawan Food Berhad appears to beryllium getting much proficient astatine generating returns since superior employed has remained level but net (before liking and tax) are up. Since nan banal has only returned 23% to shareholders complete nan past 5 years, nan promising fundamentals whitethorn not beryllium recognized yet by investors. So pinch that successful mind, we deliberation nan banal deserves further research.