There Are Reasons To Feel Uneasy About Guan Chong Berhad’s (KLSE:GCB) Returns On Capital

Simply Wall St

Sun, February 15, 2026 at 9:32 AM GMT+9 3 min read

In this article:

5102.KL

-2.16%

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we’ll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. However, after briefly looking over the numbers, we don’t think Guan Chong Berhad (KLSE:GCB) has the makings of a multi-bagger going forward, but let’s have a look at why that may be.

Trump has pledged to “unleash” American oil and gas and these 15 US stocks have developments that are poised to benefit.

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. To calculate this metric for Guan Chong Berhad, this is the formula:

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

0.039 = RM132m ÷ (RM8.3b - RM4.9b) (Based on the trailing twelve months to September 2025).

So, **Guan Chong Berhad has an ROCE of 3.9%. ** In absolute terms, that’s a low return and it also under-performs the Food industry average of 11%.

See our latest analysis for Guan Chong Berhad

KLSE:GCB Return on Capital Employed February 15th 2026

Above you can see how the current ROCE for Guan Chong Berhad compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’d like to see what analysts are forecasting going forward, you should check out our free analyst report for Guan Chong Berhad .

What Does the ROCE Trend For Guan Chong Berhad Tell Us?

On the surface, the trend of ROCE at Guan Chong Berhad doesn’t inspire confidence. Around five years ago the returns on capital were 21%, but since then they’ve fallen to 3.9%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

On a side note, Guan Chong Berhad’s current liabilities are still rather high at 59% of total assets. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we’d like to see this reduce as that would mean fewer obligations bearing risks.

The Bottom Line On Guan Chong Berhad’s ROCE

While returns have fallen for Guan Chong Berhad in recent times, we’re encouraged to see that sales are growing and that the business is reinvesting in its operations. These growth trends haven’t led to growth returns though, since the stock has fallen 38% over the last five years. As a result, we’d recommend researching this stock further to uncover what other fundamentals of the business can show us.

Story Continues  

One more thing to note, we’ve identified ** 1 warning sign ** with Guan Chong Berhad and understanding this should be part of your investment process.

While Guan Chong Berhad isn’t earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

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.

Terms and Privacy Policy

Privacy Dashboard

More Info