KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
China Railway Signal & Communication (HKG:3969) may struggle to deliver strong long-term returns despite recent stock gains, as its ability to generate higher returns from reinvested capital appears limited.
Key Metrics:
Return on Capital Employed (ROCE): 6.8%, close to the electronic industry average of 6.5%.
ROCE has fallen from 8.7% over five years, indicating declining efficiency.
Current liabilities: 51% of total assets, meaning a large portion of operations is funded through short-term creditors, adding risk.
Growth Concerns:
The company has been investing more capital, but sales haven’t grown significantly, suggesting that the returns from these investments may take time to materialize.
Revenue performance has been flat in the past 12 months, making the case for a near-term breakout less convincing.
Market Sentiment:
Despite these issues, the stock has gained 42% over the last five years, showing investor optimism that long-term returns will improve.
Summary: China Railway Signal & Communication is reinvesting heavily, but falling ROCE and high reliance on short-term liabilities raise concerns about whether these investments can drive sustainable growth. Investors may need to see a turnaround in returns to justify future gains.
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