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 State Construction Engineering (SHSE:601668) has seen its stock climb 43% over the past five years, but its financials suggest investors should tread carefully.
Key Metric: ROCE Falling
Return on Capital Employed (ROCE): 6.8%, based on the latest 12 months.
Down from 9.6% five years ago, signaling a decline in profitability from its capital investments.
ROCE is roughly in line with the construction industry average of 5.7%, but low in absolute terms.
Capital Use vs. Returns
The company has been deploying more capital, yet sales haven’t grown significantly in the last year.
This suggests ongoing long-term investments that may take time to yield results.
High Liabilities Add Risk
Current liabilities: 55% of total assets.
Heavy reliance on short-term creditors raises operational risk. A lower ratio would indicate stronger financial stability.
Takeaway
While China State Construction Engineering is reinvesting in its business, declining returns and high liabilities make its path to becoming a “multi-bagger” uncertain. Unless ROCE trends reverse and earnings begin to reflect capital growth, upside may be limited despite the stock’s past performance.
Investors should watch for signs of improving margins and reduced dependency on short-term debt before expecting sustained growth.
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