KUALA LUMPUR, July 31 (Bernama) -- Bursa Malaysia ended higher on Friday as investors continued to accumulate blue-chip stocks in line with stronger performances across most regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.50 points to 1,724.90 from yesterday’s close of 1,720.40. The benchmark index opened 0.83 of a point higher at 1,721.23, and moved between 1,715.67 and 1,730.12 throughout the day. The broader market was positive with gainers outpacing losers 707 to 402, while 547 counters were unchanged, 1,085 untraded and 56 suspended. Turnover expanded to 3.03 billion units valued at RM3.56 billion from 2.49 billion units valued at RM2.25 billion on Thursday.
China Suntien Green Energy has been a five-year stock market darling, returning a stunning +189% to long-term shareholders.
But behind the impressive share price rally, a key metric is raising red flags.
Return on Capital Employed (ROCE): A Closer Look
ROCE is a valuable measure that tells us how effectively a company reinvests its profits. Ideally, we want to see companies not only reinvesting — but doing so at increasing rates of return.
Unfortunately, that’s not what’s happening here.
ROCE = 6.0%, based on EBIT of CN¥3.8B and capital employed of CN¥64B.Down from 7.8% five years ago.
That’s a declining trend, and while 6% is close to the industry average, it’s not compelling — especially in the high-growth world of green energy.
Capital Is Going In, But Not Much Is Coming Out
Suntien is increasing its capital base — but sales have barely budged over the past 12 months.
This might mean:
Management is investing in long-term infrastructure.
These investments haven’t started yielding results.
Or worse — they may not yield much at all.
And yet, the stock price has surged.
So What’s the Market Betting On?
Despite weak ROCE trends, the market seems bullish — possibly on:
China’s renewable energy push.
Future policy incentives.
Or hopes for an eventual turnaround in earnings from these ongoing investments.
My Take: Caution is Warranted
While the macro story is attractive, the micro fundamentals need improvement.
Unless ROCE starts climbing again, it’s hard to justify further upside — especially after such a strong run.
If you're already holding, you might wait and watch. But for new investors? There may be greener energy picks elsewhere.
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