To avoid investing in a business that's in decline, there's a few financial metrics that can provide early indications of aging. A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining. This indicates the company is producing less profit from its investments and its total assets are decreasing. So after we looked into Perusahaan Sadur Timah Malaysia (Perstima) Berhad (KLSE:PERSTIM), the trends above didn't look too great.
AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.
Return On Capital Employed (ROCE): What Is It?
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Perusahaan Sadur Timah Malaysia (Perstima) Berhad is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.0019 = RM841k ÷ (RM911m - RM469m) (Based on the trailing twelve months to June 2025).
So, Perusahaan Sadur Timah Malaysia (Perstima) Berhad has an ROCE of 0.2%. In absolute terms, that's a low return and it also under-performs the Metals and Mining industry average of 8.2%.
Historical performance is a great place to start when researching a stock so above you can see the gauge for Perusahaan Sadur Timah Malaysia (Perstima) Berhad's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Perusahaan Sadur Timah Malaysia (Perstima) Berhad.
So How Is Perusahaan Sadur Timah Malaysia (Perstima) Berhad's ROCE Trending?
In terms of Perusahaan Sadur Timah Malaysia (Perstima) Berhad's historical ROCE movements, the trend doesn't inspire confidence. About five years ago, returns on capital were 9.1%, however they're now substantially lower than that as we saw above. And on the capital employed front, the business is utilizing roughly the same amount of capital as it was back then. Since returns are falling and the business has the same amount of assets employed, this can suggest it's a mature business that hasn't had much growth in the last five years. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Perusahaan Sadur Timah Malaysia (Perstima) Berhad becoming one if things continue as they have.