What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a perfect world, we’d like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in TH Plantations Berhad’s (KLSE:THPLANT) returns on capital, so let’s have a look.
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For those who don’t know, ROCE is a measure of a company’s yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for TH Plantations Berhad, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.077 = RM184m ÷ (RM2.7b – RM286m) (Based on the trailing twelve months to June 2025).
Thus, TH Plantations Berhad has an ROCE of 7.7%. In absolute terms, that’s a low return and it also under-performs the Food industry average of 9.7%.
Check out our latest analysis for TH Plantations Berhad
Above you can see how the current ROCE for TH Plantations 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 TH Plantations Berhad .
TH Plantations Berhad’s ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 24% over the last five years. So it’s likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn’t changed considerably. It’s worth looking deeper into this though because while it’s great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.
To bring it all together, TH Plantations Berhad has done well to increase the returns it’s generating from its capital employed. Since the stock has only returned 36% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So with that in mind, we think the stock deserves further research.