If you’re looking for a multi-bagger, there’s a few things to keep an eye out for. Firstly, we’d want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So when we looked at the ROCE trend of Kencana Agri (SGX:BNE) we really liked what we saw.
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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. Analysts use this formula to calculate it for Kencana Agri:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.24 = US$46m ÷ (US$290m – US$96m) (Based on the trailing twelve months to June 2025).
So, Kencana Agri has an ROCE of 24%. In absolute terms that’s a great return and it’s even better than the Food industry average of 13%.
View our latest analysis for Kencana Agri
Above you can see how the current ROCE for Kencana Agri compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’re interested, you can view the analysts predictions in our free analyst report for Kencana Agri .
Kencana Agri is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 107% whilst employing roughly the same amount of capital. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. On that front, things are looking good so it’s worth exploring what management has said about growth plans going forward.
As discussed above, Kencana Agri appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
Kencana Agri does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those is a bit concerning…