Investors Will Want Pansar Berhad’s (KLSE:PANSAR) Growth In ROCE To Persist

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we’d want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. If you see this, it typically means it’s a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Pansar Berhad (KLSE:PANSAR) and its trend of ROCE, 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. To calculate this metric for Pansar Berhad, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.097 = RM36m ÷ (RM841m – RM474m) (Based on the trailing twelve months to September 2025).

Thus, Pansar Berhad has an ROCE of 9.7%. Even though it’s in line with the industry average of 9.6%, it’s still a low return by itself.

See our latest analysis for Pansar Berhad

Historical performance is a great place to start when researching a stock so above you can see the gauge for Pansar Berhad’s ROCE against it’s prior returns. If you’re interested in investigating Pansar Berhad’s past further, check out this free graph covering Pansar Berhad’s past earnings, revenue and cash flow.

The fact that Pansar Berhad is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it’s now earning 9.7% on its capital. In addition to that, Pansar Berhad is employing 105% more capital than previously which is expected of a company that’s trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

For the record though, there was a noticeable increase in the company’s current liabilities over the period, so we would attribute some of the ROCE growth to that. Essentially the business now has suppliers or short-term creditors funding about 56% of its operations, which isn’t ideal. And with current liabilities at those levels, that’s pretty high.

In summary, it’s great to see that Pansar Berhad has managed to break into profitability and is continuing to reinvest in its business. Since the total return from the stock has been almost flat over the last five years, there might be an opportunity here if the valuation looks good. So researching this company further and determining whether or not these trends will continue seems justified.

On a final note, we found 2 warning signs for Pansar Berhad (1 is a bit concerning) you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.