WEBULL

The Returns On Capital At AGX Group Berhad (KLSE:AGX) Don't Inspire Confidence

Simply Wall St · 3d ago

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Having said that, from a first glance at AGX Group Berhad (KLSE:AGX) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for AGX Group Berhad:

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

0.11 = RM14m ÷ (RM178m - RM52m) (Based on the trailing twelve months to September 2025).

Therefore, AGX Group Berhad has an ROCE of 11%. On its own, that's a standard return, however it's much better than the 4.7% generated by the Logistics industry.

See our latest analysis for AGX Group Berhad

roce
KLSE:AGX Return on Capital Employed January 7th 2026

Above you can see how the current ROCE for AGX Group Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering AGX Group Berhad for free.

What Does the ROCE Trend For AGX Group Berhad Tell Us?

In terms of AGX Group Berhad's historical ROCE movements, the trend isn't fantastic. Around four years ago the returns on capital were 34%, but since then they've fallen to 11%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

On a side note, AGX Group Berhad has done well to pay down its current liabilities to 30% of total assets. So we could link some of this to the decrease in ROCE. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE.

Our Take On AGX Group Berhad's ROCE

Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for AGX Group Berhad.

If you want to know some of the risks facing AGX Group Berhad we've found 2 warning signs (1 is significant!) that you should be aware of before investing here.

While AGX Group Berhad may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.