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Returns On Capital Are Showing Encouraging Signs At TT Vision Holdings Berhad (KLSE:TTVHB)

Simply Wall St · 3d ago

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding 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 TT Vision Holdings Berhad (KLSE:TTVHB) and its trend of ROCE, we really liked what we saw.

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Understanding Return On Capital Employed (ROCE)

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 TT Vision Holdings Berhad, this is the formula:

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

0.04 = RM5.5m ÷ (RM149m - RM9.9m) (Based on the trailing twelve months to September 2025).

Therefore, TT Vision Holdings Berhad has an ROCE of 4.0%. Ultimately, that's a low return and it under-performs the Semiconductor industry average of 7.7%.

See our latest analysis for TT Vision Holdings Berhad

roce
KLSE:TTVHB Return on Capital Employed January 8th 2026

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating TT Vision Holdings Berhad's past further, check out this free graph covering TT Vision Holdings Berhad's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

We're delighted to see that TT Vision Holdings Berhad is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 4.0% which is a sight for sore eyes. And unsurprisingly, like most companies trying to break into the black, TT Vision Holdings Berhad is utilizing 148% more capital than it was five years ago. 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.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 6.6%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

Our Take On TT Vision Holdings Berhad's ROCE

Long story short, we're delighted to see that TT Vision Holdings Berhad's reinvestment activities have paid off and the company is now profitable. Although the company may be facing some issues elsewhere since the stock has plunged 70% in the last year. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding.

One final note, you should learn about the 3 warning signs we've spotted with TT Vision Holdings Berhad (including 1 which is significant) .

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.