KJTS Group Berhad (KLSE:KJTS) has had a great run on the share market with its stock up by a significant 28% over the last three months. We wonder if and what role the company’s financials play in that price change as a company’s long-term fundamentals usually dictate market outcomes. Specifically, we decided to study KJTS Group Berhad’s ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for KJTS Group Berhad is:
12% = RM14m ÷ RM124m (Based on the trailing twelve months to June 2025).
The ‘return’ refers to a company’s earnings over the last year. So, this means that for every MYR1 of its shareholder’s investments, the company generates a profit of MYR0.12.
See our latest analysis for KJTS Group Berhad
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or “retain”, we are then able to evaluate a company’s future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
On the face of it, KJTS Group Berhad’s ROE is not much to talk about. Although a closer study shows that the company’s ROE is higher than the industry average of 6.2% which we definitely can’t overlook. This certainly adds some context to KJTS Group Berhad’s moderate 18% net income growth seen over the past five years. Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. Hence there might be some other aspects that are causing earnings to grow. E.g the company has a low payout ratio or could belong to a high growth industry.
Next, on comparing with the industry net income growth, we found that KJTS Group Berhad’s reported growth was lower than the industry growth of 25% over the last few years, which is not something we like to see.
