Ocean Vantage Holdings Berhad’s (KLSE:OVH) stock up by 3.6% over the past week. As most would know, long-term fundamentals have a strong correlation with market price movements, so we decided to look at the company’s key financial indicators today to determine if they have any role to play in the recent price movement. Specifically, we decided to study Ocean Vantage Holdings Berhad’s ROE in this article.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Ocean Vantage Holdings Berhad is:
15% = RM11m ÷ RM72m (Based on the trailing twelve months to September 2025).
The ‘return’ is the amount earned after tax over the last twelve months. That means that for every MYR1 worth of shareholders’ equity, the company generated MYR0.15 in profit.
Check out our latest analysis for Ocean Vantage Holdings Berhad
So far, we’ve learned that ROE is a measure of a company’s profitability. We now need to evaluate how much profit the company reinvests or “retains” for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don’t have the same features.
At first glance, Ocean Vantage Holdings Berhad seems to have a decent ROE. Further, the company’s ROE is similar to the industry average of 14%. For this reason, Ocean Vantage Holdings Berhad’s five year net income decline of 10% raises the question as to why the decent ROE didn’t translate into growth. So, there might be some other aspects that could explain this. For example, it could be that the company has a high payout ratio or the business has allocated capital poorly, for instance.
So, as a next step, we compared Ocean Vantage Holdings Berhad’s performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 37% over the last few years.
