Sanli Environmental Limited’s (Catalist:1E3) Has Had A Decent Run On The Stock market: Are Fundamentals In The Driver’s Seat?

Sanli Environmental’s (Catalist:1E3) stock is up by 3.2% over the past month. 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 Sanli Environmental’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. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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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 Sanli Environmental is:

6.0% = S$3.2m ÷ S$53m (Based on the trailing twelve months to September 2025).

The ‘return’ is the profit over the last twelve months. That means that for every SGD1 worth of shareholders’ equity, the company generated SGD0.06 in profit.

See our latest analysis for Sanli Environmental

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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. 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.

At first glance, Sanli Environmental’s ROE doesn’t look very promising. We then compared the company’s ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 11%. Despite this, surprisingly, Sanli Environmental saw an exceptional 22% net income growth over the past five years. Therefore, there could be other reasons behind this growth. Such as – high earnings retention or an efficient management in place.

We then compared Sanli Environmental’s net income growth with the industry and found that the company’s growth figure is lower than the average industry growth rate of 29% in the same 5-year period, which is a bit concerning.