UUE Holdings Berhad (KLSE:UUE) Stock Has Shown Weakness Lately But Financials Look Strong: Should Prospective Shareholders Make The Leap?

May 2, 2025
uue-holdings-berhad-(klse:uue)-stock-has-shown-weakness-lately-but-financials-look-strong:-should-prospective-shareholders-make-the-leap?

editorial-team@simplywallst.com (Simply Wall St)

3 min read

UUE Holdings Berhad (KLSE:UUE) has had a rough three months with its share price down 19%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Particularly, we will be paying attention to UUE Holdings Berhad’s ROE today.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder’s equity.

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ROE 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 UUE Holdings Berhad is:

20% = RM23m ÷ RM113m (Based on the trailing twelve months to February 2025).

The ‘return’ is the income the business earned over the last year. One way to conceptualize this is that for each MYR1 of shareholders’ capital it has, the company made MYR0.20 in profit.

Check out our latest analysis for UUE Holdings Berhad

So far, we’ve learned that ROE is a measure of a company’s profitability. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company’s earnings growth potential. 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, UUE Holdings Berhad seems to have a decent ROE. Further, the company’s ROE compares quite favorably to the industry average of 8.3%. This certainly adds some context to UUE Holdings Berhad’s exceptional 22% net income growth seen over the past five years. However, there could also be other causes behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.

Next, on comparing with the industry net income growth, we found that UUE Holdings Berhad’s growth is quite high when compared to the industry average growth of 15% in the same period, which is great to see.

past-earnings-growth

KLSE:UUE Past Earnings Growth May 1st 2025

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you’re wondering about UUE Holdings Berhad’s’s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.


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