Company listed in BURSA with ROE > 20% and Low Debt

Two days ago, I have filtered out company listed in bursa with ROE > 20%. And, it have a total of 72 companies that met my criteria.

From DuPont Analysis, a company able to achieve high ROE from 3 appraoches:-

1. Higher Net Profit Margin
2. Higher Asset Turn Over
3. Increase Financial Leverage

In my opinion (1) and (2) is a more desirable way to achieve a higher ROE compare to (3). There is no doubt leverage amplifies ROE in good time, but in bad times, it can hurt ROE badly. And, too much leverage can make a company becoming risky in time of economic downturn and financial crisis.

So, I am more keen to look for company with high ROE and low debt.  And, I manage to find out 14 companies that suite my taste.

	Code	Name	ROE%	ROTA%	Debt Ratio	Leverage	Close Price	F.Y.
1	5182	GWPLAST	50.15	49.97	0	1.00	0.63	31/12/13
2	5204	PRESBHD	43.39	35.81	0.18	1.22	1.8	31/12/13
3	5229	CAP	33.41	28.14	0.16	1.19	0.31	31/12/12
4	5031	TIMECOM	32.01	27.27	0.15	1.18	4.3	31/12/13
5	5168	HARTA	30.55	24.82	0.19	1.23	5.92	31/03/13
6	7231	WELLCAL	29.67	25.17	0.15	1.18	1.5	30/09/13
7	0058	JOBST	24.63	19.48	0.2	1.25	2.44	31/12/13
8	5131	ZHULIAN	24	21.71	0.1	1.11	2.71	30/11/13
9	0008	WILLOW	22.55	18.52	0.18	1.22	0.81	31/12/13
10	0113	MMSV	22.24	18.77	0.16	1.19	0.21	31/12/13
11	6769	KELADI	21.74	19.92	0.06	1.06	0.33	31/01/13
12	0099	SCICOM	21.06	19.13	0.09	1.10	1.04	30/06/13
13	5189	MAXWELL	20.48	17.09	0.17	1.20	0.26	31/12/12
14	7100	UCHITEC	20.47	17.87	0.13	1.15	1.44	31/12/13

What to do next?

• To check if there is any pitfall and issues on the ROE
• To perform valuation on selected companies. Jae Jun top 10 stock valuation ratio is a good start for me.

References:-

• DuPont Analysis - Dissecting ROE 
• 5 step DuPont Equation