Better plantation companies are getting better

The charts show the ROA and ROE trends of the Bursa Plantation sector over the past decade.

There are 2 key takeaways

• Both the ROA and ROE shows similar pattern
• The inter quartile range for both are widening over time.

The similar trends in the ROA and ROE suggest that companies within the industry are facing similar competitive pressures, market conditions, and regulatory environments. This could be influencing their overall financial performance in a similar manner.

The widening gap suggests that the better performing companies are delivering better returns over the years.

Both ROA and ROE are financial metrics used to evaluate the financial performance of a company, but they focus on different aspects of a company's operations.

• ROA measures how efficiently a company is utilizing its assets to generate profits. It is useful for comparing the profitability of companies within the same industry with similar asset structures.
• ROE measures a company's ability to generate profits from shareholders' equity. It is particularly important for investors who are concerned with the returns on their equity investments.

Moral of story? It is better to invest in the better companies. This sounds like Warren Buffett adage of investing in wonderful companies