Hi fellow investors,

When screening for value counters on Bursa Malaysia, low P/E or P/B ratios are often the primary metrics retail investors look for. However, buying strictly on low valuation multiples frequently leads to "value traps"—companies trading cheap because their underlying business model is structurally collapsing.

Here are 3 quantitative metrics to separate genuine value from value traps:

• ROIC Trend Over WACC: Ensure Return on Invested Capital consistently exceeds Weighted Average Cost of Capital over a 5-year cycle. A company destroying economic capital will logically trade at a persistent discount.

• Cash Conversion Cycle (CCC): Watch for expanding inventory days or receivables alongside low valuation multiples. Working capital deterioration often precedes negative earnings revisions.

• Debt Service Capability: Evaluate Net Debt-to-EBITDA alongside interest coverage ratios (>4x). Cheap counters burdened by heavy leverage leave zero margin of safety during economic slowdowns.

True value is buying sustainable earning power at a discount, not simply buying low multiples. What key parameters do you rely on to filter out value traps when screening Bursa stocks?