In your own opinion, discuss the future prospect of Gamuda Berhad and WCT Holding that you analyse at below:

The financial performance of a company can be measured by analyzing few ratios like Gross Margin, Operating Margin, Net Margin, Return on Equity, Return on Assets, Return on Capital Employed, etc.

As per the above ratio analysis, the Gross Margin ratio of the Gamuda has not been consistent. It has been in the range of 21.10% to 30.09%. Although gross margin ratio of this range will be considered good. The same ratio for WCT Holding has been in the range of 11.53% to 24.33% which is on lower side. If a comparison is made between these companies, the Gamuda will score more.

If we talk about operating margin ratio, it has been on downtrend for the Gamuda Berhad. The operating margin ratio has decreased from 25.08% in 2015 to 15.10% in 2019. On the other hand the same ratio for WCT Holding has been inconsistent. It has seen a high operating ratio of 20.03% in 2017 and low operating ratio of 9.44% in 2016. Operating ratio indicates how much of total revenue, the company is able to generate operating profit.

Net Profit margin ratio states the percentage of net income a company is able to generate from its revenue. Net Margin Ratio for Gamuda Berhad has been in the range of 12.57% to 29.51%. The variation is huge in the Net Margin ratio, however, the percentage is quite satisfactory. On the other hand, WCT Holding is not very much impressive with its Net Margin ratio. In 2019, it has generated a net loss of 27.32 million. Before this as well, the net margin was not very good.

The next ratio is Return on Assets (ROA) which indicates how efficiently the company has used its assets to generate the net income. The ROA for Gamuda Berhad has been in the range of 2.94% to 3.90%. The ratio is quite low, however, this ratio needs to be compared with the industry ratio in order to have a fair view on this. Similarly, the same ratio for WCT Holding was also low. The last five year's average ROA is 1.55% for the company.

Return on Equity (ROE) states the company is able to get the return on its equity. It is computed by dividing the net income by the shareholders' equity. The average ROE for the last five years is 7.63% for Gamuda Berhad. The average ROE for the last five years for WCT Holding is 4.07%. In this comparison, the Gamuda Berhad scores more over WCT Holding.

Retun on Capital Employed (ROCE) is also indicates about the profitability of the company when compared with capital employed in the business. The capital employed in the business includes shareholders' equity and non-current liabilities. The average ROCE for the past five years for Gamuda Berhad is 5.06% whereas it is 4.49% for WCT Holding. Both company are performing almost similar on this criteria, however, Gamuda again is scoring a little more.

Current ratio, although, is not a financial performance ratio, but it is very important to see the liquidity of the company. It shows the ability of the company to pay off its current obligations. The current ratio of Gamuda has been in the rate of 1.5 to 2.03 which is considered good. WCT Holding also has the current ration in the range of 1.33 to 1.84 which is also considered satisfactory.

Looking at the ration analysis, both the companies are performing almost same, however, Gamuda Berhad is score a little more on few parameters.