The retention ratio is not that important in this discussion as I am comparing between your own incremental ROE vs the companies incremental ROE. In addition, it is not the average ROE that matters, it is the incremental ROE that matters, that is what ROE the incremental retained earnings manage to generate.

I believe the company you talk about that churn out 30-80% ROE are tech, pharma and recently IPO-ed companies. I am not sure how you define ROE, but, if you define it as accounting ROE i.e. Net Income/ Accounting Net Book Value rather than finance ROE i.e. Net Income/ Market Cap then, the company are most likely in the industry I mention above. This is due to the fact that there are certain accounting rules that require them to expense R and D rather than keep it at the books, so, the ROE is actually not a good reflection of true economics of the business because a lot of asset are actually off the balance sheet.

Another possible explaination for such a high ROE is that it is a human resource based business. For example, it is a pure play investment bank (i.e. no trading) or consultancy firm. Again, such companies have a lot of off balance sheet assets that is not reflected in the balance sheet.

In any way, businesses above should not be judged on ROE because their profitability and growth is not a function of their capital allocation decision. It is more of a function of how they increase their brand awareness, customer loyalty and retaining their best talent. All this are off balance sheet assets. So, accounting ROE become unimportant in such businesses because their key success factors is not capital allocation. For example, take coca cola, a management should be judged on how much its retain its brand awareness and image or even increase it as such action would result in an increase in bottom line. He should not be judged on how good he is spending money to build the factory. The damage done on the coca cola brand image on its bottom line  should be much more severe than a wrong capital allocation decision.

Another type of companies with such an impressive ROE is those with a recent IPO, but, those advantage tend to fade within 3 years.

I ran a stock screen using Capital IQ with a very basic requirement of non-tech and non-pharma, sustainable >30% ROE of 10 years, debt to equity less than 1.25, out of the universe of 500k companies worldwide, only 200 fits the bill.

In any case, I would like to hear the list of companies you have mention. If it is cheap, I may even buy it. Not necessary need to be in Malaysia. I have access to most markets as long as it is not companies that is listed in Timbaktu.

I use Capital IQ. But, mere mortals like us would not be able to afford it unless you have USD13k/year to throw around. It is actually for hedge funds and asset management guys. I got it because it is in my university database. Even in my school, I can't access it as it is for MBA student not undergrad. I somehow manage to convince the librarian to allow me to use it.

Capital IQ is fantastic. It is the best software out there. The figure is accurate and you can check back to the annual report because it provides an instant link. If you know who is Li Lu, the man in running to replace Buffett before he voluntarily pull out, he actually have some stake in Capital IQ. It is way way way better than Bloomberg because it is designed for FA rather than TA. If you like trading, perhaps Bloomberg is a better platform.