We Think Chengdu Haoneng Technology's (SHSE:603809) Healthy Earnings Might Be Conservative

Shareholders appeared to be happy with Chengdu Haoneng Technology Co., Ltd.'s (SHSE:603809) solid earnings report last week. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

Check out our latest analysis for Chengdu Haoneng Technology

The Impact Of Unusual Items On Profit

For anyone who wants to understand Chengdu Haoneng Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥56m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Chengdu Haoneng Technology to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Chengdu Haoneng Technology's Profit Performance

Because unusual items detracted from Chengdu Haoneng Technology's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Chengdu Haoneng Technology's statutory profit actually understates its earnings potential! And the EPS is up 28% annually, over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Chengdu Haoneng Technology, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Chengdu Haoneng Technology and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Chengdu Haoneng Technology's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.