Jianshe Industry Group (Yunnan)'s (SZSE:002265) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Jianshe Industry Group (Yunnan) Co., Ltd.'s (SZSE:002265) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

View our latest analysis for Jianshe Industry Group (Yunnan)

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Jianshe Industry Group (Yunnan)'s profit received a boost of CN¥28m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Jianshe Industry Group (Yunnan) had a rather significant contribution from unusual items relative to its profit to June 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jianshe Industry Group (Yunnan).

Our Take On Jianshe Industry Group (Yunnan)'s Profit Performance

As we discussed above, we think the significant positive unusual item makes Jianshe Industry Group (Yunnan)'s earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Jianshe Industry Group (Yunnan)'s underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. We've done some analysis and you can see our take on Jianshe Industry Group (Yunnan)'s balance sheet by clicking here.

Today we've zoomed in on a single data point to better understand the nature of Jianshe Industry Group (Yunnan)'s profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.