We Think That There Are More Issues For Sany Heavy IndustryLtd (SHSE:600031) Than Just Sluggish Earnings

The subdued market reaction suggests that Sany Heavy Industry Co.,Ltd's (SHSE:600031) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Sany Heavy IndustryLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Sany Heavy IndustryLtd's profit received a boost of CN¥1.7b 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'. Sany Heavy IndustryLtd had a rather significant contribution from unusual items relative to its profit to June 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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 Sany Heavy IndustryLtd's Profit Performance

As previously mentioned, Sany Heavy IndustryLtd's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Sany Heavy IndustryLtd'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. If you'd like to know more about Sany Heavy IndustryLtd as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Sany Heavy IndustryLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Sany Heavy IndustryLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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.