We Think That There Are More Issues For Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology (SHSE:603300) Than Just Sluggish Earnings

The subdued market reaction suggests that Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology Co., Ltd.'s (SHSE:603300) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

View our latest analysis for Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology

How Do Unusual Items Influence Profit?

To properly understand Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology's profit results, we need to consider the CN¥173m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology's Profit Performance

We'd posit that Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 29% 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'd like to know more about Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology you should be mindful of and 1 of these bad boys is concerning.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Haikong Nanke Huatie Digital Intelligence and Technology's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.