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There May Be Some Bright Spots In Solareast Holdings' (SHSE:603366) Earnings
Shareholders appeared unconcerned with Solareast Holdings Co., Ltd.'s (SHSE:603366) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
See our latest analysis for Solareast Holdings
How Do Unusual Items Influence Profit?
For anyone who wants to understand Solareast Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥86m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. In the twelve months to September 2024, Solareast Holdings had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Solareast Holdings.
Our Take On Solareast Holdings' Profit Performance
As we discussed above, we think the significant unusual expense will make Solareast Holdings' statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Solareast Holdings' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Solareast Holdings.
This note has only looked at a single factor that sheds light on the nature of Solareast Holdings' 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. 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.
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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.
About SHSE:603366
Solareast Holdings
Engages in the research and development, production, and sales of water heaters, kitchen appliances, clean energy heating, water purification, and other businesses in China and internationally.
Excellent balance sheet slight.