Junhe Pumps HoldingLtd's (SHSE:603617) Profits May Not Reveal Underlying Issues

Junhe Pumps Holding Co.,Ltd's (SHSE:603617) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

See our latest analysis for Junhe Pumps HoldingLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Junhe Pumps HoldingLtd's profit received a boost of CN¥15m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Junhe Pumps HoldingLtd's positive unusual items were quite significant relative to its profit in the year to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Junhe Pumps HoldingLtd.

Our Take On Junhe Pumps HoldingLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Junhe Pumps HoldingLtd's earnings a poor guide to its underlying profitability. For this reason, we think that Junhe Pumps HoldingLtd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But at least holders can take some solace from the 40% EPS growth in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Junhe Pumps HoldingLtd, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Junhe Pumps HoldingLtd you should be mindful of and 1 of these makes us a bit uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of Junhe Pumps HoldingLtd'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.