Why Bingshan Refrigeration & Heat Transfer Technologies' (SZSE:000530) Shaky Earnings Are Just The Beginning Of Its Problems

The market rallied behind Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd.'s (SZSE:000530) stock, leading do a rise in the share price after its recent weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

See our latest analysis for Bingshan Refrigeration & Heat Transfer Technologies

How Do Unusual Items Influence Profit?

For anyone who wants to understand Bingshan Refrigeration & Heat Transfer Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥23m worth of unusual items. 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'. Bingshan Refrigeration & Heat Transfer Technologies had a rather significant contribution from unusual items relative to its profit to March 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Bingshan Refrigeration & Heat Transfer Technologies' Profit Performance

As previously mentioned, Bingshan Refrigeration & Heat Transfer Technologies' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Bingshan Refrigeration & Heat Transfer Technologies' 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 8.2% EPS growth 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 Bingshan Refrigeration & Heat Transfer Technologies as a business, it's important to be aware of any risks it's facing. For example - Bingshan Refrigeration & Heat Transfer Technologies has 3 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Bingshan Refrigeration & Heat Transfer Technologies' 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 that insiders are buying 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.