Shenyang Yuanda Intellectual Industry GroupLtd's (SZSE:002689) Solid Profits Have Weak Fundamentals

Shenyang Yuanda Intellectual Industry Group Co.,Ltd's (SZSE:002689) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

View our latest analysis for Shenyang Yuanda Intellectual Industry GroupLtd

The Impact Of Unusual Items On Profit

To properly understand Shenyang Yuanda Intellectual Industry GroupLtd's profit results, we need to consider the CN¥14m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Shenyang Yuanda Intellectual Industry GroupLtd's positive unusual items were quite significant relative to its profit in the year to June 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenyang Yuanda Intellectual Industry GroupLtd.

Our Take On Shenyang Yuanda Intellectual Industry GroupLtd's Profit Performance

As previously mentioned, Shenyang Yuanda Intellectual Industry GroupLtd'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 Shenyang Yuanda Intellectual Industry GroupLtd's underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Shenyang Yuanda Intellectual Industry GroupLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Shenyang Yuanda Intellectual Industry GroupLtd'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.