We Think You Should Be Aware Of Some Concerning Factors In Shenzhen Riland Industry Group's (SZSE:300154) Earnings

Shenzhen Riland Industry Group Co., Ltd's (SZSE:300154) 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.

View our latest analysis for Shenzhen Riland Industry Group

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shenzhen Riland Industry Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥88m 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'. Shenzhen Riland Industry Group had a rather significant contribution from unusual items relative to its profit 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 Shenzhen Riland Industry Group.

Our Take On Shenzhen Riland Industry Group's Profit Performance

As we discussed above, we think the significant positive unusual item makes Shenzhen Riland Industry Group's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Shenzhen Riland Industry Group's underlying earnings power is lower than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 62% over the last three years. 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. 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 2 warning signs that you should run your eye over to get a better picture of Shenzhen Riland Industry Group.

This note has only looked at a single factor that sheds light on the nature of Shenzhen Riland Industry Group'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. 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.