Shenzhen Jasic TechnologyLtd's (SZSE:300193) Profits Appear To Have Quality Issues

Shenzhen Jasic Technology Co.,Ltd.'s (SZSE:300193) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Shenzhen Jasic TechnologyLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Shenzhen Jasic TechnologyLtd's profit received a boost of CN¥19m 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, after all, that's exactly what the accounting terminology implies. If Shenzhen Jasic TechnologyLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenzhen Jasic TechnologyLtd.

Our Take On Shenzhen Jasic TechnologyLtd's Profit Performance

Arguably, Shenzhen Jasic TechnologyLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shenzhen Jasic TechnologyLtd's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 24% per annum growth in EPS for the last three. 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'd like to know more about Shenzhen Jasic TechnologyLtd as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for Shenzhen Jasic TechnologyLtd (1 is a bit unpleasant) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Shenzhen Jasic TechnologyLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.