Statutory Profit Doesn't Reflect How Good Hanyu Group's (SZSE:300403) Earnings Are

When companies post strong earnings, the stock generally performs well, just like Hanyu Group Joint-Stock Co., Ltd.'s (SZSE:300403) stock has recently. Our analysis found some more factors that we think are good for shareholders.

View our latest analysis for Hanyu Group

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hanyu Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥29m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Hanyu Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Hanyu Group's Profit Performance

Because unusual items detracted from Hanyu Group's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Hanyu Group's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 23% in the last year. 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. If you want to do dive deeper into Hanyu Group, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Hanyu Group, and understanding it should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Hanyu 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.