Shareholders Can Be Confident That Zhejiang Jindun Fans' (SZSE:300411) Earnings Are High Quality

Even though Zhejiang Jindun Fans Co., Ltd's (SZSE:300411) recent earnings release was robust, the market didn't seem to notice. We think that investors have missed some encouraging factors underlying the profit figures.

Check out our latest analysis for Zhejiang Jindun Fans

The Impact Of Unusual Items On Profit

For anyone who wants to understand Zhejiang Jindun Fans' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥7.7m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Zhejiang Jindun Fans took a rather significant hit from unusual items in the year to March 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker 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 Zhejiang Jindun Fans.

Our Take On Zhejiang Jindun Fans' Profit Performance

As we discussed above, we think the significant unusual expense will make Zhejiang Jindun Fans' statutory profit lower than it would otherwise have been. Because of this, we think Zhejiang Jindun Fans' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Zhejiang Jindun Fans at this point in time. For example, we've found that Zhejiang Jindun Fans has 2 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

This note has only looked at a single factor that sheds light on the nature of Zhejiang Jindun Fans' 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.