Jiangsu Leili Motor (SZSE:300660) Strong Profits May Be Masking Some Underlying Issues

Jiangsu Leili Motor Co., Ltd's (SZSE:300660) 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.

Check out our latest analysis for Jiangsu Leili Motor

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jiangsu Leili Motor's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥37m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Jiangsu Leili Motor doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 Jiangsu Leili Motor's Profit Performance

We'd posit that Jiangsu Leili Motor's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Jiangsu Leili Motor's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 9.1% 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 Jiangsu Leili Motor as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Jiangsu Leili Motor you should know about.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Leili Motor's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.