Chongqing YuXin Pingrui Electronic's (SZSE:301107) Problems Go Beyond Weak Profit

The subdued market reaction suggests that Chongqing YuXin Pingrui Electronic Co., Ltd.'s (SZSE:301107) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Chongqing YuXin Pingrui Electronic

How Do Unusual Items Influence Profit?

To properly understand Chongqing YuXin Pingrui Electronic's profit results, we need to consider the CN¥8.3m gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Chongqing YuXin Pingrui Electronic 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 Chongqing YuXin Pingrui Electronic.

Our Take On Chongqing YuXin Pingrui Electronic's Profit Performance

We'd posit that Chongqing YuXin Pingrui Electronic's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Chongqing YuXin Pingrui Electronic's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Chongqing YuXin Pingrui Electronic and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Chongqing YuXin Pingrui Electronic'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 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.