Weak Statutory Earnings May Not Tell The Whole Story For Anhui Provincial Architectural Design and Research InstituteLtd (SZSE:301167)

Anhui Provincial Architectural Design and Research Institute Co.,Ltd.'s (SZSE:301167) stock showed strength, with investors undeterred by its weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

View our latest analysis for Anhui Provincial Architectural Design and Research InstituteLtd

How Do Unusual Items Influence Profit?

To properly understand Anhui Provincial Architectural Design and Research InstituteLtd's profit results, we need to consider the CN¥3.2m 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. And, after all, that's exactly what the accounting terminology implies. If Anhui Provincial Architectural Design and Research InstituteLtd 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 Anhui Provincial Architectural Design and Research InstituteLtd.

Our Take On Anhui Provincial Architectural Design and Research InstituteLtd's Profit Performance

We'd posit that Anhui Provincial Architectural Design and Research InstituteLtd'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 Anhui Provincial Architectural Design and Research InstituteLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased 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'd like to know more about Anhui Provincial Architectural Design and Research InstituteLtd as a business, it's important to be aware of any risks it's facing. For example, Anhui Provincial Architectural Design and Research InstituteLtd has 4 warning signs (and 1 which can't be ignored) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Anhui Provincial Architectural Design and Research InstituteLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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 with significant insider holdings 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.