Zhejiang HangminLtd's (SHSE:600987) Earnings Seem To Be Promising

Despite posting healthy earnings, Zhejiang Hangmin Co.,Ltd's (SHSE:600987 ) stock has been quite weak. Our analysis suggests that there are some reasons for hope that investors should be aware of.

View our latest analysis for Zhejiang HangminLtd

The Impact Of Unusual Items On Profit

To properly understand Zhejiang HangminLtd's profit results, we need to consider the CN¥136m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Zhejiang HangminLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang HangminLtd.

Our Take On Zhejiang HangminLtd's Profit Performance

Because unusual items detracted from Zhejiang HangminLtd'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 Zhejiang HangminLtd's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 15% per year over the last three years. 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. While it's very important to consider the profit and loss statement, you can also learn a lot about a company by looking at its balance sheet. If you're interested we have a graphic representation of Zhejiang HangminLtd's balance sheet.

This note has only looked at a single factor that sheds light on the nature of Zhejiang HangminLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.