We Think That There Are More Issues For Zhejiang Zhongjian TechnologyLtd (SZSE:002779) Than Just Sluggish Earnings

The market wasn't impressed with the soft earnings from Zhejiang Zhongjian Technology Co.,Ltd (SZSE:002779) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Zhejiang Zhongjian TechnologyLtd

The Impact Of Unusual Items On Profit

To properly understand Zhejiang Zhongjian TechnologyLtd's profit results, we need to consider the CN¥8.3m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. We can see that Zhejiang Zhongjian TechnologyLtd's positive unusual items were quite significant relative to its profit in the year to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger 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 Zhongjian TechnologyLtd.

Our Take On Zhejiang Zhongjian TechnologyLtd's Profit Performance

As previously mentioned, Zhejiang Zhongjian TechnologyLtd's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Zhejiang Zhongjian TechnologyLtd's underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Zhejiang Zhongjian TechnologyLtd as a business, it's important to be aware of any risks it's facing. For example - Zhejiang Zhongjian TechnologyLtd has 2 warning signs we think you should be aware of.

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