We Like Beijing Haohua Energy Resource's (SHSE:601101) Earnings For More Than Just Statutory Profit

Shareholders appeared to be happy with Beijing Haohua Energy Resource Co., Ltd.'s (SHSE:601101) solid earnings report last week. According to our analysis of the report, the strong headline profit numbers are supported by strong earnings fundamentals.

See our latest analysis for Beijing Haohua Energy Resource

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Beijing Haohua Energy Resource's profit was reduced by CN¥331m, due to unusual items, over the last year. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Beijing Haohua Energy Resource to produce a higher profit next year, all else being equal.

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 Beijing Haohua Energy Resource's Profit Performance

Because unusual items detracted from Beijing Haohua Energy Resource's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Beijing Haohua Energy Resource's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 1 warning sign for Beijing Haohua Energy Resource you should know about.

Today we've zoomed in on a single data point to better understand the nature of Beijing Haohua Energy Resource'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.