Shanghai Maling AquariusLtd's (SHSE:600073) Problems Go Beyond Weak Profit

A lackluster earnings announcement from Shanghai Maling Aquarius Co.,Ltd (SHSE:600073) last week didn't sink the stock price. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

View our latest analysis for Shanghai Maling AquariusLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Shanghai Maling AquariusLtd's profit received a boost of CN¥48m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Shanghai Maling AquariusLtd 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 Shanghai Maling AquariusLtd.

Our Take On Shanghai Maling AquariusLtd's Profit Performance

Arguably, Shanghai Maling AquariusLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Shanghai Maling AquariusLtd's true underlying earnings power is actually less than its statutory profit. 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 Shanghai Maling AquariusLtd as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 3 warning signs for Shanghai Maling AquariusLtd and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of Shanghai Maling AquariusLtd'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 that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.