Beijing Yanjing BreweryLtd's (SZSE:000729) Solid Profits Have Weak Fundamentals

Beijing Yanjing Brewery Co.,Ltd.'s (SZSE:000729) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

Check out our latest analysis for Beijing Yanjing BreweryLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Beijing Yanjing BreweryLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥162m worth of 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Beijing Yanjing BreweryLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Yanjing BreweryLtd's Profit Performance

Arguably, Beijing Yanjing BreweryLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Beijing Yanjing BreweryLtd's true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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 Beijing Yanjing BreweryLtd as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Beijing Yanjing BreweryLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Beijing Yanjing BreweryLtd'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. 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.

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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.