Chongqing Baiya Sanitary Products' (SZSE:003006) Profits Appear To Have Quality Issues

The recent earnings posted by Chongqing Baiya Sanitary Products Co., Ltd. (SZSE:003006) were solid, but the stock didn't move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

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How Do Unusual Items Influence Profit?

To properly understand Chongqing Baiya Sanitary Products' profit results, we need to consider the CN¥47m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Chongqing Baiya Sanitary Products' Profit Performance

Arguably, Chongqing Baiya Sanitary Products' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Chongqing Baiya Sanitary Products' statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 26% per annum growth in EPS for the last three. 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 Chongqing Baiya Sanitary Products as a business, it's important to be aware of any risks it's facing. For example - Chongqing Baiya Sanitary Products has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Chongqing Baiya Sanitary Products' 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 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.