Yunnan Bowin Technology IndustryLtd's (SHSE:600883) Sluggish Earnings Might Be Just The Beginning Of Its Problems

The subdued market reaction suggests that Yunnan Bowin Technology Industry Co.,Ltd's (SHSE:600883) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Yunnan Bowin Technology IndustryLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Yunnan Bowin Technology IndustryLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥4.1m 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. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Yunnan Bowin Technology IndustryLtd.

Our Take On Yunnan Bowin Technology IndustryLtd's Profit Performance

Arguably, Yunnan Bowin Technology IndustryLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Yunnan Bowin Technology IndustryLtd's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 62% per annum growth in EPS for the last three. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 3 warning signs for Yunnan Bowin Technology IndustryLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Yunnan Bowin Technology IndustryLtd'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.