We Like The Quality Of Baiyin Nonferrous Group's (SHSE:601212) Earnings

Baiyin Nonferrous Group Co., Ltd.'s (SHSE:601212) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

Check out our latest analysis for Baiyin Nonferrous Group

The Impact Of Unusual Items On Profit

To properly understand Baiyin Nonferrous Group's profit results, we need to consider the CN¥743m expense attributed to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Baiyin Nonferrous Group to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Baiyin Nonferrous Group.

Our Take On Baiyin Nonferrous Group's Profit Performance

Unusual items (expenses) detracted from Baiyin Nonferrous Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Baiyin Nonferrous Group's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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 want to do dive deeper into Baiyin Nonferrous Group, you'd also look into what risks it is currently facing. For example, Baiyin Nonferrous Group has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

This note has only looked at a single factor that sheds light on the nature of Baiyin Nonferrous Group's profit. But there are plenty of other ways to inform your opinion of a company. 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.