Pan Asian Microvent Tech (Jiangsu)'s (SHSE:688386) Earnings Are Weaker Than They Seem

Unsurprisingly, Pan Asian Microvent Tech (Jiangsu) Corporation's (SHSE:688386) stock price was strong on the back of its healthy earnings report. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for Pan Asian Microvent Tech (Jiangsu)

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Pan Asian Microvent Tech (Jiangsu)'s profit received a boost of CN¥16m 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, after all, that's exactly what the accounting terminology implies. If Pan Asian Microvent Tech (Jiangsu) 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 Pan Asian Microvent Tech (Jiangsu)'s Profit Performance

Arguably, Pan Asian Microvent Tech (Jiangsu)'s statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Pan Asian Microvent Tech (Jiangsu)'s statutory profits are better than its underlying earnings power. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Pan Asian Microvent Tech (Jiangsu) has 1 warning sign and it would be unwise to ignore this.

This note has only looked at a single factor that sheds light on the nature of Pan Asian Microvent Tech (Jiangsu)'s profit. But there are plenty of other ways to inform your opinion of a company. 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.

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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.