We Think Guangdong Tapai Group's (SZSE:002233) Healthy Earnings Might Be Conservative

The market seemed underwhelmed by last week's earnings announcement from Guangdong Tapai Group Co., Ltd. (SZSE:002233) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

View our latest analysis for Guangdong Tapai Group

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Guangdong Tapai Group's profit was reduced by CN¥141m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Guangdong Tapai Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Guangdong Tapai Group's Profit Performance

Because unusual items detracted from Guangdong Tapai Group's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Guangdong Tapai Group's statutory profit actually understates its earnings potential! And the EPS is up 53% over the last twelve months. 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 Guangdong Tapai Group as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Guangdong Tapai Group you should know about.

Today we've zoomed in on a single data point to better understand the nature of Guangdong Tapai 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 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.