There May Be Some Bright Spots In Zhe Jiang KangshengLtd's (SZSE:002418) Earnings

The market for Zhe Jiang Kangsheng Co.,Ltd.'s (SZSE:002418) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for Zhe Jiang KangshengLtd

How Do Unusual Items Influence Profit?

To properly understand Zhe Jiang KangshengLtd's profit results, we need to consider the CN¥10.0m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. If Zhe Jiang KangshengLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhe Jiang KangshengLtd.

Our Take On Zhe Jiang KangshengLtd's Profit Performance

Because unusual items detracted from Zhe Jiang KangshengLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Zhe Jiang KangshengLtd's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. If you want to do dive deeper into Zhe Jiang KangshengLtd, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Zhe Jiang KangshengLtd you should know about.

This note has only looked at a single factor that sheds light on the nature of Zhe Jiang KangshengLtd'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 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.