Zhangjiagang Haiguo New Energy Equipment Manufacturing's (SZSE:301063) Problems Go Beyond Weak Profit

The market rallied behind Zhangjiagang Haiguo New Energy Equipment Manufacturing Co., Ltd.'s (SZSE:301063) stock, leading do a rise in the share price after its recent weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Zhangjiagang Haiguo New Energy Equipment Manufacturing.

View our latest analysis for Zhangjiagang Haiguo New Energy Equipment Manufacturing

The Impact Of Unusual Items On Profit

For anyone who wants to understand Zhangjiagang Haiguo New Energy Equipment Manufacturing's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥10m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Zhangjiagang Haiguo New Energy Equipment Manufacturing had a rather significant contribution from unusual items relative to its profit to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhangjiagang Haiguo New Energy Equipment Manufacturing.

Our Take On Zhangjiagang Haiguo New Energy Equipment Manufacturing's Profit Performance

As previously mentioned, Zhangjiagang Haiguo New Energy Equipment Manufacturing's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Zhangjiagang Haiguo New Energy Equipment Manufacturing's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. Sadly, its EPS was down over the last twelve months. 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 Zhangjiagang Haiguo New Energy Equipment Manufacturing, you'd also look into what risks it is currently facing. To help with this, we've discovered 4 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Zhangjiagang Haiguo New Energy Equipment Manufacturing.

Today we've zoomed in on a single data point to better understand the nature of Zhangjiagang Haiguo New Energy Equipment Manufacturing'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.