Shenzhen Kingsun Science & TechnologyLtd's (SZSE:300235) Profits May Not Reveal Underlying Issues

The recent earnings posted by Shenzhen Kingsun Science & Technology Co.,Ltd (SZSE:300235) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

Check out our latest analysis for Shenzhen Kingsun Science & TechnologyLtd

The Impact Of Unusual Items On Profit

To properly understand Shenzhen Kingsun Science & TechnologyLtd's profit results, we need to consider the CN¥4.6m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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 Shenzhen Kingsun Science & TechnologyLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenzhen Kingsun Science & TechnologyLtd.

Our Take On Shenzhen Kingsun Science & TechnologyLtd's Profit Performance

We'd posit that Shenzhen Kingsun Science & TechnologyLtd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Shenzhen Kingsun Science & TechnologyLtd's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 44% in the last year. 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 want to do dive deeper into Shenzhen Kingsun Science & TechnologyLtd, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Shenzhen Kingsun Science & TechnologyLtd has 1 warning sign and it would be unwise to ignore this.

Today we've zoomed in on a single data point to better understand the nature of Shenzhen Kingsun Science & TechnologyLtd'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.