We Think Guangdong Brandmax MarketingLtd's (SZSE:300805) Robust Earnings Are Conservative

When companies post strong earnings, the stock generally performs well, just like Guangdong Brandmax Marketing Co.,Ltd.'s (SZSE:300805) stock has recently. We have done some analysis, and we found several positive factors beyond the profit numbers.

Check out our latest analysis for Guangdong Brandmax MarketingLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Guangdong Brandmax MarketingLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥4.6m due 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. 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. Guangdong Brandmax MarketingLtd took a rather significant hit from unusual items in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Guangdong Brandmax MarketingLtd.

Our Take On Guangdong Brandmax MarketingLtd's Profit Performance

As we discussed above, we think the significant unusual expense will make Guangdong Brandmax MarketingLtd's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Guangdong Brandmax MarketingLtd's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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. For example, we've found that Guangdong Brandmax MarketingLtd has 2 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.

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