Sunshine Guojian Pharmaceutical (Shanghai) (SHSE:688336) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Sunshine Guojian Pharmaceutical (Shanghai) Co., Ltd's (SHSE:688336) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

Check out our latest analysis for Sunshine Guojian Pharmaceutical (Shanghai)

The Impact Of Unusual Items On Profit

For anyone who wants to understand Sunshine Guojian Pharmaceutical (Shanghai)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥104m worth of 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 that's as you'd expect, given these boosts are described as 'unusual'. Sunshine Guojian Pharmaceutical (Shanghai) 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.

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 Sunshine Guojian Pharmaceutical (Shanghai)'s Profit Performance

As previously mentioned, Sunshine Guojian Pharmaceutical (Shanghai)'s large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Sunshine Guojian Pharmaceutical (Shanghai)'s underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 68% in 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. So while earnings quality is important, it's equally important to consider the risks facing Sunshine Guojian Pharmaceutical (Shanghai) at this point in time. Be aware that Sunshine Guojian Pharmaceutical (Shanghai) is showing 3 warning signs in our investment analysis and 1 of those is a bit unpleasant...

This note has only looked at a single factor that sheds light on the nature of Sunshine Guojian Pharmaceutical (Shanghai)'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 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.