Wanbangde Pharmaceutical Holding Group's (SZSE:002082) Solid Earnings May Rest On Weak Foundations

The recent earnings posted by Wanbangde Pharmaceutical Holding Group Co., Ltd. (SZSE:002082) 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.

View our latest analysis for Wanbangde Pharmaceutical Holding Group

The Impact Of Unusual Items On Profit

To properly understand Wanbangde Pharmaceutical Holding Group's profit results, we need to consider the CN¥22m gain attributed to 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. And that's as you'd expect, given these boosts are described as 'unusual'. If Wanbangde Pharmaceutical Holding Group 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 Wanbangde Pharmaceutical Holding Group.

Our Take On Wanbangde Pharmaceutical Holding Group's Profit Performance

Arguably, Wanbangde Pharmaceutical Holding Group's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Wanbangde Pharmaceutical Holding Group's statutory profits are better than its underlying earnings power. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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'd like to know more about Wanbangde Pharmaceutical Holding Group as a business, it's important to be aware of any risks it's facing. For instance, we've identified 3 warning signs for Wanbangde Pharmaceutical Holding Group (1 makes us a bit uncomfortable) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Wanbangde Pharmaceutical Holding Group'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.