Tianjin Chase Sun PharmaceuticalLtd's (SZSE:300026) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Tianjin Chase Sun Pharmaceutical Co.,Ltd's (SZSE:300026) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Tianjin Chase Sun PharmaceuticalLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Tianjin Chase Sun PharmaceuticalLtd's profit received a boost of CN¥150m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. Tianjin Chase Sun PharmaceuticalLtd had a rather significant contribution from unusual items relative to its profit to December 2023. 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 Tianjin Chase Sun PharmaceuticalLtd's Profit Performance

As previously mentioned, Tianjin Chase Sun PharmaceuticalLtd'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 Tianjin Chase Sun PharmaceuticalLtd's underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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'd like to know more about Tianjin Chase Sun PharmaceuticalLtd as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Tianjin Chase Sun PharmaceuticalLtd and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of Tianjin Chase Sun PharmaceuticalLtd'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.