Investors Can Find Comfort In China Resources Boya Bio-pharmaceutical GroupLtd's (SZSE:300294) Earnings Quality

The market for China Resources Boya Bio-pharmaceutical Group Co.,Ltd's (SZSE:300294) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for China Resources Boya Bio-pharmaceutical GroupLtd

How Do Unusual Items Influence Profit?

To properly understand China Resources Boya Bio-pharmaceutical GroupLtd's profit results, we need to consider the CN¥325m expense attributed 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. 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. China Resources Boya Bio-pharmaceutical GroupLtd took a rather significant hit from unusual items in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its 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 China Resources Boya Bio-pharmaceutical GroupLtd's Profit Performance

As we discussed above, we think the significant unusual expense will make China Resources Boya Bio-pharmaceutical GroupLtd's statutory profit lower than it would otherwise have been. Because of this, we think China Resources Boya Bio-pharmaceutical GroupLtd's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over 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 want to do dive deeper into China Resources Boya Bio-pharmaceutical GroupLtd, you'd also look into what risks it is currently facing. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of China Resources Boya Bio-pharmaceutical GroupLtd.

Today we've zoomed in on a single data point to better understand the nature of China Resources Boya Bio-pharmaceutical GroupLtd'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 with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.