Beijing Centergate Technologies (holding)'s (SZSE:000931) Solid Profits Have Weak Fundamentals

Beijing Centergate Technologies (holding) Co., Ltd. (SZSE:000931) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. We did some analysis and think that investors are missing some details hidden beneath the profit numbers.

View our latest analysis for Beijing Centergate Technologies (holding)

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Beijing Centergate Technologies (holding)'s profit received a boost of CN¥11m in unusual items, over the last year. 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'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Beijing Centergate Technologies (holding).

Our Take On Beijing Centergate Technologies (holding)'s Profit Performance

We'd posit that Beijing Centergate Technologies (holding)'s statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Beijing Centergate Technologies (holding)'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. 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 Beijing Centergate Technologies (holding) as a business, it's important to be aware of any risks it's facing. For example - Beijing Centergate Technologies (holding) has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Beijing Centergate Technologies (holding)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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 that insiders are buying 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.