Some May Be Optimistic About Shenzhen New Nanshan Holding (Group)'s (SZSE:002314) Earnings

The market for Shenzhen New Nanshan Holding (Group) Co., Ltd.'s (SZSE:002314) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for Shenzhen New Nanshan Holding (Group)

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Shenzhen New Nanshan Holding (Group)'s profit was reduced by CN¥541m, due to unusual items, over the last year. 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. In the twelve months to December 2023, Shenzhen New Nanshan Holding (Group) had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenzhen New Nanshan Holding (Group).

Our Take On Shenzhen New Nanshan Holding (Group)'s Profit Performance

As we mentioned previously, the Shenzhen New Nanshan Holding (Group)'s profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Shenzhen New Nanshan Holding (Group)'s statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Shenzhen New Nanshan Holding (Group) as a business, it's important to be aware of any risks it's facing. Our analysis shows 4 warning signs for Shenzhen New Nanshan Holding (Group) (1 is concerning!) and we strongly recommend you look at these before investing.

Today we've zoomed in on a single data point to better understand the nature of Shenzhen New Nanshan Holding (Group)'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.