Shanghai Yimin Commercial Group's (SHSE:600824) Profits May Not Reveal Underlying Issues

The recent earnings posted by Shanghai Yimin Commercial Group Co., Ltd. (SHSE:600824) 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 Shanghai Yimin Commercial Group

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Shanghai Yimin Commercial Group's profit received a boost of CN¥8.9m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Shanghai Yimin Commercial Group's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shanghai Yimin Commercial Group.

Our Take On Shanghai Yimin Commercial Group's Profit Performance

As we discussed above, we think the significant positive unusual item makes Shanghai Yimin Commercial Group's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Shanghai Yimin Commercial Group's underlying earnings power is lower than its statutory profit. 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 want to do dive deeper into Shanghai Yimin Commercial Group, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for Shanghai Yimin Commercial Group (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Yimin Commercial Group'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 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.