We Think Beijing Sanfo Outdoor Products' (SZSE:002780) Profit Is Only A Baseline For What They Can Achieve

Even though Beijing Sanfo Outdoor Products Co., Ltd (SZSE:002780 ) posted strong earnings, investors appeared to be underwhelmed. We have done some analysis and have found some comforting factors beneath the profit numbers.

View our latest analysis for Beijing Sanfo Outdoor Products

The Impact Of Unusual Items On Profit

For anyone who wants to understand Beijing Sanfo Outdoor Products' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥47m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Beijing Sanfo Outdoor Products took a rather significant hit from unusual items in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Beijing Sanfo Outdoor Products.

Our Take On Beijing Sanfo Outdoor Products' Profit Performance

As we mentioned previously, the Beijing Sanfo Outdoor Products' profit was hampered by unusual items in the last year. Because of this, we think Beijing Sanfo Outdoor Products' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Beijing Sanfo Outdoor Products, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Beijing Sanfo Outdoor Products, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Beijing Sanfo Outdoor Products' 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.