HAND Enterprise Solutions' (SZSE:300170) Problems Go Beyond Weak Profit

HAND Enterprise Solutions Co., Ltd.'s (SZSE:300170) stock showed strength, with investors undeterred by its weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

Check out our latest analysis for HAND Enterprise Solutions

How Do Unusual Items Influence Profit?

To properly understand HAND Enterprise Solutions' profit results, we need to consider the CN¥59m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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'. We can see that HAND Enterprise Solutions' positive unusual items were quite significant relative to its profit in the year to June 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 HAND Enterprise Solutions.

Our Take On HAND Enterprise Solutions' Profit Performance

As we discussed above, we think the significant positive unusual item makes HAND Enterprise Solutions' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that HAND Enterprise Solutions' underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 HAND Enterprise Solutions, you'd also look into what risks it is currently facing. For example, we've found that HAND Enterprise Solutions has 3 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

Today we've zoomed in on a single data point to better understand the nature of HAND Enterprise Solutions' 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 with high insider ownership.

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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.