We Think That There Are More Issues For New Trend International Logis-TechLtd (SZSE:300532) Than Just Sluggish Earnings

Investors were disappointed by New Trend International Logis-Tech Co.,Ltd.'s (SZSE:300532 ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

View our latest analysis for New Trend International Logis-TechLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand New Trend International Logis-TechLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥30m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If New Trend International Logis-TechLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of New Trend International Logis-TechLtd.

Our Take On New Trend International Logis-TechLtd's Profit Performance

Arguably, New Trend International Logis-TechLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that New Trend International Logis-TechLtd's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with New Trend International Logis-TechLtd, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of New Trend International Logis-TechLtd'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. 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.