We Think Shenzhen Mason TechnologiesLtd's (SZSE:002654) Robust Earnings Are Conservative

Even though Shenzhen Mason Technologies Co.,Ltd's (SZSE:002654) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

Check out our latest analysis for Shenzhen Mason TechnologiesLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Shenzhen Mason TechnologiesLtd's profit was reduced by CN¥50m, due to unusual items, over the last year. 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. In the twelve months to March 2024, Shenzhen Mason TechnologiesLtd 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 Mason TechnologiesLtd.

Our Take On Shenzhen Mason TechnologiesLtd's Profit Performance

As we discussed above, we think the significant unusual expense will make Shenzhen Mason TechnologiesLtd's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Shenzhen Mason TechnologiesLtd's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 1 warning sign for Shenzhen Mason TechnologiesLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Shenzhen Mason TechnologiesLtd's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.