Solid Earnings May Not Tell The Whole Story For Chongqing PortLtd (SHSE:600279)

The recent earnings posted by Chongqing Port Co.,Ltd. (SHSE:600279) were solid, but the stock didn't move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

Check out our latest analysis for Chongqing PortLtd

The Impact Of Unusual Items On Profit

To properly understand Chongqing PortLtd's profit results, we need to consider the CN¥1.3b 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Chongqing PortLtd had a rather significant contribution from unusual items relative to its profit 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 Chongqing PortLtd.

Our Take On Chongqing PortLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Chongqing PortLtd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Chongqing PortLtd's underlying earnings power is lower than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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'd like to know more about Chongqing PortLtd as a business, it's important to be aware of any risks it's facing. For example - Chongqing PortLtd has 2 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Chongqing PortLtd'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 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.