Shanghai Shine-Link International Logistics' (SHSE:603648) Weak Earnings May Only Reveal A Part Of The Whole Picture

The subdued market reaction suggests that Shanghai Shine-Link International Logistics Co., Ltd.'s (SHSE:603648) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Shanghai Shine-Link International Logistics

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shanghai Shine-Link International Logistics' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥17m worth of 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'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shanghai Shine-Link International Logistics.

Our Take On Shanghai Shine-Link International Logistics' Profit Performance

Arguably, Shanghai Shine-Link International Logistics' statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Shanghai Shine-Link International Logistics' true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 21% over the last three years. 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 Shanghai Shine-Link International Logistics as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Shanghai Shine-Link International Logistics you should know about.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Shine-Link International Logistics' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.