CITIC Offshore Helicopter's (SZSE:000099) Earnings Are Of Questionable Quality

CITIC Offshore Helicopter Co., Ltd. (SZSE:000099) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think that shareholders may be missing some concerning details in the numbers.

See our latest analysis for CITIC Offshore Helicopter

How Do Unusual Items Influence Profit?

To properly understand CITIC Offshore Helicopter's profit results, we need to consider the CN¥39m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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'. If CITIC Offshore Helicopter doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On CITIC Offshore Helicopter's Profit Performance

We'd posit that CITIC Offshore Helicopter's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that CITIC Offshore Helicopter's true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 24% EPS growth in the 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. If you want to do dive deeper into CITIC Offshore Helicopter, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for CITIC Offshore Helicopter and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of CITIC Offshore Helicopter'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 that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.