Are Rimbaco Group Global's (HKG:1953) Statutory Earnings A Good Reflection Of Its Earnings Potential?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. Today we'll focus on whether this year's statutory profits are a good guide to understanding Rimbaco Group Global (HKG:1953).

It's good to see that over the last twelve months Rimbaco Group Global made a profit of RM15.4m on revenue of RM241.6m.

Check out our latest analysis for Rimbaco Group Global

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will discuss how unusual items have impacted Rimbaco Group Global's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Rimbaco Group Global.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Rimbaco Group Global's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM8.2m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Rimbaco Group Global doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Rimbaco Group Global's Profit Performance

Because unusual items detracted from Rimbaco Group Global's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Rimbaco Group Global's earnings potential is at least as good as it seems, and maybe even better! Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Rimbaco Group Global has 3 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 Rimbaco Group Global's profit. But there are plenty of other ways to inform your opinion of a company. 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.

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This article by Simply Wall St is general in nature. 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.
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