We Like Sino Hotels (Holdings)'s (HKG:1221) Earnings For More Than Just Statutory Profit

Sino Hotels (Holdings) Limited's (HKG:1221) solid earnings announcement recently didn't do much to the stock price. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

See our latest analysis for Sino Hotels (Holdings)

How Do Unusual Items Influence Profit?

For anyone who wants to understand Sino Hotels (Holdings)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$41m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Sino Hotels (Holdings) took a rather significant hit from unusual items in the year to June 2024. 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 Sino Hotels (Holdings).

Our Take On Sino Hotels (Holdings)'s Profit Performance

As we discussed above, we think the significant unusual expense will make Sino Hotels (Holdings)'s statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Sino Hotels (Holdings)'s statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite 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. If you'd like to know more about Sino Hotels (Holdings) as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 2 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Sino Hotels (Holdings).

This note has only looked at a single factor that sheds light on the nature of Sino Hotels (Holdings)'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 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.