Impressive Earnings May Not Tell The Whole Story For Tingyi (Cayman Islands) Holding (HKG:322)

Tingyi (Cayman Islands) Holding Corp. (HKG:322) announced strong profits, but the stock was stagnant. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

Check out our latest analysis for Tingyi (Cayman Islands) Holding

The Impact Of Unusual Items On Profit

For anyone who wants to understand Tingyi (Cayman Islands) Holding's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥300m 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. Which is hardly surprising, given the name. If Tingyi (Cayman Islands) Holding 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 Tingyi (Cayman Islands) Holding's Profit Performance

We'd posit that Tingyi (Cayman Islands) Holding's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Tingyi (Cayman Islands) Holding's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 18% in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for Tingyi (Cayman Islands) Holding and you'll want to know about it.

Today we've zoomed in on a single data point to better understand the nature of Tingyi (Cayman Islands) Holding'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 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.