Xinjiang Xinxin Mining Industry's (HKG:3833) Earnings Are Of Questionable Quality

Xinjiang Xinxin Mining Industry Co., Ltd. (HKG:3833) announced strong profits, but the stock was stagnant. Our analysis suggests that shareholders have noticed something concerning in the numbers.

Check out our latest analysis for Xinjiang Xinxin Mining Industry

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Xinjiang Xinxin Mining Industry's profit received a boost of CN¥27m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. 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 Xinjiang Xinxin Mining Industry.

Our Take On Xinjiang Xinxin Mining Industry's Profit Performance

Arguably, Xinjiang Xinxin Mining Industry's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Xinjiang Xinxin Mining Industry's statutory profits are better than its underlying earnings power. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Xinjiang Xinxin Mining Industry and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Xinjiang Xinxin Mining Industry'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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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