Stock Analysis

Hung Hing Printing Group's (HKG:450) Solid Earnings May Rest On Weak Foundations

SEHK:450
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Hung Hing Printing Group Limited's (HKG:450) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

View our latest analysis for Hung Hing Printing Group

earnings-and-revenue-history
SEHK:450 Earnings and Revenue History April 29th 2024

The Impact Of Unusual Items On Profit

To properly understand Hung Hing Printing Group's profit results, we need to consider the HK$135m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. We can see that Hung Hing Printing Group's positive unusual items were quite significant relative to its profit in the year to December 2023. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hung Hing Printing Group.

Our Take On Hung Hing Printing Group's Profit Performance

As previously mentioned, Hung Hing Printing Group's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Hung Hing Printing Group's underlying earnings power is lower than its statutory profit. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for Hung Hing Printing Group and you'll want to know about these.

This note has only looked at a single factor that sheds light on the nature of Hung Hing Printing Group'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. 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.

Valuation is complex, but we're helping make it simple.

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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.

About SEHK:450

Hung Hing Printing Group

An investment holding company, engages in book and package printing, consumer product packaging, corrugated box, and paper trading in the People’s Republic of China, the United States, Hong Kong, the United Kingdom, and internationally.

Excellent balance sheet with proven track record and pays a dividend.