Does Come Sure Group (Holdings)'s (HKG:794) Statutory Profit Adequately Reflect Its Underlying Profit?

By
Simply Wall St
Published
August 10, 2020
SEHK:794

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 Come Sure Group (Holdings) (HKG:794).

It's good to see that over the last twelve months Come Sure Group (Holdings) made a profit of HK$12.0m on revenue of HK$1.01b. The chart below shows how it has grown revenue over the last three years, but that profit has declined.

View our latest analysis for Come Sure Group (Holdings)

earnings-and-revenue-history
SEHK:794 Earnings and Revenue History August 11th 2020

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Come Sure Group (Holdings)'s statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Come Sure Group (Holdings).

The Impact Of Unusual Items On Profit

To properly understand Come Sure Group (Holdings)'s profit results, we need to consider the HK$17.3m expense attributed 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Come Sure Group (Holdings) to produce a higher profit next year, all else being equal.

Our Take On Come Sure Group (Holdings)'s Profit Performance

Unusual items (expenses) detracted from Come Sure Group (Holdings)'s earnings over the last year, but we might see an improvement next year. Because of this, we think Come Sure Group (Holdings)'s earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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. To help with this, we've discovered 5 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Come Sure Group (Holdings).

This note has only looked at a single factor that sheds light on the nature of Come Sure Group (Holdings)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.

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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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