Earnings Troubles May Signal Larger Issues for Tsim Sha Tsui Properties (HKG:247) Shareholders

Tsim Sha Tsui Properties Limited's (HKG:247) stock showed strength, with investors undeterred by its weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Tsim Sha Tsui Properties.

See our latest analysis for Tsim Sha Tsui Properties

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Tsim Sha Tsui Properties' profit received a boost of HK$210m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. 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).

Our data indicates that Tsim Sha Tsui Properties insiders have been buying shares! You can click here to find out who, and how much.

Our Take On Tsim Sha Tsui Properties' Profit Performance

We'd posit that Tsim Sha Tsui Properties' statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Tsim Sha Tsui Properties' statutory profits are better than its underlying earnings power. Sadly, its EPS was down over 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. If you'd like to know more about Tsim Sha Tsui Properties as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Tsim Sha Tsui Properties has 1 warning sign and it would be unwise to ignore this.

This note has only looked at a single factor that sheds light on the nature of Tsim Sha Tsui Properties' 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. 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 with significant insider holdings to be useful.

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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.