We Think You Should Be Aware Of Some Concerning Factors In Wing Lee Property Investments' (HKG:864) Earnings

Wing Lee Property Investments Limited's (HKG:864) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

See our latest analysis for Wing Lee Property Investments

The Impact Of Unusual Items On Profit

To properly understand Wing Lee Property Investments' profit results, we need to consider the HK$14m 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 Wing Lee Property Investments' positive unusual items were quite significant relative to its profit in the year to June 2022. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Wing Lee Property Investments.

Our Take On Wing Lee Property Investments' Profit Performance

As we discussed above, we think the significant positive unusual item makes Wing Lee Property Investments' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Wing Lee Property Investments' underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money 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. If you want to do dive deeper into Wing Lee Property Investments, you'd also look into what risks it is currently facing. At Simply Wall St, we found 3 warning signs for Wing Lee Property Investments and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Wing Lee Property Investments' 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. 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. 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.