Grand Baoxin Auto Group (HKG:1293) Is Posting Promising Earnings But The Good News Doesn’t Stop There

Shareholders appeared to be happy with Grand Baoxin Auto Group Limited's (HKG:1293) solid earnings report last week. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

View our latest analysis for Grand Baoxin Auto Group

How Do Unusual Items Influence Profit?

For anyone who wants to understand Grand Baoxin Auto Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥176m due 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 that's hardly a surprise given these line items are considered unusual. If Grand Baoxin Auto Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Grand Baoxin Auto Group's Profit Performance

Unusual items (expenses) detracted from Grand Baoxin Auto Group's earnings over the last year, but we might see an improvement next year. Because of this, we think Grand Baoxin Auto Group's earnings potential is at least as good as it seems, and maybe even better! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 4 warning signs for Grand Baoxin Auto Group you should be mindful of and 2 of them are significant.

Today we've zoomed in on a single data point to better understand the nature of Grand Baoxin Auto Group'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. 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.