We Think Karrie International Holdings' (HKG:1050) Robust Earnings Are Conservative

Karrie International Holdings Limited (HKG:1050) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

Check out our latest analysis for Karrie International Holdings

How Do Unusual Items Influence Profit?

For anyone who wants to understand Karrie International Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$41m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Karrie International Holdings doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Karrie International Holdings.

Our Take On Karrie International Holdings' Profit Performance

Unusual items (expenses) detracted from Karrie International Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think Karrie International Holdings' earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 21% over the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into Karrie International Holdings, you'd also look into what risks it is currently facing. For example, we've found that Karrie International Holdings has 3 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

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