We Think Man Yue Technology Holdings' (HKG:894) Solid Earnings Are Understated

The market seemed underwhelmed by last week's earnings announcement from Man Yue Technology Holdings Limited (HKG:894) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

Check out our latest analysis for Man Yue Technology Holdings

How Do Unusual Items Influence Profit?

To properly understand Man Yue Technology Holdings' profit results, we need to consider the HK$14m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Man Yue Technology 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 Man Yue Technology Holdings.

Our Take On Man Yue Technology Holdings' Profit Performance

Unusual items (expenses) detracted from Man Yue Technology Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think Man Yue Technology Holdings' 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. 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 Man Yue Technology Holdings, you'd also look into what risks it is currently facing. To help with this, we've discovered 4 warning signs (2 are significant!) that you ought to be aware of before buying any shares in Man Yue Technology Holdings.

This note has only looked at a single factor that sheds light on the nature of Man Yue Technology Holdings' 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 with high insider ownership.

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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.