We Think That There Are Issues Underlying Tianjin Port Development Holdings' (HKG:3382) Earnings

Tianjin Port Development Holdings Limited's (HKG:3382) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

View our latest analysis for Tianjin Port Development Holdings

The Impact Of Unusual Items On Profit

For anyone who wants to understand Tianjin Port Development Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from HK$572m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Tianjin Port Development Holdings had a rather significant contribution from unusual items relative to its profit to December 2021. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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

Our Take On Tianjin Port Development Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Tianjin Port Development Holdings' earnings a poor guide to its underlying profitability. For this reason, we think that Tianjin Port Development Holdings' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the good news is that its EPS growth over the last three years has been very impressive. 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 Tianjin Port Development Holdings, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Tianjin Port Development Holdings you should know about.

Today we've zoomed in on a single data point to better understand the nature of Tianjin Port Development Holdings' profit. But there are plenty of other ways to inform your opinion of a company. 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.