Ilsung Construction's (KRX:013360) Problems Go Beyond Weak Profit

Ilsung Construction Co., Ltd.'s (KRX:013360) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

Check out our latest analysis for Ilsung Construction

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ilsung Construction's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩3.7b worth of 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. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Ilsung Construction's positive unusual items were quite significant relative to its profit in the year to December 2023. 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 Ilsung Construction.

Our Take On Ilsung Construction's Profit Performance

As we discussed above, we think the significant positive unusual item makes Ilsung Construction's earnings a poor guide to its underlying profitability. For this reason, we think that Ilsung Construction's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. Nonetheless, it's still worth noting that its earnings per share have grown at 27% over the last three years. 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. If you'd like to know more about Ilsung Construction as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 4 warning signs for Ilsung Construction (of which 1 can't be ignored!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Ilsung Construction'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.