Shareholders Will Be Pleased With The Quality of Synergy Innovation's (KOSDAQ:048870) Earnings

Synergy Innovation Co., Ltd. (KOSDAQ:048870) just reported healthy earnings but the stock price didn't move much. Our analysis suggests that investors might be missing some promising details.

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In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Synergy Innovation increased the number of shares on issue by 6.5% over the last twelve months by issuing new shares. As a result, its net income is now split between a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. You can see a chart of Synergy Innovation's EPS by clicking here.

How Is Dilution Impacting Synergy Innovation's Earnings Per Share (EPS)?

Synergy Innovation was losing money three years ago. On the bright side, in the last twelve months it grew profit by 80%. But EPS was less impressive, up only 75% in that time. And so, you can see quite clearly that dilution is influencing shareholder earnings.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Synergy Innovation shareholders will want to see that EPS figure continue to increase. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Synergy Innovation.

How Do Unusual Items Influence Profit?

Alongside that dilution, it's also important to note that Synergy Innovation's profit suffered from unusual items, which reduced profit by ₩9.5b in the last twelve months. 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. In the twelve months to September 2025, Synergy Innovation had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Our Take On Synergy Innovation's Profit Performance

To sum it all up, Synergy Innovation took a hit from unusual items which pushed its profit down; without that, it would have made more money. But unfortunately the dilution means that shareholders now own a smaller proportion of the company (assuming they maintained the same number of shares). That will weigh on earnings per share, even if it is not reflected in net income. Based on these factors, we think that Synergy Innovation's profits are a reasonably conservative guide to its underlying profitability. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 1 warning sign for Synergy Innovation and you'll want to know about this.

Our examination of Synergy Innovation has focussed on certain factors that can make its earnings look better than they are. 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 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.