Stock Analysis

Malaysian Resources Corporation Berhad (KLSE:MRCB) Strong Profits May Be Masking Some Underlying Issues

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Malaysian Resources Corporation Berhad's (KLSE:MRCB) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

View our latest analysis for Malaysian Resources Corporation Berhad

KLSE:MRCB Earnings and Revenue History April 10th 2024

How Do Unusual Items Influence Profit?

To properly understand Malaysian Resources Corporation Berhad's profit results, we need to consider the RM152m gain attributed to 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'. Malaysian Resources Corporation Berhad had a rather significant contribution from unusual items relative to its profit to December 2023. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Malaysian Resources Corporation Berhad's Profit Performance

As previously mentioned, Malaysian Resources Corporation Berhad's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Malaysian Resources Corporation Berhad's underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 56% EPS growth in the last year. 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'd like to know more about Malaysian Resources Corporation Berhad as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Malaysian Resources Corporation Berhad you should be mindful of and 1 of these bad boys makes us a bit uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of Malaysian Resources Corporation Berhad's 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 that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Malaysian Resources Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.