Ta Ann Holdings Berhad's (KLSE:TAANN) Shareholders May Want To Dig Deeper Than Statutory Profit

Ta Ann Holdings Berhad's (KLSE:TAANN) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Our free stock report includes 1 warning sign investors should be aware of before investing in Ta Ann Holdings Berhad. Read for free now.

How Do Unusual Items Influence Profit?

To properly understand Ta Ann Holdings Berhad's profit results, we need to consider the RM37m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Ta Ann Holdings Berhad doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Ta Ann Holdings Berhad's Profit Performance

Arguably, Ta Ann Holdings Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Ta Ann Holdings Berhad's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 15% EPS growth in the 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Ta Ann Holdings Berhad and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Ta Ann Holdings 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 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.