Hiap Teck Venture Berhad's (KLSE:HIAPTEK) Promising Earnings May Rest On Soft Foundations

Despite posting some strong earnings, the market for Hiap Teck Venture Berhad's (KLSE:HIAPTEK) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

Check out our latest analysis for Hiap Teck Venture Berhad

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Hiap Teck Venture Berhad's profit received a boost of RM3.3m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Hiap Teck Venture Berhad's Profit Performance

Arguably, Hiap Teck Venture Berhad's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hiap Teck Venture Berhad's true underlying earnings power is actually less than its statutory profit. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. If you want to do dive deeper into Hiap Teck Venture Berhad, you'd also look into what risks it is currently facing. For example - Hiap Teck Venture Berhad has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Hiap Teck Venture Berhad's 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.