Investors Shouldn't Be Too Comfortable With EcoFirst Consolidated Bhd's (KLSE:ECOFIRS) Earnings

Last week's profit announcement from EcoFirst Consolidated Bhd (KLSE:ECOFIRS) was underwhelming for investors, despite headline numbers being robust. We think that the market might be paying attention to some underlying factors that they find to be concerning.

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The Impact Of Unusual Items On Profit

To properly understand EcoFirst Consolidated Bhd's profit results, we need to consider the RM33m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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, after all, that's exactly what the accounting terminology implies. We can see that EcoFirst Consolidated Bhd's positive unusual items were quite significant relative to its profit in the year to February 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of EcoFirst Consolidated Bhd.

Our Take On EcoFirst Consolidated Bhd's Profit Performance

As we discussed above, we think the significant positive unusual item makes EcoFirst Consolidated Bhd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that EcoFirst Consolidated Bhd's underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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'd like to know more about EcoFirst Consolidated Bhd as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for EcoFirst Consolidated Bhd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of EcoFirst Consolidated Bhd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.