Chuan Hup Holdings' (SGX:C33) Conservative Accounting Might Explain Soft Earnings

The market for Chuan Hup Holdings Limited's (SGX:C33) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Chuan Hup Holdings

The Impact Of Unusual Items On Profit

For anyone who wants to understand Chuan Hup Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$1.2m due to unusual items. 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. Chuan Hup Holdings took a rather significant hit from unusual items in the year to June 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Chuan Hup Holdings.

Our Take On Chuan Hup Holdings' Profit Performance

As we mentioned previously, the Chuan Hup Holdings' profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Chuan Hup Holdings' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 3 warning signs for Chuan Hup Holdings (of which 1 is a bit concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Chuan Hup Holdings' 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.