Chuan Hup Holdings' (SGX:C33) Shareholders May Want To Dig Deeper Than Statutory Profit

By
Simply Wall St
Published
September 04, 2021
SGX:C33
Source: Shutterstock

Chuan Hup Holdings Limited's (SGX:C33) 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.

See our latest analysis for Chuan Hup Holdings

earnings-and-revenue-history
SGX:C33 Earnings and Revenue History September 5th 2021

How Do Unusual Items Influence 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 gained from US$3.5m worth of unusual items. 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 that's as you'd expect, given these boosts are described as 'unusual'. We can see that Chuan Hup Holdings' positive unusual items were quite significant relative to its profit in the year to June 2021. 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 Chuan Hup Holdings.

Our Take On Chuan Hup Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Chuan Hup Holdings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Chuan Hup Holdings' underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 3 warning signs for Chuan Hup Holdings (1 is potentially serious) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Chuan Hup Holdings' 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. 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 that insiders are buying to be useful.

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