Jiyuan Packaging Holdings' (TPE:8488) Soft Earnings Don't Show The Whole Picture

The market for Jiyuan Packaging Holdings Limited's (TPE:8488) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for Jiyuan Packaging Holdings

The Impact Of Unusual Items On Profit

To properly understand Jiyuan Packaging Holdings' profit results, we need to consider the NT$30m expense attributed 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Jiyuan Packaging Holdings to produce a higher profit next year, all else being equal.

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

Our Take On Jiyuan Packaging Holdings' Profit Performance

Unusual items (expenses) detracted from Jiyuan Packaging Holdings' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Jiyuan Packaging 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 3 warning signs we've spotted with Jiyuan Packaging Holdings (including 2 which can't be ignored).

This note has only looked at a single factor that sheds light on the nature of Jiyuan Packaging 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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This article by Simply Wall St is general in nature. 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.
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