Chia Hsin Cement's (TWSE:1103) Solid Earnings Are Supported By Other Strong Factors

Even though Chia Hsin Cement Corporation's (TWSE:1103) recent earnings release was robust, the market didn't seem to notice. Investors are probably missing some underlying factors which are encouraging for the future of the company.

View our latest analysis for Chia Hsin Cement

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Chia Hsin Cement's profit was reduced by NT$43m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Chia Hsin Cement 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 Chia Hsin Cement.

Our Take On Chia Hsin Cement's Profit Performance

Because unusual items detracted from Chia Hsin Cement's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Chia Hsin Cement's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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. If you'd like to know more about Chia Hsin Cement as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for Chia Hsin Cement (1 shouldn't be ignored) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Chia Hsin Cement'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 that insiders are buying 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.