Shareholders appeared to be happy with Chengdu Haoneng Technology Co., Ltd.'s (SHSE:603809) solid earnings report last week. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

The Impact Of Unusual Items On Profit

To properly understand Chengdu Haoneng Technology's profit results, we need to consider the CN¥79m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 Chengdu Haoneng Technology to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Chengdu Haoneng Technology's Profit Performance

Unusual items (expenses) detracted from Chengdu Haoneng Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think Chengdu Haoneng Technology's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 26% over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. 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. While conducting our analysis, we found that Chengdu Haoneng Technology has 3 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of Chengdu Haoneng Technology's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.