Sin Heng Heavy Machinery Limited’s (SGX:BKA) healthy profit numbers didn’t contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.
View our latest analysis for Sin Heng Heavy Machinery
The Impact Of Unusual Items On Profit
To properly understand Sin Heng Heavy Machinery’s profit results, we need to consider the S$1.3m gain attributed to unusual items. While it’s always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that’s as you’d expect, given these boosts are described as ‘unusual’. If Sin Heng Heavy Machinery doesn’t see that contribution repeat, then all else being equal we’d expect its profit to drop over the current year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sin Heng Heavy Machinery.
Our Take On Sin Heng Heavy Machinery’s Profit Performance
Arguably, Sin Heng Heavy Machinery’s statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Sin Heng Heavy Machinery’s true underlying earnings power is actually less than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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. If you’d like to know more about Sin Heng Heavy Machinery as a business, it’s important to be aware of any risks it’s facing. Case in point: We’ve spotted 2 warning signs for Sin Heng Heavy Machinery you should be aware of.
This note has only looked at a single factor that sheds light on the nature of Sin Heng Heavy Machinery’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 with significant insider holdings 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.
