The market seemed underwhelmed by last week's earnings announcement from Sino Harbour Holdings Group Limited (HKG:1663) despite the healthy numbers. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Sino Harbour Holdings Group's profit was reduced by CN¥31m, 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 Sino Harbour Holdings Group 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 Sino Harbour Holdings Group.

Our Take On Sino Harbour Holdings Group's Profit Performance

Unusual items (expenses) detracted from Sino Harbour Holdings Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Sino Harbour Holdings Group's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the 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. If you want to do dive deeper into Sino Harbour Holdings Group, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Sino Harbour Holdings Group and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Sino Harbour Holdings Group's 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.

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