Solid profit numbers didn't seem to be enough to please Shandong Zhonglu Oceanic Fisheries Company Limited's (SZSE:200992) shareholders. Our analysis has found some concerning factors which weaken the profit's foundation.
Check out our latest analysis for Shandong Zhonglu Oceanic Fisheries
SZSE:200992 Earnings and Revenue History September 1st 2022
Zooming In On Shandong Zhonglu Oceanic Fisheries' Earnings
Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. The ratio shows us how much a company's profit exceeds its FCF.
That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".
For the year to June 2022, Shandong Zhonglu Oceanic Fisheries had an accrual ratio of 0.22. Unfortunately, that means its free cash flow fell significantly short of its reported profits. Over the last year it actually had negative free cash flow of CN¥190m, in contrast to the aforementioned profit of CN¥35.5m. It's worth noting that Shandong Zhonglu Oceanic Fisheries generated positive FCF of CN¥33m a year ago, so at least they've done it in the past. However, that's not all there is to consider. We can see that unusual items have impacted its statutory profit, and therefore the accrual ratio. The good news for shareholders is that Shandong Zhonglu Oceanic Fisheries' accrual ratio was much better last year, so this year's poor reading might simply be a case of a short term mismatch between profit and FCF. As a result, some shareholders may be looking for stronger cash conversion in the current year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong Zhonglu Oceanic Fisheries.
The Impact Of Unusual Items On Profit
The fact that the company had unusual items boosting profit by CN¥12m, in the last year, probably goes some way to explain why its accrual ratio was so weak. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Shandong Zhonglu Oceanic Fisheries had a rather significant contribution from unusual items relative to its profit to June 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.
Our Take On Shandong Zhonglu Oceanic Fisheries' Profit Performance
Shandong Zhonglu Oceanic Fisheries had a weak accrual ratio, but its profit did receive a boost from unusual items. For the reasons mentioned above, we think that a perfunctory glance at Shandong Zhonglu Oceanic Fisheries' statutory profits might make it look better than it really is on an underlying level. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've found that Shandong Zhonglu Oceanic Fisheries has 3 warning signs (2 don't sit too well with us!) that deserve your attention before going any further with your analysis.
Our examination of Shandong Zhonglu Oceanic Fisheries has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.
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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.
穩健的利潤數字似乎不足以取悦山東中路遠洋水產有限公司(SZSE:200992)股東。我們的分析發現,一些令人擔憂的因素削弱了利潤的基礎。
查看我們對山東中路海洋漁業的最新分析
深交所:200992盈利及收入歷史2022年9月1日
放大山東中路海洋漁業的收入
許多投資者都沒有聽説過現金流應計比率但它實際上是衡量一家公司在給定時期內自由現金流(FCF)支持公司利潤的程度的有用指標。應計制比率從給定期間的利潤中減去FCF,然後將結果除以該時間段內公司的平均運營資產。這一比率向我們展示了一家公司的利潤超過其固定現金流的程度。
這意味着負的應計比率是一件好事,因為它表明該公司帶來的自由現金流比其利潤所暗示的要多。雖然應計比率高於零並不令人擔憂,但我們確實認為,當一家公司的應計比率相對較高時,這一點值得注意。引用勒維倫和雷蘇泰克2014年的一篇論文,“應計利潤較高的公司未來的利潤往往較低”。
截至2022年6月的一年,山東中路海洋漁業的應計比率為0.22。不幸的是,這意味着其自由現金流遠遠低於其公佈的利潤。在過去的一年裏,它實際上負面自由現金流為1.9億元,而前述利潤為3550萬元。值得注意的是,山東中路海洋漁業一年前產生了3300萬元的正FCF,所以至少他們過去做到了。然而,這並不是需要考慮的全部問題。我們可以看到,不尋常的項目影響了其法定利潤,從而影響了應計比率。對股東來説,好消息是山東中路海洋漁業去年的應計比率要好得多,因此今年的糟糕讀數可能只是利潤與FCF短期錯配的一個例子。因此,一些股東可能希望在本年度實現更強勁的現金轉換。
注:我們總是建議投資者檢查資產負債表的實力。點擊這裏可以看到我們對山東中路海洋漁業資產負債表的分析。
異常項目對利潤的影響
該公司去年有一些不尋常的項目使利潤增加了1200萬加元,這一事實可能在某種程度上解釋了為什麼它的應計比率如此之低。雖然有更高的利潤總是好事,但不尋常的東西帶來的巨大貢獻有時會挫傷我們的熱情。當我們分析了數千家上市公司的數據時,我們發現,在給定的一年中,不尋常的項目往往會帶來提振不第二年又重複了一遍。考慮到這個名字,這並不令人驚訝。山東中路海洋漁業在截至2022年6月的利潤中,異常項目的貢獻相當大。在其他條件不變的情況下,這可能會使法定利潤成為衡量潛在盈利能力的糟糕指標。
我們如何看待山東中路海洋漁業的盈利表現
山東中路遠洋漁業的應計制比率較低,但其利潤確實受到了異常項目的提振。基於上述原因,我們認為,敷衍地看一眼山東中路海洋漁業的法定利潤,可能會讓它看起來比實際情況更好。因此,如果你想更深入地研究這隻股票,考慮它面臨的任何風險是至關重要的。比如,我們發現山東中路海洋漁業有3個警示標誌(2不要和我們坐在一起太舒服!)在進一步分析之前,這一點值得你注意。
我們對山東中路遠洋漁業的調查集中在某些因素上,這些因素可能會讓它的收益看起來比實際情況更好。在此基礎上,我們對此持懷疑態度。但還有很多其他方式可以讓你瞭解一家公司的看法。例如,許多人認為高股本回報率是有利的商業經濟指標,而另一些人則喜歡“跟着錢走”,尋找內部人士正在買入的股票。所以你可能想看看這個免費擁有高股本回報率的公司的集合,或內部人士正在購買的這份股票清單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。