Shanghai Industrial Urban Development Group Limited's (HKG:563) strong earnings report was rewarded with a positive stock price move. We have done some analysis, and we found several positive factors beyond the profit numbers.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shanghai Industrial Urban Development Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$415m due to unusual items. 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 Shanghai Industrial Urban Development 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 Shanghai Industrial Urban Development Group.

Our Take On Shanghai Industrial Urban Development Group's Profit Performance

Because unusual items detracted from Shanghai Industrial Urban Development Group's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Shanghai Industrial Urban Development Group's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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'd like to know more about Shanghai Industrial Urban Development Group as a business, it's important to be aware of any risks it's facing. For instance, we've identified 3 warning signs for Shanghai Industrial Urban Development Group (2 are potentially serious) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Industrial Urban Development Group'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. 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.