Keli Sensing Technology (Ningbo) Co.,Ltd.'s (SHSE:603662) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

The Impact Of Unusual Items On Profit

To properly understand Keli Sensing Technology (Ningbo)Ltd's profit results, we need to consider the CN¥90m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. And that's as you'd expect, given these boosts are described as 'unusual'. Keli Sensing Technology (Ningbo)Ltd had a rather significant contribution from unusual items relative to its profit to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Keli Sensing Technology (Ningbo)Ltd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Keli Sensing Technology (Ningbo)Ltd's earnings a poor guide to its underlying profitability. For this reason, we think that Keli Sensing Technology (Ningbo)Ltd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But at least holders can take some solace from the 18% EPS growth in 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 Keli Sensing Technology (Ningbo)Ltd, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Keli Sensing Technology (Ningbo)Ltd and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of Keli Sensing Technology (Ningbo)Ltd'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. 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.

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.