Shareholders appeared unconcerned with CITIC Resources Holdings Limited's (HKG:1205) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
View our latest analysis for CITIC Resources Holdings
The Impact Of Unusual Items On Profit
To properly understand CITIC Resources Holdings' profit results, we need to consider the HK$309m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. CITIC Resources Holdings took a rather significant hit from unusual items in the year to June 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of CITIC Resources Holdings.
Our Take On CITIC Resources Holdings' Profit Performance
As we mentioned previously, the CITIC Resources Holdings' profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that CITIC Resources Holdings' statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 5.5% per year over the last three years. 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 CITIC Resources Holdings as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for CITIC Resources Holdings you should be aware of.
This note has only looked at a single factor that sheds light on the nature of CITIC Resources Holdings' 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. 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.
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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.