We Think Shanghai Yongmaotai Automotive Technology’s (SHSE:605208) Profit Is Only A Baseline For What They Can Achieve

Shanghai Yongmaotai Automotive Technology Co., Ltd. (SHSE:605208) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

Check out our latest analysis for Shanghai Yongmaotai Automotive Technology

earnings-and-revenue-history
SHSE:605208 Earnings and Revenue History May 3rd 2024

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shanghai Yongmaotai Automotive Technology’s profit beyond the statutory numbers, it’s important to note that during the last twelve months statutory profit was reduced by CN¥25m due 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, after all, that’s exactly what the accounting terminology implies. Assuming those unusual expenses don’t come up again, we’d therefore expect Shanghai Yongmaotai Automotive Technology 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 Yongmaotai Automotive Technology.

Our Take On Shanghai Yongmaotai Automotive Technology’s Profit Performance

Unusual items (expenses) detracted from Shanghai Yongmaotai Automotive Technology’s earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Shanghai Yongmaotai Automotive Technology’s statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite 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. Keep in mind, when it comes to analysing a stock it’s worth noting the risks involved. For instance, we’ve identified 3 warning signs for Shanghai Yongmaotai Automotive Technology (2 make us uncomfortable) you should be familiar with.

Today we’ve zoomed in on a single data point to better understand the nature of Shanghai Yongmaotai Automotive Technology’s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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 that insiders are buying to be useful.

Valuation is complex, but we’re helping make it simple.

Find out whether Shanghai Yongmaotai Automotive Technology is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.

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