Jilin Jian Yisheng Pharmaceutical Co., Ltd.'s (SZSE:002566) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Jilin Jian Yisheng Pharmaceutical's profit received a boost of CN¥20m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Jilin Jian Yisheng Pharmaceutical's positive unusual items were quite significant relative to its profit in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jilin Jian Yisheng Pharmaceutical.

Our Take On Jilin Jian Yisheng Pharmaceutical's Profit Performance

As we discussed above, we think the significant positive unusual item makes Jilin Jian Yisheng Pharmaceutical's earnings a poor guide to its underlying profitability. For this reason, we think that Jilin Jian Yisheng Pharmaceutical's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. And we are pleased to note that EPS is at least heading in the right direction in the alst twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Jilin Jian Yisheng Pharmaceutical as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Jilin Jian Yisheng Pharmaceutical you should know about.

Today we've zoomed in on a single data point to better understand the nature of Jilin Jian Yisheng Pharmaceutical'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 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.