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ITC Properties Group's (HKG:199) Robust Earnings Are Supported By Other Strong Factors

Simply Wall St ·  08/03 06:35

ITC Properties Group Limited (HKG:199) just reported healthy earnings but the stock price didn't move much. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for ITC Properties Group

earnings-and-revenue-historySEHK:199 Earnings and Revenue History August 2nd 2022

The Impact Of Unusual Items On Profit

To properly understand ITC Properties Group's profit results, we need to consider the HK$39m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If ITC Properties Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of ITC Properties Group.

Our Take On ITC Properties Group's Profit Performance

Unusual items (expenses) detracted from ITC Properties Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that ITC Properties Group's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing ITC Properties Group at this point in time. For instance, we've identified 3 warning signs for ITC Properties Group (2 are a bit concerning) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of ITC Properties Group'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. 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.

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.

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