The subdued market reaction suggests that Tingyi (Cayman Islands) Holding Corp.'s (HKG:322) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Tingyi (Cayman Islands) Holding

The Impact Of Unusual Items On Profit

For anyone who wants to understand Tingyi (Cayman Islands) Holding's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥237m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Tingyi (Cayman Islands) Holding doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Tingyi (Cayman Islands) Holding's Profit Performance

Arguably, Tingyi (Cayman Islands) Holding's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Tingyi (Cayman Islands) Holding's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 14% over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Tingyi (Cayman Islands) Holding.

Today we've zoomed in on a single data point to better understand the nature of Tingyi (Cayman Islands) Holding's 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. 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.