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Nov 05, 2024

Hangzhou Oxygen Plant GroupLtd's (SZSE:002430) Earnings Are Weaker Than They Seem - Simply Wall St News

Stock Analysis Hangzhou Oxygen Plant Group Co.,Ltd. (SZSE:002430) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think

Stock Analysis

Hangzhou Oxygen Plant Group Co.,Ltd. (SZSE:002430) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think that shareholders may be missing some concerning details in the numbers.

Check out our latest analysis for Hangzhou Oxygen Plant GroupLtd

For anyone who wants to understand Hangzhou Oxygen Plant GroupLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥141m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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.

Arguably, Hangzhou Oxygen Plant GroupLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Hangzhou Oxygen Plant GroupLtd's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 29% EPS growth in the last year. 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. Ultimately, this article has formed an opinion based on historical data. However, it can also be great to think about what analysts are forecasting for the future. At Simply Wall St, we have analyst estimates which you can view by clicking here.

This note has only looked at a single factor that sheds light on the nature of Hangzhou Oxygen Plant GroupLtd'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 with significant insider holdings to be useful.

Discover if Hangzhou Oxygen Plant GroupLtd might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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.

Manufactures and sells air separation equipment, petrochemical equipment, and other gas products worldwide.