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Puya Semiconductor’s (Shanghai) (SHSE:688766) promising gains may rest on soft foundations

Puya Semiconductor (Shanghai) Co., Ltd. (SHSE:688766) just reported some strong gains, and the market responded accordingly with a healthy share price increase. We’ve done some analysis and think investors are missing some details hidden beneath the earnings numbers.

See our latest analysis for Puya Semiconductor (Shanghai)

SHSE:688766 Earnings and revenue history May 6, 2024

How do unusual items affect profits?

For anyone wanting to understand Puya Semiconductor (Shanghai)’s profit beyond the statutory figures, it’s important to note that over the last twelve months, its statutory profit came from CN„22 million in unusual items. We can’t deny that higher profits generally make us optimistic, but we would prefer if profits were sustainable. We’ve gone through the numbers of most publicly traded companies around the world, and it’s very common for unusual items to be one-off in nature. And after all, that’s exactly what accounting terminology means. Puya Semiconductor (Shanghai) had a fairly significant contribution from unusual items to its profit to March 2024. As a result, we can suspect that the unusual items make statutory profit significantly stronger than it would otherwise be.

You may be wondering what analysts are predicting in terms of future profitability. Fortunately, you can click here to see an interactive graph showing future profitability, based on their estimates.

Our view on Puya Semiconductor’s (Shanghai) earnings performance.

As mentioned earlier, Puya Semiconductor’s (Shanghai) big boost from unusual items won’t last indefinitely, so statutory earnings are likely a poor guide to underlying profitability. As a result, we think it may well be that Puya Semiconductor’s (Shanghai) underlying earnings power is lower than its statutory earnings. But the good news is that, while we recognize that we need to look beyond the statutory figures, these figures are still improving, with earnings per share growing very rapidly over the past year. The aim of this article was to assess how confident we can be that statutory earnings reflect the company’s potential, but there’s plenty more to think about. So if you want to dive deeper into this stock, it’s crucial to consider the risks facing the stock. At Simply Wall Street we found 1 warning sign for Puya Semiconductor (Shanghai) and we believe they deserve your attention.

This note looks at only a single factor that sheds light on the nature of Puya Semiconductor’s (Shanghai) profits. But there is always more to discover if you are able to focus your mind on details. 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 look for stocks that insiders are buying. So you might want to see this free collection of companies with high return on equity, or this list of stocks that insiders are buying.

Valuation is complex, but we help make it simple.

Find out if Puya Semiconductor (Shanghai) may be over or undervalued by checking out our comprehensive analysis, including fair value estimates, risks and cautions, dividends, insider transactions and financial health.

View the Free Analysis

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.