Nam Cheong's (SGX:1MZ) Anemic Earnings Might Be Worse Than You Think
The subdued market reaction suggests that Nam Cheong Limited's (SGX:1MZ) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.
Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.
Importantly, our data indicates that Nam Cheong's profit received a boost of RM441m 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 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. And that's as you'd expect, given these boosts are described as 'unusual'. Nam Cheong had a rather significant contribution from unusual items relative to its profit to March 2025. 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 Nam Cheong.
As we discussed above, we think the significant positive unusual item makes Nam Cheong's earnings a poor guide to its underlying profitability. For this reason, we think that Nam Cheong's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. In further bad news, its earnings per share decreased 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. If you want to do dive deeper into Nam Cheong, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 4 warning signs with Nam Cheong, and understanding them should be part of your investment process.
Today we've zoomed in on a single data point to better understand the nature of Nam Cheong'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. 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.
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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