Shares of Shanghai Electric Group Co., Ltd. (SH ELECTRIC) plummeted by 20.29% on November 7, 2024, despite the company reporting solid earnings. The market reaction seems to have been driven by concerns raised over the sustainability of the company's profits.
According to an analysis by Simply Wall St, Shanghai Electric Group's statutory profit was boosted by CN¥169 million worth of unusual items during the last twelve months. These unusual items are typically one-off in nature, and their absence in the future could lead to a drop in the company's reported profit.
The article suggests that Shanghai Electric Group's statutory earnings may not accurately reflect its underlying earnings power and ongoing productivity due to the impact of these large unusual items. While the company managed to book a profit this year after losing money last year, analysts and investors are questioning the sustainability of its earnings and advising caution.
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