Hafary Holdings' (SGX:5VS) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Simply Wall St · 04/14 22:28

The market wasn't impressed with the soft earnings from Hafary Holdings Limited (SGX:5VS) recently. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

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earnings-and-revenue-history
SGX:5VS Earnings and Revenue History April 14th 2025

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hafary Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from S$3.9m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. If Hafary Holdings doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hafary Holdings.

Our Take On Hafary Holdings' Profit Performance

We'd posit that Hafary Holdings' statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Hafary Holdings' true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 3 warning signs for Hafary Holdings (1 is a bit concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Hafary Holdings' 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.