Cahya Mata Sarawak Berhad's (KLSE:CMSB) Solid Earnings May Rest On Weak Foundations

Yahoo

29-05-2025

Cahya Mata Sarawak Berhad's (KLSE:CMSB) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.
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Importantly, our data indicates that Cahya Mata Sarawak Berhad's profit received a boost of RM13m in unusual items, over the last year. 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. And that's as you'd expect, given these boosts are described as 'unusual'. 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, Cahya Mata Sarawak Berhad's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Cahya Mata Sarawak Berhad's true underlying earnings power is actually less than its statutory profit. And we are pleased to note that EPS is at least heading in the right direction in the alst twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 1 warning sign with Cahya Mata Sarawak Berhad, and understanding this should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of Cahya Mata Sarawak Berhad's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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