Even though PTT Synergy Group Berhad (KLSE:PTT) posted strong earnings recently, the stock hasn't reacted in a large way. We looked deeper into the numbers and found that shareholders might be concerned with some underlying weaknesses.
See our latest analysis for PTT Synergy Group Berhad
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, PTT Synergy Group Berhad increased the number of shares on issue by 20% over the last twelve months by issuing new shares. As a result, its net income is now split between a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. You can see a chart of PTT Synergy Group Berhad's EPS by clicking here.
How Is Dilution Impacting PTT Synergy Group Berhad's Earnings Per Share (EPS)?
As you can see above, PTT Synergy Group Berhad has been growing its net income over the last few years, with an annualized gain of 4,516% over three years. In comparison, earnings per share only gained 1,038% over the same period. And the 382% profit boost in the last year certainly seems impressive at first glance. But in comparison, EPS only increased by 139% over the same period. So you can see that the dilution has had a bit of an impact on shareholders.
In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if PTT Synergy Group Berhad can grow EPS persistently. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of PTT Synergy Group Berhad.
How Do Unusual Items Influence Profit?
Finally, we should also consider the fact that unusual items boosted PTT Synergy Group Berhad's net profit by RM21m over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. We can see that PTT Synergy Group Berhad's positive unusual items were quite significant relative to its profit in the year to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.