Listed firms’ strong H1 showing mirrors China’s growth
Companies listed on China’s A-share market reported a better-than-expected performance in the first half of the year, indicating that the Chinese economy kept its development momentum.
From January to June, A-share-listed companies reported combined operating revenue of 34.54 trillion yuan (about $5.01 trillion), up 9.24 percent year on year, according to data from the China Association for Public Companies.
Their net profit reached 3.25 trillion yuan, a 3.19-percent increase from a year earlier.
Listed companies, in general, managed to sustain a growth trend despite unexpected challenges, such as Covid-19 outbreaks at home and soaring inflation overseas, the association said.
The quality of listed companies has steadily improved and their structure has been further optimized, it added.
Listed nonfinancial companies posted higher-than-average growth in operating revenues and net income during the period. Their operating revenues grew 10.89 percent to 29.23 trillion yuan and net income climbed 4.55 percent to 1.95 trillion yuan.
Since the first quarter of 2021, the operating revenues of nonfinancial firms have been higher than financial firms’, signaling that the real economy has been growing.
Industry-wise, coal, oil, gas, basic chemical, power battery raw material and photovoltaic new energy grew rapidly in the first six months.
In contrast, firms in the aviation, catering and tourism sectors faced challenges due to the coronavirus flare-ups and high prices of raw materials.
The new energy sector saw a supply and demand boom, as it benefits from Beijing’s efforts to achieve its carbon peak and carbon neutrality goals, said Chen Li, chief economist with Chuancai Securities.
The rapid development of new-energy vehicles and wind power led to high-profit growth of the nonferrous metal sector, while surging inflation overseas and an energy crisis in Europe contributed to the profit growth of coal, petroleum and petrochemicals, Chen said.
In the first six months of 2022, the average research and development (R&D) expenditure of listed companies accounted for 1.69 percent of their operating revenues.
The R&D intensity of computing, bio-industry and high-end equipment manufacturing reached 10.29 percent, 10.1 percent and 6.84 percent, respectively.
The A-share market also emerged as a champion globally in the initial public offering (IPO) financing scale in the same period, according to data from financial information provider Wind. It raised 311.9 billion yuan through the IPOs, a 46-percent hike from a year ago.
Industry insiders have been optimistic about the prospects of the A-share market, as commodity prices started to decline at the end of the second quarter and the economy continued to recover in the third.
Companies may report notable performance improvement, driven by higher profit margins, according to Sinolink Securities.