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Economy· Macro

China's listcos see weak growth in earnings, up merely 2%

CKN
minutes 2019/07/25 10:00:36
1,940
corporate earnings; public works programs; construction machinery

Jul 25, 2019 (China Knowledge) - Compare with 2018, the net profit estimate among listed Chinese companies increased merely 2% for H1 2019 YoY, figures reported by some 1,700 companies or half the number in both Shanghai and Shenzhen Exchange.

The earnings figures reported yesterday shows a marked improvement from the nearly 30% profit decline in H2 2018.

The increase H1 attributes almost entirely to the public works programs, and infrastructure investment that rose 4.1% YoY. Both the construction machinery and cement industries’ net profits rose by more than 60%.

The economic stimulus has substantial and positive impact on some companies. For instance construction machinery maker Zoomlion Heavy Industry tripled its six-month profit. Huaxin Cement and Shangfeng Cement also experience strong growth profits between 50% and 100%.

Meanwhile, sectors dependent on consumer spending floundered. The automobile market shrank by double digits in the H1. The retail and commerce sector retreated 40%. Profit of consumer electronics seller Suning.com reportedly dropped by more than 60%.

The trade war between China and the U.S. has not greatly impacted corporate earnings currently; however, foreign companies that export to the U.S. are poised to exit China. There are no signs that earnings in the H2 will recover significantly.

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