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Most listed firms fare well

By Zhou Yan (China Daily)
Updated: 2009-10-30 08:10

More than half of the 1,050 listed firms on the two mainland bourses, have reported year-on-year profit growth and bettered their subdued performances during the first six months of the year.

According to figures compiled by Securities Times, 559 firms reported net profit increases from July to September compared with the same period last year.

Leading the pack were liquor maker Kweichow Moutai Co Ltd, China Shipbuilding Industry Co and diesel engine maker Weichai Power Co, with earnings per share of 4.01 yuan (59 cents), 2.97 yuan, and 2.86 yuan respectively.

Electric power, aviation, insurance and securities were among the sectors with the highest growth ratio. Insurers clocked 116 percent year-on-year growth, while for securities firms it was 93.3 percent.

The net profit of Huaneng Power International, China's largest electricity producer, reached 2.17 billion yuan in the third quarter, compared with 2.16 billion yuan loss a year earlier.

"The turnaround of power firms has largely been due to the price drop in commodities, which lifted most firms' gross margin," said Zhang Zhaowei, an investment manager at Guojin Wealth Investment Center.

But he warned power firms might find the going tough due to the still-regulated electricity price and the uncertain outlook for commodity prices.

Generally speaking, even though the quarterly net margin on average still had a 0.03 percent decline from previous year, the decrease ratio was distinctly narrowed when compared with the first half's 14.79-percent drop year-on-year.

The good quarterly earnings numbers have been the major trigger for stock gains in October, Zhang said.

"The third-quarter reports will probably be the best among all the four quarters due to the real impact of the stimulus moves across all sectors," said Zhu Lixu, an analyst from TX Investment Consulting Co based in Shanghai.

China's vehicle sales, for instance, rose 78 percent to 1.33 million in September, with passenger cars rising 84 percent. Boosted by strong demand, Dongfeng Motor Group Co, China's third-biggest carmaker, reported quarterly net profit of 130 million yuan, up 98.8 percent from last year.

The net profit of property developers grew 24.3 percent over last year due to booming house sales.

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Shenzhen-listed Vanke, the largest domestic developer by market value, reported a net profit of 430 million yuan in the third quarter, up 100 percent over last year. The property giant sold a total of 5.1 million sq m of gross floor area worth 46.15 billion from January to September, 26.8 percent higher than the first nine months of 2008.

The rise in the property market has also injected strong momentum to infrastructure sectors like cement and equipment manufacturing, Zhu said.

Anhui Conch Cement Co, for instance, reported a 33.18-percent net profit growth in the third quarter to 937 million yuan.

In addition, among 408 companies that have released their full-year earnings forecasts, 213 projected year-on-year sales gains, while the rest are expected to report negative results.

The fourth quarter is hard to compete with the third quarter in terms of profitability, given the slowdown of construction projects and new loan growth, Zhu said.