Strong Growth Momentum of Blue-chip Companies on the Main Board

date: 2017-9-12

In the first half of 2017, Companies listed on the main board have witnessed a steady increase in their operating revenue and a significant boost in profitability, and are expected to maintain the strong growth momentum. Their performance could be characterized as follows:

 

First, blue chip companies are prosperous with improving performance.

 

In the first half of 2017, the 10 best-performing blue chip companies on the main board show a double-digit increase in both their aggregate operating revenue and net profits: the aggregate operating revenue amounts to CNY491.508 trillion, up by 21.2% compared with the same period of 2016; net profits reach CNY65.372 trillion, up by 22.7% year-on-year. MIDEA GROUP, with a 50% year-on-year increase in its operating revenue in the first half of 2017, is fully engaged in transformation and upgrading, and has been actively conducting M&As externally. BOE is quickening the layout of production lines for large LCD panels a, and its performance in 2017 is significantly boosted. Profitability of GREE and VANKE-A is also soaring, with a year-on-year increase of over 30%. Relying on the strengths of the capital market, blue chip companies on the main board are growing prosperously with improved revenue and nets profits despite the size of their business.

 

Second, the reform of state-owned enterprises is showing results and has yielded plentiful benefits.

 

State-owned enterprises account for about 60% of the companies listed on the main board. As per the “1+N” guiding plan issued by the government for the reform, the state-owned companies on the main board have been actively pushing forward the reform and trying to increase efficiency and achieve results. In the first six months of the year, main-board-listed state-owned companies are excellent in their performance: average nets profits reach CNY338 million, with a year-on-year increase of 55.81% which is 21.80% higher than that of the main board on average. By making use of the capital market, state-owned companies have achieved successful results in strategically integrating and circulating the state-owned resources in an orderly way, adjusting their business layout, and transforming and upgrading themselves. For example, CNPCCCL, after its injection into JDEC as a whole, is able to integrate production with finance and to better coordinate the financial resources. CNPCCCL ranks among the top in term of business performance in the first half the year, with operating revenue of over CNY 10 trillion and an increase of 19.2% in net profits, which is a reflection of the benefits of the state-owned enterprise reform.

 

Third, the listed companies are performing their social responsibilities by actively participating in property alleviation.

 

Statistics show that at least 90 main-board-listed companies have participated in property alleviation in response to the national call in the first half of the year. They companies, based on their own characteristics and circumstance, make an organic combination between the work of property relief and business development via such measures taken in the industrial, financial and education domains and exporting labor services. For instance, YNALCO solved the employment problem by developing business and making investment in certain areas. SHAANXI JINYE set up a scholarship project, and ZHONGTIAN participated in a specific poverty alleviation project titled “a thousand companies help a thousand villages out of poverty”. The companies have undertaken such responsibilities and have yielded satisfactory social benefits.

 

Fourth, the number losing firms have dropped and operating risks are effectively controlled and avoided.

 

In the first half of the year, losing companies on the main board have decreased by 23; companies with EPS of less than CNY0.1 are reduced by 22. Furthermore, losses of the 10 worst-performing companies drop by 59.9%. Companies mainly engaged in traditional industries are earnestly implementing the supply-side structural reform and making more input in technological innovation to help themselves out of difficulty, revitalize their assets and control and avoid operating risks.

 

Fifth, growth momentum is enduring with sound prospects

 

As per the third-quarter earnings forecast already disclosed, about 58% companies are expecting a growing revenue, 42% have expected their revenue to increase by over 50%, and 13% are expecting to turn from deficits to profit. About 11% estimated a decline in revenue and 18% are expecting losses. In general, prospects are sound for over 70% of the Companies on the main board according to their earnings forecast.