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August 30, 2016

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A-share firms’ profit rise slows in H1

PROFIT growth for companies listed on China’s A-share market slowed in the first six months of this year, with brokerages leading the pace of decline amid a sluggish stock market.

Listed firms which have revealed their first-half earnings posted a 5.2 percent drop year on year in total profits, widening from a fall of 0.6 percent in the first quarter, UBS Securities said.

More than 2,000 listed firms, or around 70 percent of the total, had released interim reports as of last Friday.

Non-financial companies reported a 5.2 percent increase in net profits in the first-half of this year, slower than the 7.5-percent rise in the first quarter, while financial firms suffered an annual decline of 13.2 percent in earnings, although over half of the banks have yet to reveal their first-half results, according to UBS Securities. Brokerages suffered the most as their earnings slumped over 60 percent annually.

“Based on results released so far, A-share earnings growth in the first half has slowed from the first quarter but remained solid, largely in line with our expectations,” Gao Ting, head of China strategy at UBS Securities, said in a report yesterday.

“Given a high base in the same period of last year, we see the level of growth as decent, which will likely shore up the market,” Gao added.

Based on the available data, UBS estimated earnings of mainboard-listed firms to decline 9.1 percent year on year in the first half of this year, those of companies on the SME Board to grow 15.8 percent, and earnings of ChiNext companies to surge 47.4 percent.

UBS kept its forecast for zero growth in overall earnings of A-share companies in 2016, with non-financial firms’ earnings up 7.5 percent and financial firms’ earnings down 5 percent.


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