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Listed companies report slower profit growth in H1

Companies listed on China’s A-share market reported slower profit growth in the first six months this year, with brokerages leading the pace of decline amid a sluggish stock market.

Total profit of listed companies that have disclosed their first-half earnings fell 5.2 percent year on year, widened from a decline of 0.6 percent in the first quarter, according to UBS Securities.

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

Among them, non-financial companies reported a 5.2 percent increase in net profits of the first half of the year, compared with the growth pace of 7.5 percent in the first quarter, while financial firms posted a year-on-year decline of 13.2 percent in earnings.

Brokerages were the biggest draggers with their earnings down over 60 percent year on year. UBS expected the final decline in financial companies’ earnings to narrow as over half of banks are yet to announce their first-half results.

Sectors crippled with overcapacity saw their earnings improve. Profit growth of the coal sector turned positive in the first half, the steel industry swung to a profit and earnings decline of the construction materials sector narrowed sharply during the period, UBS said in a report today.

“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 expectation,” said Gao Ting, head of China strategy at UBS Securities.

“Given a high base in the same period 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 year, companies on SME Board to log a 15.8 percent growth in first-half earnings, and earnings of ChiNext companies to surge 47.4 percent.

UBS maintained its forecast for the overall A-share earnings growth in 2016 at zero, with non-financial earnings up 7.5 percent and financial earnings down 5 percent.


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