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Profit plunges at mainland-listed firms

COMBINED profits for 1,009 listed companies on the Chinese mainland dropped 43.61 percent last year on a yearly basis, according to annual earnings and preliminary reports.

The profits, accounting for 32.18 percent of total mainland-listed companies' profits in 2007, reached 173.6 billion yuan (US$25.39 billion) last year, according to figures compiled by TX Investment Consulting Co.

Of the 93 companies that have reported annual results, only seven firms reported losses last year while 40 reported profit growth. Their combined profit gained 15.6 percent to 14.3 billion yuan.

Combined profits for the 916 companies that have released preliminary reports slumped 46.1 percent to 159.2 billion yuan, and only 41 percent of these firms have forecast a profitable 2008.

Profitable companies included those in the coal, construction, telecommunications, shipping and banking sectors. Others were from the hotels, aviation, insurance, securities, power and steel sectors, TX Investment said.

Although the central government has issued stimulus packages, including spending 4 trillion yuan by the end of 2010, to boost domestic demand, analysts said they are still concerned that sharply slowing economic growth would erode corporate earnings and amplify stock-price volatility.

The State Council, China's Cabinet, has approved stimulus packages targeted at several key sectors, including light industry, petrochemicals, electronics and information technology. The market expects more forceful economic measures during the annual session of the National People's Congress next month.

TX Investment suggested investors focus on firms that have strong balance sheets in sectors such as construction materials, power supplies, chemical and machinery equipment.

Firms listed on the Chinese mainland publish annual earnings reports between January and April.


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