State-owned enterprises now China's big losers
Source: Xinhua |
May 1, 2013, Wednesday
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Print Edition
Print Edition
CHINA'S state-owned enterprises lost their position as the most profitable sector to become the country's biggest losers last year, according to their 2012 results.
SOEs reported a combined loss of about 50 billion yuan (US$8 billion), their financial statements revealed.
China COSCO Holdings Co, the country's largest shipping company, topped the list for the second consecutive year, losing 9.56 billion yuan in 2012 after a deficit of 10.45 billion yuan in 2011.
China COSCO was followed by Aluminum Corp of China, the country's largest alumina producer, and Metallurgical Corporation of China Ltd, which reported losses of 8.23 billion yuan and 6.95 billion yuan, respectively.
Half of the top 10 poor-performing companies were in the iron and steel sector, including 4.16 billion yuan in losses for Angang Steel, 3.86 billion yuan for Maanshan Iron & Steel, 3.83 billion yuan for Shandong Iron & Steel, 3.5 billion yuan for Anyang Iron & Steel and 3.25 billion yuan for Valin Steel.
Size ineffective
All the top losing companies blamed their results on the downward trend in their industries and the broader macroeconomy.
However, Luo Xiaoming, chief strategy analyst with Ping An Securities, said they had been depending on their sheer size to avert risks, which proved ineffective last year.
Their size means even a small percentage loss will translate into a big number for them, Luo said, adding that the SOEs in the red were mostly in a sector easily affected by changes in the economic cycle.
Even though the poor performance of such SOEs was "understandable" amid the lingering European debt crisis and a slowing Chinese economy, experts said companies should do more than just pointing fingers at others.
Zhang Zhaowei, an analyst with Hua'an Securities, said the iron and steel industry should not simply attribute their huge losses to the economic slowdown.
He said steel makers were too aggressive in increasing their size during good times but lacked the capability of negotiating iron ore prices, leading to a worsening overcapacity in producing low-end products.
"The huge losses are just a disastrous result they should swallow after years of indiscriminate expansion," he said.
SOEs reported a combined loss of about 50 billion yuan (US$8 billion), their financial statements revealed.
China COSCO Holdings Co, the country's largest shipping company, topped the list for the second consecutive year, losing 9.56 billion yuan in 2012 after a deficit of 10.45 billion yuan in 2011.
China COSCO was followed by Aluminum Corp of China, the country's largest alumina producer, and Metallurgical Corporation of China Ltd, which reported losses of 8.23 billion yuan and 6.95 billion yuan, respectively.
Half of the top 10 poor-performing companies were in the iron and steel sector, including 4.16 billion yuan in losses for Angang Steel, 3.86 billion yuan for Maanshan Iron & Steel, 3.83 billion yuan for Shandong Iron & Steel, 3.5 billion yuan for Anyang Iron & Steel and 3.25 billion yuan for Valin Steel.
Size ineffective
All the top losing companies blamed their results on the downward trend in their industries and the broader macroeconomy.
However, Luo Xiaoming, chief strategy analyst with Ping An Securities, said they had been depending on their sheer size to avert risks, which proved ineffective last year.
Their size means even a small percentage loss will translate into a big number for them, Luo said, adding that the SOEs in the red were mostly in a sector easily affected by changes in the economic cycle.
Even though the poor performance of such SOEs was "understandable" amid the lingering European debt crisis and a slowing Chinese economy, experts said companies should do more than just pointing fingers at others.
Zhang Zhaowei, an analyst with Hua'an Securities, said the iron and steel industry should not simply attribute their huge losses to the economic slowdown.
He said steel makers were too aggressive in increasing their size during good times but lacked the capability of negotiating iron ore prices, leading to a worsening overcapacity in producing low-end products.
"The huge losses are just a disastrous result they should swallow after years of indiscriminate expansion," he said.
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