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China’s listed firms expect better earnings in Q3 as economy rebounds

作者:admin 2020-10-11

China’s listed firms expect better earnings in Q3 as economy rebounds  第1张

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The third quarter earnings season is set to kick off in China, with more than 40 percent of
A-share firms that have revealed earnings forecasts expecting a better performance as the Chinese economy continues a steady recovery from the COVID-19 epidemic.

As of 8pm Thursday, 609 firms listed on Chinese mainland bourses had disclosed earnings forecasts for the first three quarters, with 262, or 43 percent of them, anticipating performance improvements over the first three quarters, China Securities Journal reported.

Net profits of 210 listed firms are estimated to grow by more than 10 percent year-on-year in the first three quarters, according to the report, and 88 firms expect their net profits to soar more than 100 percent during the period, while 30 firms projecting an earnings surge of more than 300 percent. 

Those sitting atop the net profit forecasts rankings largely falls under the category of bio pharmaceuticals, food and beverage, computer and telecommunications, and electronic equipment manufacturing. These winners got a massive earnings boost from the nation's anti-epidemic efforts and the thriving stay-at-home economy during the first six months.

Shenzhen-listed hog breeder Ningbo Tech-bank is currently top-ranked with its net profits expected to surge from 11.94 million ($1.78 million) to 2.9 billion yuan year-on-year, the company revealed in a filing on Friday. 

China’s listed firms expect better earnings in Q3 as economy rebounds  第2张

File photo:VCG

Sansure Biotech, traded on the STAR Market in Shanghai, estimated its net profits would grow 13,457 percent year-on-year to 1.73 billion yuan in January-September, according to its prospectus in August. The COVID-19 nucleic acid testing kit developer debuted on the A-share market in late August.

Roughly 4,000 firms are currently listed on the mainland market. Other than the STAR 50 Index tracking the tech-heavy STAR Market, all three other major indices posted a gain in the third quarter.

"Expectations for a better performance have already been reflected in the previous stock rallies, in line with market estimates," Wu Jinduo, head of fixed income at the research institute of Great Wall Securities, told the Global Times on Saturday. 

The Chinese economy is on course to continue its rebound in the third quarter after swinging back to positive growth in the second quarter, Wu said.

The economy contracted 6.8 percent in the first quarter, its first contraction in decades, official data showed.

Firms hoping for better-than-expected earnings are mostly in the fields of medicine, food and beverage, and farm machines, which have either benefited from demands for anti-epidemic supplies and the development of vaccines or have shown to have been barely impacted by the pandemic, said Wu, adding that cement and glass, which are among the sectors benefiting from increased investment in infrastructure and real estate, are also expected to post stable performance.

Listed firms in the services sector that were battered by the pandemic are expected to post poor earnings, but their plight is likely to be consciously eased in the last quarter, the analyst reckoned, noting that the performance of listed firms and their corporate governance lay the micro groundwork for the economy's quality growth.

In a fresh push to build a healthy capital market, the State Council, the country's cabinet, on Friday unveiled a document urging improved quality of listed firms. 

Global Times 

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