Profitability of A-share companies falls to lowest in five years
Return on equity slides to 8.05 per cent in the third quarter from 9.12 per cent a year ago and 12.21 per cent in 2011
The profitability of A-share listed firms - mainland Chinese companies traded on the Shanghai and Shenzhen stock exchanges - has slumped to the lowest in five years as China’s economy continues to stall.
As of October 31, a total of 2,954 A-share listed companies had issued third-quarter earnings reports.
Their return on equity (ROE), which measures the profitability of a company, fell to 8.05 per cent, the lowest since the third quarter of 2011 when it was 12.21 per cent, according to data provider Wind Information’s calculation. The ROE was down from 9.12 per cent in the July-September period of 2015.
By the end of the third quarter, the A-share companies had reaped total revenue of 22.44 trillion yuan (HK$25.7 trillion), up by 3.78 per cent year-on-year. But net profit increased by just 1.87 per cent to 2.08 trillion yuan.
The traditional industrial activity is declining to the profit advantage of rising, new services oriented activity
Shenzhen-listed companies, particularly those traded on the ChiNext board and the SME Board - mostly start-ups and small-and-mid sized firms - have reported better results than the state-owned big players, which are mostly listed on the Shanghai bourse. Analysts say this trend may indicate the gradual emergence of China’s “new economy”, in which service-oriented companies and technology start-ups make a larger contribution to growth.