Listed mainland companies reported an average 32 per cent rise in profit in the first quarter of the year, thanks to strong earnings posted in the cement, biomedicine and food sectors.
Data from financial information and software provider Wind Information shows 338 A-share firms that published quarterly earnings reports before Wednesday this week posted total profits of 23 billion yuan (HK$27.35 billion), translating into a 32.2 per cent year-on-year rise.
But the increase would not be enough to restore investor confidence amid further tightening monetary policies, analysts said.
In the first quarter of 2010, mainland-listed companies posted a 70 per cent profit jump from the previous year.
'The fast-expanding economy and high inflation are set to usher in more tightening measures,' said Shenyin Wanguo Securities analyst Li Xiaoxuan. 'Even if the central government stops further monetary tightening, it will be some time before investors regain confidence in the economy and corporate earnings.'
China's consumer inflation jumped 5.4 per cent last month, the highest in nearly three years. The mainland's gross domestic product expanded 9.7 per cent in the first three months.
Economic analysts predict the central bank will raise deposit and lending rates for the third time this year within the second quarter.
The benchmark Shanghai Composite Index has gained 7.8 per cent so far this year following a 14.3 per cent decline last year, but thousands of retail investors on the mainland are holding off buying though some stocks are said to be undervalued.
Citic Securities, the mainland's largest brokerage, estimated profit growth of mainland-listed companies would range from 16 per cent to 25 per cent this year, slowing from the 30 per cent level seen last year. But brokerages are still bearish on the market outlook because of low buying interest.
In the first quarter, Anhui Conch Cement - listed in Hong Kong and Shanghai - reported a 180 per cent profit jump on rising sales volume and higher product prices.
The first-quarter performance by the listed firms beat the 22.4 per cent profit increase reported by the country's 120-odd leading state-owned companies.
The State-owned Assets Supervision and Administration Commission said on Wednesday that the state-owned firms earned 208.6 billion yuan in the first quarter. The percentage increase by the firms slowed from 40.2 per cent a year ago.