Chinese listed companies to deliver upbeat earnings for third quarter, riding stimulus measures, commodities rally
- Shanghai- and Shenzhen-listed firms probably recorded an average of 3.1 per cent profit increase in the September quarter from a year ago: Zheshang Securities
- CICC says profits for the 948 companies it covers may have risen by 12 per cent in the third quarter, compared with a 2 per cent increase in the previous quarter
Profits for Chinese listed companies are likely to have rebounded in the third quarter, as the government’s campaign to support growth worked its way into corporate earnings and as higher commodity prices boosted profitability at raw-material producers, analysts said as the earnings season gathers steam.
The 5,000-plus companies trading on the Shanghai and Shenzhen exchanges probably recorded an average 3.1 per cent profit increase from a year earlier for the three-month period that ended September, according to Zheshang Securities. That compared with a 9.6 per cent decline in the second quarter. Earnings growth will probably accelerate to 7.3 per cent this quarter, given the lower base last year, the brokerage said.
China International Capital Corp (CICC) is even more sanguine, predicting that profits for the 948 companies covered by the investment bank may have risen by 12 per cent in the third quarter, compared with a 2 per cent increase in the previous quarter.
This earnings season, which will see most of the companies releasing the quarterly results in the coming two weeks, could provide balm for the nation’s troubled US$9.4 trillion onshore stock markets. Stocks have been struggling even after the securities regulator took a slew of measures to bolster sentiment. Steps such as tightening of new share supply and restrictions on short selling failed to dispel the gloom, with the CSI 300 Index hitting an 11-month low on Wednesday after posting a decline of more than 6 per cent this year.
“The second quarter may be a bottom for both revenue and earnings,” said Wang Yang, an analyst at Zheshang Securities. “Corporate earnings are expected to improve further after the implementation of growth-stabilising policies in the second half.”
As of last week, about 6 per cent of onshore listed companies had disclosed preliminary quarterly results or earnings forecasts, with three quarters of these entities expecting profit increases, according to Topsperity Securities.