As of October 31, 2017, the 1,368 companies listed on the Shanghai Stock Exchange (SSE) released their reports for the third quarter of the year as scheduled. The data show that under the guidance of the new development outlook, the overall pattern of high-quality development among the SSE-listed companies is taking shape, the effect of the supply-side structural reform is further manifested, the emerging industries continue to develop rapidly, the economic development is increasingly balanced, coordinated and sustainable, and the general tone of stability with good momentum for the whole year has been established.
First of all, both the operating income and the net profit recorded increases, and the inner quality of the growth of the real economy improved significantly. According to statistics, in the first three quarters of the year, the companies listed on the SSE posted a total of RMB20.67 trillion in operating income, an increase of 17.67% year on year, and a total of RMB2.04 trillion in net profit, up by 16.68% from a year earlier, and nearly 60% of the companies achieved growths. Specifically, the real economy realized the steady growth, as the listed companies in non-financial industries totaled an operating income of RMB16.08 trillion and a net profit of RMB0.76 trillion, up by 21.29% and 39.52% respectively year on year. More encouraging is that the net profit after extraordinary gains and losses reached RMB677.861 billion, an increase of up to 57.00% year on year, indicating the significant improvement in the inner quality of the growth of the real economy. As the vigorous economy will boost the financial sector, the financial industry saw the business remain stable on the whole. The quality of bank assets was generally improved, and the four major commercial banks, namely, Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC) and Construction Bank of China (CBC), saw the non-performing loan ratios decline continuously, down by about 0.02 to 0.4 percentage point from early this year; the performance of the insurance industry grew remarkably, as in the first three quarters the four major insurance companies, namely, China Life Insurance, China Ping An, China Pacific Insurance, and New China Life Insurance, attained a total net profit of RMB109.111 billion, a substantial increase of 30% year on year.
Secondly, the performance of the traditional cyclical industries was brilliant, with the health, cultural and consumer industries as the new growth engines. In the first three quarters, driven by the policy of optimizing the allocation of the stock resources, increasing the quality incremental supplies and moderately expanding the aggregate demand, the traditional industries on the supply side saw the performance significantly improved, and the coal, iron and steel, non-ferrous and other cyclical industries registered RMB2.29 trillion of operating income and RMB0.14 trillion of net profit in total, up by 38.82% and 216.21% respectively year on year. On the consumer demand side, the comprehensive health, green low-carbon, modern supply chain and other fields formed the new growth engines. The pharmaceutical manufacturing totaled RMB249.1 billion in operating income and RMB31.261 billion in net profit, representing gains of 9.53% and 20% respectively year on year. The culture, media and other industries continued to grow, posting RMB18.809 billion for operating income and RMB2.481 billion for net profit, up by 15.78% and 10.03% respectively from a year earlier.
Thirdly, the breakthroughs were made in the high-end manufacturing, and the green industry achieved sustained growth. Propelled by the new development concepts of innovation, coordination, green, openness and sharing, the companies in advanced manufacturing and high-end manufacturing were active in promoting technological changes, with the new driving forces emerging profusely. The companies in aircraft engine, radar and other high-end manufacturing fields such as AECC Aviation Power Co., Ltd. and Anhui Sun Create Electronics Co., Ltd. saw their net profits grow by more than 20%. The green and environmental protection industry turned out a strong performer. Zhejiang Weiming Environment Protection Co., Ltd. engaged in treatment of solid waste reported an increase of 47.26% in net profit and the growth rate of Beijing GeoEnviron Engineering and Technology, Inc. involved in soil remediation reached 71.89%. The facts show that the economic development has been much more inclusive and coordinated, thus laying a solid foundation for China’s high quality economic growth.
Fourthly, notable achievements were made in reform of state-owned enterprises, and the private enterprises continued to demonstrate vitality. In the first three quarters, the pattern of the state-owned economy was optimized more rapidly, progress was continuously made in restructuring, strategic reorganization and the reform in mixed ownership, greatly stimulating the vitality, energy and potential of the state-owned economy. In the period, the state-owned enterprises listed on the SSE recorded an operating income of RMB17.69 trillion, a year-on-year increase of 15.41%, and a net profit of RMB1.82 trillion, up by 14.78% from a year earlier. The reform of the state-owned enterprises has resulted in a number of typical cases highly concerned by the market and featuring the demonstration effect. For example, China Shipbuilding Industry Company Limited acquired the equities of Dalian Shipbuilding Industry Co., Ltd. (DSIC) and Wuchang Shipbuilding Industry Co., Ltd. (WSIC) by issuing shares, substantially advancing the debt-to-equity swap and the leverage reduction. COSCO Shipping Holdings Co., Ltd. acquired Orient Overseas Container Line Ltd. (OOCL) through tender offer, making itself one of the top three container shipping companies in the world and resulting in a representative case of cross-border mergers and acquisitions. Meanwhile, further maintaining the development vigor, the private enterprises achieved an operating income of RMB2.97 trillion, up by 33.21% year on year, and a net profit of RMB0.22 trillion, an increase of 35.44% from the same period of last year. Relying on the capital market, some private enterprises have developed into the industrial leaders, such as Fuyao Glass Industry Group Co., Ltd., Jiangsu Hengrui Medicine Co., Ltd. and Yonghui Superstores Co., Ltd.
Fifthly, harmonized development was achieved in different regions, and the “Belt & Road” initiative was pushed forward in a steady way. As an important strategy for China’s comprehensive and coordinated development, strong support was provided for the old revolutionary base areas, ethnic areas, border areas and poverty-stricken areas to speed up the development. Driven by the policies such as strengthening the development of the west regions and accelerating the rejuvenation of the old industrial bases in Northeast China and other regions, the listed companies in central, western and other regions in China reported significant improvement in performance. The listed companies in Xinjiang Uyghur Autonomous Region, for example, posted a total net profit of RMB6.694 billion, a year-on-year increase of 69.37%. In addition, the “Belt and Road” initiative was advanced in a sustained and stable way, as a large number of central-government-administrated state-owned enterprises achieved initial success in expanding their overseas markets, with the volume of the newly signed overseas contracts growing steadily. For example, the volume of the overseas contracts newly signed by China State Construction Engineering Corporation Ltd. (CSCEC) from January to September 2017 amounted to RMB144 billion, up by 56.3% on a year-on-year basis; in the same period, China Communications Construction Co., Ltd. (CCCC) saw the volume of the newly signed contracts for the overseas projects increase by 30.79% year on year.
Sixthly, the newly listed companies reported stable operating incomes, and the new leading blue-chip companies were emerging. As a new force in the capital market, in the first three quarters, more than 180 companies newly listed on the SSE registered a total operating income of RMB315.259 billion, up by 17.69% from a year earlier, and a total net profit of RMB29.401 billion, up by 28.10% year on year. In terms of the individual companies, except a small number of companies reporting losses, most of the newly listed companies were profitable, and nearly 30% of them grew by more than 30% in net profit, resulting in a number of new blue-chip companies as a new driving force. For example, Gigadevice Semiconductor (Beijing) Inc., Shenzhen Kinwong Electronic Co., Ltd. and other companies in integrated circuit, printed circuit and other strategic emerging industries realized high-speed growth in operating income and net profit.
On the other hand, the Q3 reports also showed that with the backward production capacity being eliminated from the market more rapidly, some listed companies were still in the face of the operating difficulties in the current stage, as 108 companies reported losses, somewhat improved compared with over 120 unprofitable companies according to the semi-annual reports. The common problems for these companies included unclear main business, heavy historical burdens, ambiguous directions in transformation and others, with the relevant risks requiring much attention.