Performance Growth Remains Resilient, Consumption and Investment Recovery Accelerates : Analysis of Business Performance of Companies on SSE Main Board in 2022

As of April 29, 2023, all 1,689 listed companies (excluding Shanghai Jiaoda Onlly Co., Ltd.) on the Shanghai Stock Exchange (SSE) main board completed the disclosure of their 2022 annual reports. Statistics show that with the robust support of the CPC Central Committee and the State Council's package of measures to stabilize economic performance, companies on SSE main board have actively responded to the impact of multiple complex factors, demonstrated strong resilience in their production and operation, and maintained a steady momentum of recovery.

I. Resisting pressure to achieve positive growth for business performance

In 2022, companies on SSE main board achieved a total operating revenue of RMB 50.55 trillion yuan, up by 6% year on year; a net profit of RMB 4.16 trillion yuan, up by 2% year on year; and a net profit after deducting non-recurring gains and losses at RMB 3.95 trillion yuan, up by 3% year on year. Compared with 2019, these three operating indicators grew at a compound annual growth rate of 8%, 6% and 7% respectively, indicating a steady improvement in operating quality of listed companies. In the first and second half of 2022, the operating revenue grew 9% and 5% year on year, and the net profit grew 6% and -2% year on year respectively. While growth was relatively fast in the first half of the year, growth in the second half slowed but remained basically flat from a year earlier. In the first quarter of 2023, the overall performance of SSE main board resumed an upward trend, with net profit increasing by 5% year on year.

By structure, 60% of companies increased their operating revenue, with 30% achieving operating revenue exceeding RMB 10 billion yuan. Regarding net profits, over 80% of companies were profitable, with nearly 50% reported profit growth; 311 companies incurred losses, representing an increase of 109 companies from the previous year. By ownership, state-owned enterprises (SOEs) collectively achieved operating revenue of RMB 41.91 trillion yuan and a net profit of RMB 3.73 trillion yuan, representing year-on-year growth of 7% and 4% respectively. Specifically, listed companies controlled by central SOEs under the State-owned Assets Supervision and Administration Commission of the State Council showed even more remarkable growth, with operating revenue and net profit up by 11% and 14% year on year respectively. For private enterprises, they achieved a total operating revenue of RMB 8.65 trillion yuan, representing a year-on-year growth of 5%, while the net profit was RMB 432.8 billion yuan, representing a year-on-year decline of 12% in 2022.

Listed companies in the real economy sector showed a stronger momentum of high-quality development, achieving a total operating revenue of RMB 41.25 trillion yuan, a net profit of RMB 1.90 trillion yuan, and a net profit after deducting non-recurring gains and losses of RMB 1.70 trillion yuan. These figures represent year-on-year growth of 8%, 3%, and 5% respectively. The growth rates of the three indicators are all higher than the overall level of SSE main board. The companies achieved a net cash inflow from operating activities of RMB 3.91 trillion yuan, representing a year-on-year growth of 2% and covering twice the profit scale, demonstrating a strong generation of cash inflow from operating activities. The turnover of total assets was 0.70 times, showing an improvement from the previous year, and the asset-liability ratio was 59.73%, with a year-on-year decrease of 0.2 percentage points.

In the context of the overall adjustment of the market, a group of leading companies equipped with key and core technology achieved a rise in market value, and the structure of SSE main board was optimized. So far, the SSE main board has seen a net increase of 8 and 28 companies with a market value of over RMB 100 billion yuan in the past year and past three years, respectively. The net increase for companies with a market value of over RMB 10 billion yuan is 81 and 184 respectively. Among them, advanced manufacturing and modern service industries represented by power equipment, national defense and military industry, pharmaceuticals and biotechnology, communications and transportation have seen a more obvious increase in valuation. The number of companies with a market value of over RMB 100 billion yuan in the past three years has increased from 17 to 33, with the proportion increased from 29% to 38%. The number of companies with a market value of over RMB 10 billion yuan has increased from 240 to 342, with a year-on-year growth of 43%, and the proportion increased to 50%.

II. Playing a prominent role in stabilizing economy and employment

In 2022, companies on SSE main board continued to play the crucial role of large-cap blue-chip in stabilizing the economy, with their total operating revenue accounting for over 40% of GDP. Companies in the real economy sector saw their revenue growth and net profit growth surpassing enterprises above designated size across the country by 2.4 and 6.7 percentage points respectively. The stabilized economy further boosted stable employment. By the end of the year, companies on SSE main board had provided employment for a total of 16.91 million people, up by 180,000 from last year, with nearly 300 companies employing more than 10,000 staff each. Indirect employment calculated through GDP proportion exceeded 200 million people, accounting for nearly 30% of the national employment rate. The total payroll for employees in 2022 was RMB 4.14 trillion yuan, up by 7% year on year.

In correspondence with stable performance growth, a group of pillar-type companies critical to the national economy and people's livelihood were fully committed to consolidating the overall economic situation, and effectively supporting important basic livelihoods such as food, energy, transportation, and healthcare. In terms of food supply, Heilongjiang Agriculture Company Limited planted a total area of 10.43 million mu throughout the year, reporting a new breakthrough in total production of grain and beans with a total output of 6.07 million tons. Jiangsu Provincial Agricultural Reclamation and Development Co., Ltd. achieved a total grain output of 1.26 million tons throughout the year, exceeding the target yield. The combined annual sales of animal husbandry enterprises Leshan Giantstar Farming&Husbandry Corporation Limited, Yunnan Shennong Agricultural Industry Group Co., Ltd., and Hunan New Wellful Co., Ltd. amounted to 4.25 million pigs, representing an 85% year-on-year increase. In terms of energy supply, the five leading thermal power companies had a total power generation capacity of over 1.46 trillion kWh throughout the year. Over 10 gas companies had a combined sales of about 64.5 billion cubic meters of natural gas. The combined commercial coal production of China Shenhua Energy Company Limited, Shaanxi Coal Industry Company Limited, Yankuang Energy Group Company Limited, and China Coal Energy Company Limited was 690 million tons, seeing a 3% year-on-year increase. The total oil and gas equivalent output of Petrochina Company Limited, China Petroleum & Chemical Corporation, and CNOOC Limited was 2,798 million barrels, representing a 5% year-on-year increase. In terms of logistics and transportation, Beijing-Shanghai High Speed Railway Co., Ltd. transported a total of 17.23 million passengers throughout the year, and Daqin Railway Co., Ltd. transported 680 million tons of goods; the combined annual express delivery business of YTO Express Group Co., Ltd. and Deppon Logistics Co., Ltd. amounted to 18.2 billion pieces, representing a 6% year-on-year increase. In terms of healthcare, driven by volume-based procurement and negotiations on the medical insurance catalog, pharmaceutical companies actively controlled their costs, reduced prices, and benefited the people, seeing a decline on the expense ratio of chemical and traditional Chinese medicine companies of 1.76 percentage points.

III. Industrial and supply chains showing a sound pattern of coordinated development

The SSE main board gathers a group of high-quality blue-chip companies with industry representation, which has effectively driven the coordinated development of the upstream and downstream of related industrial chains. For example, new infrastructure, represented by 5G, ultra-high voltage, intercity high-speed railway, and rail transit, gradually became a new engine for economic growth, with huge investment and demand at one end and a constantly upgrading strong consumer market at the other end. The three major telecommunications operators on the SSE main board, based on 5G base stations, radiated the entire domestic mobile communication industry chain from system device to mobile phone chips to terminal device, with completeness and competitiveness, achieving a combined net profit growth rate of 12%. As the world's highest energy transmission technology so far, the companies in ultra-high voltage industry chain such as NARI Technology Co., Ltd., China XD Electric Co., Ltd., Henan Pinggao Electric Co., Ltd., and Beijing Sifang Automation Co., Ltd. focused on research and development of their core components, achieving net profit growth rates of 14%, 14%, 200%, and 20% respectively. In terms of rail transit sector, railway construction leader China Railway Construction Corporation Limited and railway equipment leader CRRC Corporation Limited occupied a commanding share, with net profit growth rates of 8% and 13%, boosting the coordinated development from parts and whole vehicle manufacturing to other supporting infrastructure links.

Thanks to the accelerated layout of the new energy structure, companies on SSE main board achieved a full coverage of all links in the industry chain, from upstream and midstream photovoltaic equipment to downstream photovoltaic power generation enterprises. Major photovoltaic power generation companies collectively generated about 50.7 billion kWh of electricity in the year, representing a year-on-year growth of 45%, driving up the performance of the entire industry chain, with overall operating revenue and net profit increasing by 81% and 102% respectively. The collaborative development of the industry chain spurred the emergence of a number of leading enterprises. The upstream silicon material leader Tongwei Co., Ltd.'s operating revenue and net profit increased by 120% and 217% respectively year on year. The midstream monocrystalline silicon leader Longi Green Energy Technology Co., Ltd.'s operating revenue and net profit increased by 60% and 63% respectively year on year and the downstream Zhejiang Provincial New Energy Investment Group Co., Ltd. achieved an increase in revenue and net profit of 42% and 12% respectively year on year.

Promoted by the policies of growth stabilization and consumption promotion, the automobile industry chain consisting of 89 auto parts and 16 vehicle companies on SSE main board withstood multiple challenges and demonstrated their development potential. Leading car manufacturers such as Great Wall Motor Company Limited and Guangzhou Automobile Group Co., Ltd. achieved year-on-year net profit growth of 23% and 10% respectively. Particularly, the high-speed development of new energy vehicles led to additional demand, benefiting automobile parts companies extensively. Auto parts leaders such as Fuyao Glass Industry Group Co., Ltd. and Ningbo Xusheng Group Co., Ltd. achieved net profit growth of 51% and 70% respectively. While resources were gathered in the automobile industry chain, the spillover effects in niche segments are also generated, so new energy vehicle industry drove the semiconductor and other related industries to achieve growth. Among them, IGBT leader Starpower Semiconductor Ltd.'s new energy business rapidly expanded, achieving a net profit growth of 105% year on year, doubling its performance growth for two consecutive years.

IV. High-end manufacturing showed strong growth, and the real estate sector gradually stabilized.

The high-end equipment manufacturing industry represented by rail transit equipment, aerospace equipment, communication equipment, and new energy power equipment on the SSE main board has become a driving force for economic development. The added value of rail transit equipment, industrial control equipment, energy-heavy equipment, and aerospace equipment products saw a significant increase, with year-on-year net profit growth of 9%, 12%, 19%, and 17% respectively. With the development of the digital economy, the laying of communication cables was accelerated, leading to a 113% year-on-year increase in net profit for communication equipment. Meanwhile, benefiting from energy structure adjustments, photovoltaic equipment and grid equipment achieved net profit growth of 117% and 59% respectively, and the consumption of new energy promoted energy storage equipment companies to improve their quality and efficiency. Focusing on technological breakthrough of pumped storage power generation, China Southern Power Grid Energy Storage Co., Ltd. achieved net profit growth of 33% year on year.

The performance of the real estate sector hit the bottom, showing marginal improvement in its operational situation. In 2022, the overall performance of real estate companies on SSE main board was under pressure, with a 9% year-on-year decline in operating revenue and negative net profit. Looking at the leverage situation, the average asset-liability ratio, excluding advance receipts, was 71%, nearly the same as the previous year. Since 2023, the "three arrows" policy to boost the sound and stable development of the real estate industry through financial support has continued to exert force, and the sales end has shown a clear rebound. Large real estate developers such as Poly Developments and Holdings Group Co., Ltd. and Gemdale Corporation saw a year-on-year increase of 14% and 33%, respectively, in sales contract areas. In the first quarter of 2023, the net profit of real estate companies increased slightly year on year and turned positive quarter on quarter compared to the fourth quarter of 2022. Overall, the financing environment for real estate companies on SSE has been improved, and investment willingness has gradually recovered with the bottom of the industry gradually forming, indicating a gradual recovery of prosperity.

V. Consumption prosperity continued to improve, and fixed asset investment entered expansion phase.

With various policies to expand domestic demand gradually taking effect, the potential for consumption has been gradually released. In 2022, the consumer sector of the SSE main board showed a clear momentum of recovery. In terms of essential consumption, the net profit of the food and beverage industry increased by 11% year on year, and that of the agriculture, forestry, animal husbandry, and fishery industry increased by 50% year on year. In terms of optional consumption, consumer demand continued to be released, and the net profit growth rates for household appliances and building decoration were 21% and 8%, respectively, hinting at the sustained effectiveness of policies to promote consumption. It is worth mentioning that a group of production service companies on SSE main board maintained rapid growth, with net profit growth rates of 103%, 19%, and 48% for the postal industry, loading and unloading services, scientific research and technical services, which provided strong support for the recovery of consumption.

During the continuous recovery of market confidence, fixed asset investment has also entered an expansion phase. In 2022, the total long-term assets expenditure for real economy companies on SSE main board reached 2.76 trillion yuan, a year-on-year increase of 7%. Among them, the manufacturing industry increased by 18%, with outstanding performances in chemical industry, electrical machinery, and automotive industries, which increased by 37%, 24%, and 22% year on year, respectively. At the same time, infrastructure project construction was accelerated, with nine major infrastructure companies, including China State Construction Engineering Corporation Limited, China Railway Construction Corporation Limited, and China Railway Group Limited, signing new orders worth over RMB 15 trillion yuan for the whole year, a year-on-year increase of over 14%. In the first quarter of 2023, the growth rate of the total long-term assets expenditure for real economy companies on SSE main board reached 9%, and the growth rate of new orders for leading infrastructure companies reached 15%, with investment maintaining a relatively fast pace of growth.

VI. Sci-tech innovation became decisive force to promote high-quality development.

In 2022, companies on SSE main board steadfastly implemented the innovation-driven development strategy, with a combined R&D investment of RMB 841.2 billion yuan of companies in the real economy sector, seeing an increase of 18% year on year. Among them, 19 companies, such as China State Construction Engineering Corporation Limited, Petrochina Company Limited, China Mobile Limited, CRRC Corporation Limited and Great Wall Motor Company Limited, invested over RMB 10 billion yuan in R&D, and 96 companies had R&D intensity over 10%, mainly concentrated in the fields of pharmaceutical biotechnology, computer, electronics and communication industries. The significant R&D investment brought impressive market performance for these companies. As of the end of 2022, the average P/E ratio and P/B ratio of high R&D investment companies with an R&D investment of over RMB 100 million yuan and an R&D intensity exceeding 5% were 46 times and 3.59 times, respectively, which were 36 times and 3.15 times higher than the average valuation level of other companies. R&D innovation strength has become a key element to support market value of enterprise.

With the continuous deepening of sci-tech R&D, various industries have accelerated their transformation and upgrading, and emerging momentum has constantly improved. On the one hand, the digital and intelligent transformation was accelerating, with the penetration rate of 5G mobile users of the three major operators exceeding 60%, and the cloud services achieving a year-on-year doubling growth, providing technological support for digitalization in multiple industries across society. Industrial enterprises deepened their layout in intellectualization. The "Comprehensive Automatic Transformation and Upgrading Project" of the container terminal under COSCO Shipping Holdings Co., Ltd. was put into operation. The world's first pile-beam integrated bridge-building machine "Gonggong" developed by China Railway Hi-tech Industry Corporation Limited successfully realized a new bridge-building model from factory prefabrication to intelligent erection. On the other hand, new technology breakthroughs continued to emerge. CNOOC Limited completed the application of the first domestic deepwater subsea oil and gas production system in 2022, achieving a key technological breakthrough in the deep-sea oil and gas development field and breaking the technological monopoly of overseas companies. In the field of new energy, technological innovations frequently appeared as well. The conversion efficiency of silicon heterojunction cells independently developed by photovoltaic leader Longi Green Energy Technology Co., Ltd. reached 26.81%. Dongfang Electric Corporation Limited successfully developed its new energy storage equipment, and constructed the world's first "carbon dioxide + flywheel" energy storage demonstration project.

VII. On-going stability of foreign trade and continuous net inflow of foreign capital

In 2022, the policy of stabilizing foreign trade continued to be strengthened, and companies on SSE main board achieved rapid growth in their foreign trade business. Based on port data, the three major port companies, namely Shanghai International Port (Group) Co., Ltd., Ningbo Zhoushan Port Company Limited and Qingdao Port International Co., Ltd., handled a total 2.2 billion tons of cargo for the year, up by 3% year on year; with a container throughput of 114.75 million TEUs, up by 6% year on year. A total of 956 companies disclosed that their overseas business income earned RMB 6.24 trillion yuan abroad, up by 20% year on year, and a profit of RMB 591.9 billion yuan, up by 23% year on year. A group of companies actively implemented the Belt and Road initiative, seeing a continuous development and expansion of their overseas business. SAIC Motor Corporation Limited's overseas market sales reached 1.02 million vehicles, up by 46% year on year, reaching a historic high. The Cambodian Tatay Hydroelectric Station invested and operated by Sinomach Heavy Equipment Group Co., Ltd. generated 1.2 billion kWh of electricity per year, reducing carbon emissions by 570,000 tons, making contributions to optimizing infrastructure construction and improving local people's livelihoods along the Belt and Road countries. Relying on solid core technology accumulation, a group of SSE companies achieved products and technology going global. Wanhua Chemical Group Co., Ltd. insists on independent innovation and has grown into the world's largest MDI manufacturer with a market share of 27%. Its overseas business income exceeds RMB 80 billion yuan for the year, with a net profit of over RMB 10 billion yuan. Longi Green Energy Technology Co., Ltd. deeply engaged in the photovoltaic industry, with an annual output of 85 GW of monocrystalline silicon wafers, ranking first in the world for three consecutive years.

Accompanied by continuous breakthroughs in high-standard opening up, foreign capital maintained high attention to the domestic market. On the one hand, the attractiveness of the domestic capital market to foreign capital remains unabated. By the end of 2022, foreign holdings on SSE main board represented by Shanghai-Hong Kong Stock Connect, Qualified Foreign Institutional Investors (QFII), and Renminbi Qualified Foreign Institutional Investors (RQFII) reached RMB 1.64 trillion yuan, and the total net purchase by foreign capital throughout the year was approximately RMB 92.8 billion yuan, with the number of companies receiving increased foreign capital holding totaling 892. On the other hand, companies on SSE main board actively expanded their overseas financing channels. In 2022, 19 companies on SSE main board issued a total of RMB 162.1 billion yuan of overseas bonds; 16 companies on SSE main board disclosed their GDR (Global Depositary Receipt) issuance announcements. Companies such as Ming Yang Smart Energy Group Limited, Ningbo Shanshan Co., Ltd., Keda Industrial Group Co., Ltd., and Joincare Pharmaceutical Group Industry Co., Ltd., completed their respective GDR issuances and successfully listed on exchanges in the UK and Switzerland, raising a total of USD 1.3 billion. These actions played a positive leading and demonstration role, steadily accelerating the pace of the "going global" strategy.

VIII. Direct financing remained stable and M&A restructuring promoted the optimization of industrial layout.

In 2022, the SSE stock and bond markets continued to play a positive role in providing financing support for companies on SSE main board. In terms of initial public offerings (IPO) financing, a total of 31 new companies listed on the SSE main board throughout the year, with a financing scale of RMB 106.8 billion yuan. In terms of refinancing, a total of 104 companies issued non-public offering shares, raising RMB 270.6 billion yuan; 54 companies issued convertible corporate bonds, raising RMB 136.1 billion yuan. In terms of bond financing, the SSE bond market raised about RMB 302 billion yuan for real economy companies on the SSE main board throughout the year. With strong support from diverse financing channels, the financing scale of real economy companies on the SSE main board maintained steady growth, with a total financing of RMB 12.95 trillion yuan throughout the year, a year-on-year increase of 6%, including direct financing of RMB 1.32 trillion yuan.

At the same time, companies on SSE main board effectively utilized the capital market to enhance their own quality and strength. In 2022, 56 major asset restructuring plans were disclosed by companies on SSE main board, with a total transaction amount of RMB 236.6 billion yuan. Traditional industries actively laid out new businesses through M&A and restructuring, with approximately 23% of the targeted companies in high-end manufacturing, energy conservation and environmental protection, new energy and other emerging industries. Meanwhile, many central SOE groups accelerated their efforts to integrate resources and improve their operational efficiency through restructuring. For example, China Avionics Systems Co., Ltd. absorbed and merged AVIC Electromechanical Systems Co., Ltd. to achieve the deep integration of aviation electronic systems and aviation electromechanical systems; Ningxia Building Materials Group Co., Ltd. and Gansu Qilianshan Cement Group Co., Ltd. under China National Building Material Group Co., Ltd. adjusted their business in various segments through asset sales and swaps respectively, promoting the business integration after the "merger of two major building materials central SOEs" and addressing the issue of horizontal competition.

IX. Cash dividends reached a record high, and shareholding increases and share repurchases became important means of market stabilization.

In 2022, companies on SSE main board continued to benefit investors with substantial dividends. Throughout the year, a total of 1,194 companies launched their dividend plans, accounting for 87% of the number of profitable companies. The total amount of cash dividends was RMB 1.67 trillion yuan, a year-on-year increase of 13%. Specifically, 161 companies distributed cash dividends of over RMB 1 billion yuan, and 26 companies distributed cash dividends of over RMB 10 billion yuan. Among them, Industrial and Commercial Bank of China Limited, China Construction Bank Corporation, and China Mobile Limited's cash dividend totals were RMB 108.2 billion yuan, RMB 97.3 billion yuan, and RMB 82.1 billion yuan, respectively. In terms of dividend ratios, the cash dividend ratios of 864 companies exceeded 30%, accounting for 72% of the total; 287 companies' dividend ratios exceeded 50%; and 635 companies' dividend ratios exceeded 30% for three consecutive years. In terms of dividend yields, based on the year-end closing price under the holistic approach, the average dividend yield in 2022 was 3.6%, up by 0.5 percentage points from the previous year. Among them, 113 companies' dividend yields exceeded 5% and 34 companies had stable dividend yields exceeding 5% for three consecutive years, suggesting an increasingly strong market culture of cash dividends.

Share repurchases and shareholding increases remained high and became important means for listed companies to boost market confidence. In 2022, 174 companies on SSE main board disclosed their repurchase plans, with a total proposed upper limit repurchase amount of over RMB 67.9 billion yuan and a total increase in the amount of planned implementation of about RMB 34.8 billion yuan. Among them, 11 companies, including Ping An Insurance (Group) Company of China, Ltd., Baoshan Iron & Steel Co., Ltd., China United Network Communications Limited and China Petroleum & Chemical Corporation, spent over RMB 1 billion yuan on their repurchase plans. As for shareholding increase, there were 129 newly announced plans by important shareholders to increase their shareholdings, with a total proposed upper limit amount of over RMB 34.2 billion yuan. Major shareholders of industry leaders such as China Mobile Limited, SAIC Motor Corporation Limited, Kweichow Moutai Co., Ltd. and Hengli Petrochemical Co., Ltd. all implemented large increases in their shareholdings, demonstrating their confidence in the future development prospect and long-term value of their respective companies. The information on share repurchases and shareholding increases effectively boosted the stock prices of these companies. On the 5th and 10th trading days after the announcement, their relative cumulative deviation from the average increase in the market was 1.7% and 2.1%, respectively. Nearly 70% of the companies saw their stock prices rise on the next trading day after the announcement, with an average increase of 3.2%.

X. Green development achieved remarkable results, and ESG concept contributed to rural revitalization.

In 2022, companies on SSE main board implemented the philosophy of green development, focusing on promoting carbon reduction, pollution control, green expansion and accelerated growth. Over 870 companies disclosed ESG reports, sustainable development reports, or corporate social responsibility reports, setting a record high of disclosures. More than 1,300 companies established environmental protection mechanisms, with a total investment of nearly RMB 150 billion yuan during the reporting period. Over 1,200 companies actively adopted carbon reduction measures, reducing carbon dioxide emissions equivalent to over 800 million tons. The chemical, equipment, and automotive industries achieved significant results in carbon reduction. China National Chemical Engineering Co., Ltd. optimized the green production process, with a total energy consumption of 603,700 tons of standard coal, a year-on-year decrease of 9%. CRRC Corporation Limited developed green production equipment, saving approximately 30% of the primer usage. The five major automakers, including Guangzhou Automobile Group Co., Ltd. and SAIC Motor Corporation Limited, achieved new energy vehicle sales of approximately 1.7 million vehicles, a year-on-year increase of 57%. In addition, green finance played a positive role, with a total of RMB 75.2 billion yuan of green bonds issued in the SSE bond market in 2022, a year-on-year increase of 9%.

Based on their own resource advantages and characteristics of their industry, companies on SSE main board actively consolidated the results of poverty alleviation and helped achieve rural revitalization. The annual reports showed that about 750 companies aided the front line of poverty alleviation, with a total investment of nearly RMB 80 billion yuan. Through various measures such as fund assistance, consumption assistance, industrial assistance, employment assistance and talent assistance, they promoted the sustainable and high-quality development of local industries. Among them, leading companies in various industries leveraged their strengths. China United Network Communications Limited sent 1,552 officers to designated assistance areas, contributing an assistance fund of RMB 230 million yuan. Eastern Air Logistics Co., Ltd. provided 520 tons of free air transport capacity for Shuangjiang and Cangyuan, transporting 8,021 items for free. China State Construction Engineering Corporation Limited established a remote teaching station for rural revitalization at Tsinghua University, providing online training for 156,000 community-level cadres, rural revitalization pioneers, and enterprise professionals.

XI. The normalized delisting pattern was further reinforced, and the risks of listed companies showed a decreasing trend.

Since the beginning of 2023, 11 companies have been confirmed for delisting. Among them, 4 companies triggered delisting indicators related to trading, 3 companies are expected to be delisted for major violations, and 4 companies triggered delisting indicators related to finances after the disclosure of their 2022 annual report. Besides, another 17 companies have received delisting risk warnings. Among them, 6, 9 and 5 companies triggered the "operating revenue + net profit" combination indicator, showed negative net assets, and received audit opinions triggering *ST respectively, with three companies triggering multiple indicators. In general, the diversified delisting system manifests its power, and delisting is becoming more normalized, further reinforcing the elimination of weaker companies.

On the other hand, companies on SSE main board have made further progress in mitigating various risks based on previously achieved results. In terms of debt clearance and relief from guarantees, there were still 17 companies with guarantees at the end of the year, a decrease of 13 from the previous year. The total amount of guarantees decreased by 55% to RMB 12.2 billion yuan. In terms of stock pledges, the total market value of stock pledges decreased by RMB 376.2 billion yuan, down 22%, and the total amount of outstanding borrowings decreased by RMB 43.1 billion yuan, down 6%, indicating a continued decrease in pledge scale. The number of companies with high pledge proportions, whose major shareholders have pledged over 80% of their shareholdings, fell by about 30% over the year, and the remaining quantity now only accounts for 2% of all SSE companies.

XII. The turning-point for accelerated recovery has appeared in Q1 of 2023 and the positive momentum continues to be consolidated

In Q1 of 2023, the policies aimed at stabilizing growth continued to yield positive results, with gradually picked up market demand and increased favorable changes. Companies on SSE main board achieved a total operating revenue of RMB 12.16 trillion yuan in Q1 of 2023, a net profit of RMB 1.20 trillion yuan, up by 4% and 5% year on year respectively.

Specifically, the industries that were most impacted previously, such as the contact-based consumption sector, showed signs of accelerated recovery. The net profits of accommodation and catering, travel, and cinema chains increased by 185%, 139%, and 200% year on year respectively. The growth rates of major consumer products (e.g. food & beverages, household appliances) are higher than Q4 of 2022. The year-on-year growth rates accelerated by 10 and 4 percentage points respectively. Some previously loss-making industries showed significantly lower losses. In the first quarter of 2023, the aviation transportation industry's losses were RMB 7.2 billion yuan, decreased by RMB 17.8 billion yuan year on year and RMB 30.2 billion yuan quarter on quarter compared to the fourth quarter of 2022. The steel industry's profits were RMB 2.2 billion yuan in Q1 of 2023, recoving from losses in Q4 of 2022, showing significant improvement. Data showed that 288 companies incurred losses in Q1, with a total loss of RMB 28 billion yuan. The number of companies and amount of losses both decreased compared to the same period last year, indicating an overall improvement in the production and operation of listed companies.

Overall, the economic recovery process is expected to continue in 2023, and the market demand is gradually recovering. The companies on SSE main board saw a good start in the first quarter, the positive trend of recovery and improvement has been further consolidated.