Steady Steps of Improvement: SSE-listed Companies Complete Disclosure of 2023 Third Quarter Reports

As of October 31, 2023, except for several red-chip companies listed in multiple regions, namely Semiconductor Manufacturing International Corporation, BeiGene, Ltd., Huahong Group, and InnoCare Pharma Limited, a total of 2,248 Shanghai Stock Exchange (SSE) listed companies have completed the disclosure of their 2023 third quarter reports. With strong support from a series of national policies aimed at stabilizing the economy, safeguarding livelihoods, and promoting consumption, the overall operating performance of SSE-listed companies has entered a path of gradual recovery, with positive changes observed in various industries and indicators.

I. Overall performance remains stable with noticeable signs of gradual improvement 

In the first three quarters of 2023, the total operating revenue of SSE-listed companies amounted to RMB 38.44 trillion yuan, an increase of 1.6% year on year. Net profit stood at RMB 3.51 trillion yuan, with net profit after deducting non-recurring gains and losses at RMB 3.35 trillion yuan, representing a slight year-on-year decrease of 1.5% and 0.5% respectively, indicating a narrowed decline compared to the first half of the year. Among them, 1,314 companies achieved a year-on-year revenue growth, with 306 companies experiencing a growth rate exceeding 30%. A total of 1,837 companies reported profits, accounting for 82% of the total, with 936 companies recording a year-on-year increase in net profit, 622 companies achieving a net profit growth rate exceeding 30%, and 125 companies turning losses into profits. Additionally, 411 companies reported losses, with 102 companies reducing their losses and the total loss narrowing by approximately 53% compared to the same period last year, indicating a continuous expansion of profitability.

In terms of industries, real-economy companies achieved operating revenue of RMB 31.79 trillion yuan in the first three quarters, a year-on-year increase of 1.9%. Their net profit and net profit after deducting non-recurring gains and losses amounted to RMB 1.69 trillion yuan and RMB 1.55 trillion yuan respectively, with the decline significantly narrowing by 4.6 and 5.2 percentage points compared to the first half of the year, indicating a favorable trend of gradual improvement. Financial companies maintained relatively stable year-on-year operating revenue and net profit. Looking at the quarterly performance, real-economy companies achieved a growth of 3% in operating revenue, 8% in net profit, and 8% in net profit after deducting non-recurring gains and losses in the third quarter. Among them, 809 companies saw a year-on-year increase in quarterly net profit, 140 companies saw a year-on-year decrease in losses, and 156 companies turned losses into profits. In terms of quarter-on-quarter performance, 672 companies experienced an increase in net profit, 152 companies reduced their losses, and 116 companies turned losses into profits. Data indicates that over 60% of the companies have entered a stable recovery trajectory.

II. Contact-based consumption is accelerating its recovery, with steady growth in commodity sales

Since the beginning of the third quarter, contact-based service industries such as hotel and travel have experienced accelerated recovery due to the peak tourism season. With the increase in residents' travel intentions, the aviation and airport industry has turned their losses into profits, with a total profit of RMB 5.2 billion yuan in the first three quarters, a year-on-year increase of RMB 107.3 billion yuan, of which the three major airlines, Air China Limited, China Southern Airlines Co., Ltd., and China Eastern Airlines Group, had a combined profit of RMB 12.1 billion yuan in a single quarter. The net profit of railways and highways in the first three quarters increased by 63% year on year, with Beijing-Shanghai High Speed Railway Co., Ltd. significantly turning losses around and achieving a quarter-on-quarter growth of 30%; Jiangsu Expressway Company Limited increased by 30% year on year in the first three quarters, with a quarter-on-quarter growth of 24%. Among them, the daily average traffic volume of the Shanghai-Nanjing Expressway reached 110,000 vehicles in the third quarter, surpassing the peak value in 2019. The hotel and catering industry and the tourism industry also significantly reversed their losses, with profits of RMB 1.9 billion yuan and RMB 1.4 billion yuan respectively in the first three quarters, reaching 107% and 93% of the same period in 2019, with quarter-on-quarter growth of 36% and 70%. Shanghai Jin Jiang International Hotels Co., Ltd. saw a year-on-year increase in net profit by 18 times in the first three quarters, with an average RevPAR of its domestic hotels in the third quarter reaching 113% of the same period in 2019; BTG Hotels (Group) Co., Ltd. also reversed losses year on year in the first three quarters, nearly doubling its profit in a single quarter. Huangshan Tourism Development Co., Ltd. received a total of 3.53 million tourists in Huangshan Scenic Area in the first three quarters, a year-on-year increase of 221%; Changbai Mountain's main scenic area received a total of 2.25 million visitors, a year-on-year increase of 255%, surpassing the same period in 2019.

Benefiting from the release of pent-up demand and the continuous implementation of supportive policies, commodity sales showcased strong momentum. The net profit of the automotive industry increased by 4% year on year in the first three quarters, with a quarter-on-quarter growth of 18%, of which the net profit of passenger cars increased by 42% quarter-on-quarter. The increase in consumption tendency has influenced the net profit growth of the food and beverage, household appliances, home goods, and beauty care industries, with year-on-year increases of 17%, 10%, 8%, and 22% respectively in the first three quarters. Oppein Home Group Inc., a leader in custom home furnishing, benefited from the boosting policies related to home consumption and the decrease in costs, reaching a net profit increase of 16% year on year; Eastroc Beverage (Group) Co., Ltd. actively explored multi-category development, achieving a net profit increase of 42% year on year; Haier Smart Home Co., Ltd.'s market share continued to improve for its advantageous businesses such as refrigerators and washing machines, with a net profit increase of 13% year on year. In addition, the commerce and retail industry is also steadily recovering, with a 15% year-on-year increase in net profit in the first three quarters, and the digital economy is further innovating consumer scenarios. Zhejiang China Commodities City Group Co., Ltd continuously strengthen their digital trade service capabilities, with a year-on-year increase of 122% in GMV on the Chinagoods platform and a significant increase in revenue and profit; China Tourism Group Duty Free Corporation Limited continues to deepen its duty-free market, effectively enhancing consumer brand recognition through diversified marketing channels, with a year-on-year increase of 12% in net profit in the first three quarters and a quarter-on-quarter increase of 94%.

III. Technology-driven leading enterprises are displaying strong growth momentum, which enhances the strengthening and supplementation of industrial chains

The strategic emerging industries represented by STAR Market companies have become a strong force in helping China achieve sci-tech self-reliance and self-strengthening at higher levels. In the advanced manufacturing sector, leaders in the domestic semiconductor equipment industry such as Advanced Micro-Fabrication Equipment Inc. China, ACM Research (Shanghai) Inc., Hwatsing Technology Co., Ltd., Piotech Inc., and Kingsemi Co., Ltd. have effectively promoted the process of independent development of China's integrated circuit industry. In the first three quarters, their combined operating revenue and net profit increased by 40% and 41% year on year respectively. The high-end equipment manufacturing industries such as industrial machine tools, aerospace, advanced rail transportation, and laser equipment continue to burst with vitality, laying a solid foundation for building a manufacturing power with key and core technology and stable growth. For example, Zhejiang Supcon Technology Co., Ltd., a leader in industrial automation control, continues to expand its overseas market, with operating revenue and net profit increasing by 34% and 46% year on year, respectively. Kede Numerical Control Co., Ltd., a leader in five-axis CNC machine tool, has seen a significant increase in orders in the first three quarters, with operating revenue and net profit increasing by 42% and 94% year on year, respectively. In the green and low-carbon sector, leading companies in the photovoltaic industry such as Jinko Solar Co., Ltd., Trina Solar Co., Ltd., and CSI Solar Co., Ltd. continue to leverage their advantages in technological innovation, upstream and downstream integration, and globalization, increasing their net profits by 279%, 111%, and 126% year on year in the first three quarters, respectively. In the specialized equipment sector, companies like Wuxi Autowell Technology Co., Ltd. and Qingdao Gaoce Technology Co., Ltd. have ample order backlogs, demonstrating strong market competitiveness and profitability. In the biopharmaceutical sector, a group of innovative pharmaceutical companies are stepping up their paces in commercialization, with a combined operating revenue of over RMB 9.2 billion yuan in the first three quarters. Companies like Shanghai Allist Pharmaceuticals Co., Ltd., Sunshine Guojian Pharmaceutical (Shanghai) Co., Ltd., and Shenzhen Chipscreen Biosciences Co., Ltd. have doubled their net profits. Recently, Toripalimab developed by Shanghai Junshi Biosciences Co., Ltd. has become the first and only drug in the US approved for the treatment of nasopharyngeal cancer, and it is also the first innovative biopharmaceutical developed and produced in China to be approved for market launch by the US Food and Drug Administration (FDA) .

In addition to the STAR Market, a group of technology-driven companies on the SSE Main Board are also playing a continuous leading role in innovation, enhancing the resilience and vitality of the industrial chain and supply chain. The high-end equipment industry, represented by marine equipment and aviation equipment, is releasing new momentum, with net profits increasing by 260% and 30% year on year, respectively. Avic Shenyang Aircraft Company Limited and AVIC Airborne Systems Co., Ltd., as leaders in the aviation equipment industry, have achieved net profit growth rates of over 30%. China CSSC Holdings Limited has completed the delivery of the world's first M350 floating production and storage offloading vessel and other marine engineering equipment, and the first domestically-produced large-scale cruise ship has been successfully launched. The telecommunication industry, represented by the three major telecom operators, continues to grow, with a combined net profit increase of 8% in the first three quarters. The total number of 5G package users has exceeded 1.3 billion, and active exploration of new technologies such as 6G, computing power, and satellite communication is underway. Innovative achievements in the automotive industry chain are emerging, synergistically driving the growth engine of the industrial chain and highlighting its position. Automotive parts companies achieved a 25% performance growth in the first three quarters, and automakers such as SAIC, GAC, and Foton, representing domestic new energy vehicle brands, sold a total of 390,000 new energy vehicles in the first three quarters, representing a year-on-year increase of 97%. SAIC Motor Corporation Limited is vigorously promoting the installation of solid-state batteries on vehicles and has achieved a breakthrough in seamless positioning technology based on BeiDou multi-sensor fusion. Fuyao Glass Industry Group Co., Ltd. has seized the market trend of new energy vehicles and intelligence, vigorously promoting the development of high-value-added products such as HUD glass, panoramic sunroof glass, and dimmable glass. Longi Green Energy Technology Co., Ltd. and other leading companies in the photovoltaic industry chain have continuously committed themselves to research and innovation in recent years, successively breaking multiple world records for photovoltaic cell conversion efficiency, establishing their position as the vane leading the global development of photovoltaics.

IV. The livelihood sector operates steadily and the industrial economy is stabilizing and improving

A number of fundamental livelihood industries in the SSE have maintained stable operating performance, becoming a solid force in ensuring people's livelihood. In terms of energy supply, the power industry's performance continues to grow, with a 51% year-on-year increase in net profit in the first three quarters. The five major thermal power companies have accumulated a total of over 1 trillion kilowatt-hours of on-grid electricity, a 2% increase compared to the same period last year. Shenzhen Gas Corporation Ltd. and Chengdu Gas Group Corporation Ltd. focusing on main urban gas businesses achieved a total natural gas sales volume of approximately 5.3 billion cubic meters, a 16% increase year on year. In addition, SSE-listed agricultural companies have ensured stable production and supply to guarantee people's food security. Heilongjiang Agriculture Company Limited, rooted in its main business, achieved a net profit of RMB 1.3 billion yuan in the first three quarters, steadily promoting its performance. Cofco Sugar Holding Co., Ltd and Zhongnongfa Seed Industry Group Co., Ltd. achieved year-on-year increases of 89% and 40% in net profit, respectively. At the same time, SSE-listed companies continue to actively stabilize employment. In the first three quarters of 2023, SSE-listed companies paid a total of RMB 2.26 trillion yuan in employee compensation, a year-on-year increase of 7%.

The construction of new industrialization is steadily advancing. The manufacturing of basic industrial equipment in the SSE maintains a growth momentum, providing a stable foundation for industrial development. In terms of equipment manufacturing, benefiting from the resonance of multiple downstream industries, the net profit of the construction machinery and general equipment industries increased by 13% and 7% year on year in the first three quarters, respectively. Neway Valve (Suzhou) Co., Ltd.'s industrial valve business continues to improve, with a year-on-year increase in net profit of 70%. Anhui Heli Co., Ltd. and Hangcha Group Co., Ltd., which specialize in industrial transportation equipment such as forklifts, achieved year-on-year increases in net profit of 43% and 75%, respectively. In addition, the midstream manufacturing industry has seen an increase in gross profit margins due to the recovery in downstream demand. The net profit declines in the textile manufacturing and paper industry continue to narrow, with a reduction in the decline of 18 and 27 percentage points in the first three quarters compared to the first half of the year, respectively. The net profit declines in the basic chemical and steel industry have reversed the trend of expanding decline in the first half of the year, narrowing by 7 and 53 percentage points, respectively, with the steel industry achieving a turnaround in a single quarter. The net profit decline in the electronics industry has significantly narrowed, with a 10% year-on-year increase in net profit for consumer electronics in the first three quarters, shifting from a decline to an increase compared to the first half of the year, and a 37% increase on a quarterly basis.

V. Operating indicators of real-economy enterprises continue to improve with indications of bottoming out and recovery in private-sector enterprises

SSE-listed real-economy enterprises have shown further activated internal profitability, with a gross profit margin of 17.1% in the third quarter, an increase of 0.4 percentage points compared to the previous quarter, indicating significant improvement in multiple indicators. Data shows that the inventory turnover rate of real-economy enterprises in the first three quarters was 2.8 times, an increase of 0.1 times compared to the same period last year and an increase of 0.9 times compared to the previous quarter. The operational efficiency improvement is mainly reflected in the cash flow. The operating cash net flow of real-economy enterprises in the first three quarters was RMB 2.42 trillion yuan, a year-on-year increase of 6.3%, and the ratio of operating cash flow to net profit increased from 1.3 to 1.4, indicating an improvement in the cash-generating ability. From a micro-industry perspective, industries closely related to consumption such as transportation, automobiles, and media have achieved double-digit year-on-year growth in cash flow in the first three quarters, with the automobile industry experiencing a 136% increase in cash flow. Twenty sub-industries, including computer equipment, breeding, and household goods, achieved double-digit year-on-year growth in inventory turnover and accounts receivable turnover.

Private-sector enterprises are under short-term performance pressure with bottoming-out and recovery signs emerging. In the first three quarters, SSE-listed private-sector enterprises achieved operating revenue of RMB 7.14 trillion yuan, a year-on-year increase of 2%; achieved a net profit of RMB 432.5 billion yuan, and a net profit after deducting non-recurring gains and losses of RMB 377.6 billion yuan, narrowing the decline by 1.2 and 3.3 percentage points respectively compared to the first half of the year. Among them, private-sector enterprises in the automotive manufacturing and wholesale and retail industries have stronger vitality, with a year-on-year increase in net profit of 15% and 26% respectively in the first three quarters, higher than the overall level. Additionally, the automotive manufacturing and chemical fiber industries showed a faster recovery rate in the third quarter than the overall level. As operating performance gradually emerges from the bottom of the cycle, the pace of cash flow conversion is accelerating. In the first three quarters, private-sector enterprises achieved an operating cash flow of RMB 542.5 billion yuan, a year-on-year increase of 11.5%, and the ratio of cash flow to net profit increased by 0.3 percentage points, both better than other real-economy enterprises. Correspondingly, the internal operational efficiency and capital structure have also shown improvements. The asset-liability ratio of private-sector enterprises at the end of the third quarter decreased by 0.8 percentage points compared to the beginning of the year, and the inventory turnover rate increased by 0.1 times compared to the same period last year, both better than the overall level.

VI. The STAR Market is actively constructing a future industrial development ecosystem by consistently increasing R&D investment

SSE-listed companies continue to increase their investment in R&D, demonstrating stronger innovation and higher technological content. In the first three quarters, the total R&D expenditure of real-economy companies reached approximately RMB 581.3 billion yuan, an increase of 8% compared to the same period last year. In terms of industries, the transformation and upgrading of traditional industries have accelerated, with R&D expenditure in utilities, transportation, construction, and mining industries increasing by 23%, 13%, 12%, and 9% respectively. The high-tech industry has shown more significant R&D investment, with R&D expenditure in the electronic equipment manufacturing, information technology services, and transportation equipment manufacturing industries increasing by 20%, 15%, and 15% respectively, effectively promoting the high-level development of science and technology in China. As the main platform for companies with "key and core technologies", the STAR Market adheres to innovation-driven development, showcasing a significant characteristic of high R&D investment. In the first three quarters, the total R&D investment in the STAR Market reached RMB 95.9 billion yuan, an increase of 26% compared to the same period last year. The median proportion of R&D investment to operating revenue reached 13%, an increase of nearly 4 percentage points compared to the previous year. A total of 175 companies had an R&D intensity of over 20%, an increase of 52 companies compared to the same period last year.

The STAR Market actively constructs a future industrial development ecosystem and continuously promotes the development of cutting-edge technologies and industrial transformation. Thirty percent of the companies listed on the STAR Market have products or ongoing projects that are pioneering within their industries. For example, JA Solar Co., Ltd.'s independently developed 182N high-efficiency monocrystalline silicon cell (TOPCon) has set a new world record by achieving a conversion efficiency of 27%; Shanghai United Imaging Healthcare Co., Ltd.'s "uMR Jupiter5T", a whole-body magnetic resonance imaging system, overcame the technical challenges of ultra-high-field magnetic resonance core components and achieved ultra-high-field whole-body clinical imaging, becoming the first of its kind in the industry. Many STAR Market companies are building a first-mover advantage by strategically positioning themselves in future industries such as gene technology, synthetic biology, and artificial intelligence. For example, MGI Tech Co., Ltd.'s gene sequencing instrument has reached a leading position globally in terms of research and development and production, with the ability for independent research and development and mass production of clinical sequencing instruments. Cathay Biotech Inc., a leader in synthetic biology, has made breakthroughs in major industrialization technology bottlenecks through high-throughput research and development facilities, highlighting its dominant position in the bio-based long-chain diacid, bio-based pentanediamine, and bio-based polyamide industries.

As of the end of the third quarter, a total of 303 companies listed on the STAR Market have been recognized as the national-level SRDI "Little Giant" enterprises and 35 STAR Market companies as "single-item champions" demonstration enterprises in the manufacturing industry. Forty companies have had their main products recognized as "single-item champions" in the manufacturing industry, accounting for 60% of the total number of companies on the board. Among them, several "hidden champions" have emerged in various industries, such as Qingdao Yunlu Advanced Materials Technology Co., Ltd. and Leader Harmonious Drive Systems Co., Ltd., accelerating the localization process of independent and controllable technologies.

VII. Fixed asset investment shows robust growth trends and exports are outperforming expectations

Under the trend of continuous economic recovery, fixed-asset investment has hit a record high. In the first three quarters of 2023, SSE-listed real-economy companies invested a total of RMB 2 trillion yuan in the purchase and construction of long-term assets, a year-on-year increase of 12%. Among them, the high-tech industry has shown strong momentum, with investments in industries such as electrical machinery manufacturing, transportation equipment manufacturing, specialized equipment manufacturing, and automobile manufacturing increasing by 32%, 30%, 16%, and 13% respectively compared to the previous year. On the other hand, infrastructure construction continues to play a vital role in stabilizing and promoting economic development. Nine leading infrastructure companies, including China State Construction Engineering Corporation Limited, China Railway Construction Corporation Limited, and China Railway Group Limited, signed new orders totaling over RMB 10 trillion yuan in the first three quarters, with a year-on-year growth rate of approximately 9%. Investment expenditure in infrastructure-related industries such as public utilities and transportation has also increased by 31% and 24% respectively compared to the previous year.

Key areas of exports maintain growth and outperform expectations. SSE-listed companies have seen an increase in the growth rate of cars and parts exports, maintaining a competitive advantage in the global automotive supply chain. In terms of complete vehicles, SAIC Motor Corporation Limited achieved overseas sales of 840,000 vehicles in the first three quarters, a year-on-year increase of 22%. In terms of parts, Ikd Co., Ltd. achieved a net profit increase of 47% year on year thanks to active development and layout for overseas new energy customers. Leading photovoltaic companies have actively expanded their presence in foreign markets and have reached the forefront of driving exports. Taking Trina Solar Co., Ltd. as an example, the company recently signed a memorandum of cooperation for a project in the United Arab Emirates, marking the first time that a Chinese photovoltaic company has promoted the construction of an integrated full-industry chain capacity base overseas. The export of high-end equipment is also impressive. In the third quarter, Zhejiang Dingli Machinery Co., Ltd. continued to show significant increases in the overseas sales of its new energy aerial work platforms and further strengthened the competitiveness of its products in Europe and the United States. Hisense Visual Technology Co., Ltd., relying on the advantages of the domestic panel supply chain and its own high-end strategy, has continued to achieve impressive performance in overseas sales. Its overseas revenue from smart display terminals in the first three quarters reached RMB 18.4 billion yuan, a year-on-year increase of 26%.

It is worth mentioning that over the past decade of the implementation of the Belt and Road Initiative, SSE-listed companies have actively participated in the construction of national projects and have been actively integrated into the overall national development strategy. China Railway Group Limited played a major role in the iconic cooperation project between China and Indonesia, the Jakarta-Bandung High-Speed Rail. It has successfully built the longest tunnel, the most difficult tunnel, the largest beam yard, and the entire line's power and electrification engineering to high standards and high quality, demonstrating the responsibility of a state-owned enterprise of a major country. Furthermore, many high-end equipment companies such as China Railway Signal & Communication Corporation Limited, Zhuzhou CRRC Times Electric Co., Ltd., and China Railway High-Speed Electrification Equipment Co., Ltd. have also actively participated, contributing Chinese technology, providing Chinese products, and showcasing Chinese standards. Jinko Power Technology Co., Ltd. has actively invested in the construction of photovoltaic power plants in Saudi Arabia and other countries, optimizing the company's overseas asset layout and promoting local infrastructure construction and new energy development. At the same time, construction companies have achieved impressive results in expanding overseas markets, becoming the main force in promoting the deepening and implementation of the Belt and Road Initiative. For example, the leading domestic infrastructure company, China Communications Construction Company Limited, has seen a year-on-year increase of 44% in the value of new overseas contracts signed in the first three quarters. Power Construction Corporation of China, Ltd, one of the earliest central enterprises to carry out foreign aid projects, has seen a year-on-year increase of 43% in the value of new overseas contracts signed in the first three quarters. Sinoma International Engineering Co., Ltd, the world's largest cement full-industry chain service provider, has seen a year-on-year increase of 169% in the value of new overseas contracts signed in the first three quarters.

VIII. Share repurchases and increases in holdings remain at high levels, with performance meetings having extensive coverage

SSE-listed companies continue to strengthen their value investment awareness, with significant increases in the internal drive for share repurchases and increases in holdings, boosting investor confidence through concrete actions. Since 2023, more than 230 SSE-listed companies have announced new share repurchase plans, with a maximum repurchase amount of RMB 61.4 billion yuan. In particular, since the third quarter, SSE-listed companies have accelerated their pace of share repurchases, with over 150 companies announcing new share repurchase plans, with a maximum repurchase amount of RMB 43.4 billion yuan, accounting for over 60% of the total for the year in terms of both quantity and amount. In terms of sector breakdown, companies listed in the SSE 180 Index and the STAR 50 Index have shown greater strength in share repurchases, with repurchase amounts accounting for over 60% and nearly 50% of their respective board, demonstrating significant leadership and demonstration effects. Among them, COSCO Shipping Holdings Co., Ltd. has repurchased shares worth RMB 15 billion yuan, while Haier Smart Home Co., Ltd. and Baoshan Iron & Steel Co., Ltd. have allocated RMB 3 billion yuan each for share repurchases. In terms of shareholding increases, more than 100 SSE-listed companies have announced new shareholding increase plans, with a maximum increase amount of nearly RMB 24 billion yuan. Among them, major shareholders of companies such as China Mobile Limited, Power Construction Corporation of China, Ltd, and Hengli Petrochemical Co., Ltd. have implemented large-scale shareholding increases, conveying confidence in the future development of the companies. In addition, SSE-listed companies actively respond to new dividend rules, increasing the frequency of dividend distributions. Fifteen companies paid out third-quarter cash dividends for the first time, with a total dividend amount of nearly RMB 4 billion yuan, actively sharing the benefits of improved performance with investors.

SSE-listed companies attach greater importance to the role of performance meetings as a bridge of communication. Since the beginning of this year, various forms such as roundtable forums, on-site interactions, and online Q&A sessions have been used to establish a "communication bridge" with investors. Collective performance briefings have been held for multiple themes and industries, including tourism and hotels, expressways, and supermarkets, covering a more comprehensive range of sub-sectors. The enthusiasm of companies to sign up for collective performance briefings has significantly increased, deepening investors' understanding of the positive progress in company operations from all angles. The coverage of performance meetings on third-quarter reports for Main Board companies exceeds 70%, and the coverage for STAR Market companies continues to be 100%, conveying the value investment concept to investors. Among them, more than 50 SSE Main Board and STAR Market companies have conducted group roadshows, covering various themes such as "industry leadership", "digital economy", "serving people's livelihood", and "central state-owned enterprise ESG", providing a rich perspective on how SSE-listed companies are applying the new development philosophy, creating a new development pattern, and achieving high-quality development.

IX. Investor structure further optimizes with continuous growth in the size of STAR 50 ETF products

In the first three quarters, the activity of professional institutional investors in the SSE further increased and the trading structure continued to optimize. As of the end of the third quarter, the number of active accounts held by professional institutional investors reached 77,000, a year-on-year increase of 5%, with a position ratio exceeding 20%. In the first three quarters, the trading volume of professional institutional investors accounted for 44%, a year-on-year increase of 2.5 percentage points. In the STAR Market, nearly half of the trading volume came from professional institutional investors. In terms of categories, the position ratio of fund investors is nearly 10%, with a position ratio of 26% in the STAR Market, and an average position ratio of 24%. Overseas institutional investors have achieved "full coverage" of SSE-listed companies, holding positions exceeding RMB 1.7 trillion yuan in total, accounting for 4%.

The size of STAR 50 ETF products keeps rising and investment in benchmark sci-tech innovation enterprises is favored. As of the end of the third quarter, the size of domestic and foreign STAR Index products reached RMB 164 billion yuan, with the size of domestic STAR 50 ETF products exceeding RMB 140 billion yuan, ranking second in size among domestic broad-based index products. Since the four STAR 50 ETF products of the first batch were approved and listed in November 2020, the size of STAR 50 ETF products has rapidly grown from RMB 20 billion yuan to RMB 140 billion yuan, an increase of over 7 times in nearly 3 years. Since the beginning of this year, the size of STAR 50 ETF has grown by 75%. In addition, after the official release in August 2023 of the STAR 100 Index focusing on mid-cap companies in the STAR Market, the four STAR 100 ETFs of the first batch were listed on September 15, 2023, with their size continuously growing. To date, the size has exceeded RMB 9 billion yuan, an increase of approximately 29% compared to the initial size.

X. The sustainability of positive changes still requires observation and the upward trend is expected to maintain in the fourth quarter

Against the backdrop of gradual economic recovery, some industries and companies still face significant operational pressures. Data shows that 411 companies have incurred operating losses, and 483 companies have experienced a decline in performance of over 50% year on year. At the industry level, although industries such as steel, basic chemicals, and electronics show signs of improvement, they are still in a year-on-year decline range, and their recovery situation still needs further observation. The net profit of the power equipment industry has shifted from growth to decline, mainly due to the significant price decline of upstream silicon materials and wafers caused by supply and demand changes, dragging down the operational performance of related companies. The net profit of the real estate industry declined by 26% year on year in the first three quarters, and loss was recorded in the third quarter. The building materials industry and other related industries have also experienced a decline quarter-on-quarter, and subsequent performance may continue to be under pressure.

Entering the fourth quarter, positive factors for economic recovery continue to gather and the supporting forces for sustained recovery are strengthening. At the micro level, the strong demand for travel during the "Golden Week" holidays, rapid growth in service consumption, and further realization of consumption potential are expected to lead to continuous improvement in industries such as aviation, culture and entertainment, accommodation, and catering, resulting in possible further expansion of growth. At the macro level, the issuance of trillion-yuan treasury bonds signals stable growth, while investment stabilization policies continue to be strengthened, and local policies promoting consumption have shown effective results. Industries such as automobiles, home furnishing, and electronics may accelerate their recovery, leading to a more stable recovery process. It is anticipated that major industries will continue to experience an upward trend in the fourth quarter, and the stabilization of annual performance can be expected.

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