Web Exclusive

Profits surge for China's listed in 2009

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-03-02 11:10

It has been a bumper year for China's businesses with around 70 percent releasing annual reports listing staggering profits. The rise in profits for China's listed companies in 2009 was spurred by real estate developers and machine manufacturers thanks to a rebound in the housing market and huge government stimulus.

According to Wind Info, as of Feb 9, 101 listed companies have released their annual reports before the weeklong Lunar New Year holiday. Among them, 42 reported an over 30 percent year-on-year increase in net profit and 24 companies' net profit jumped more than 100 percent, the daily China Business News (CBN) reported.

As of Jan 31, 2010, 1,103 out of 1,754 listed companies predicted their 2009 financial performance in third-quarter reports or short statements, according to a Shanghai Securities News report.

The report said 679, or 61.56 percent of the total, foresaw a year-on-year growth. It also showed that the overall performance of the listed companies signaled a rebound in 2009 from 2008, while 40.3 percent of the 986 listed companies reported a positive performance amid the financial crisis.

Industry insiders have attributed the net profits increase to the central government's economic stimulus plan. Investment injected into the infrastructure construction projects has benefited sectors such as machinery, transport equipment, communication facilities and construction and building materials, the China Securities Journal said.

The decline in commodity prices has also contributed to the profit growth of chemical companies and coal-fired power plants.

Moreover, drop in financial expenses due to low-interest rates in 2009 has also indirectly helped boost profits, the report said.

Property developers

Many property developers have already released annual reports as some of them have achieved a more satisfactory performance in 2009 compared with companies in other sectors.

As of Feb 9, 11 listed property developers disclosed annual reports, reporting a total net profit of 5.71 billion yuan, a 40.6 percent increase from the 4.06 billion yuan in 2008, the China Securities Journal said.

Beijing Dalong Weiye Real Estate Development Co reported the highest net profit increase in 2009. It reported a net profit of 339 million yuan, a 142.56-fold increase from the previous year.

The big profit increase was generated by the boom in the real estate market last year. However, regulators have begun to adopt a relatively tight monetary policy to curb excessive expansion in the real estate sector. Concern over the developers' performance in 2010 lingered in the market as some securities brokerages warned that the central government may release more strict regulatory policies and the sales of apartments may slide more than expected, according to a CBN report.

The central bank has raised the deposit reserve requirement ratio by 0.5 percentage points twice this year to curb the "comparatively loose liquidity," which was a signal of the tightening monetary policy.

Small and Medium Enterprises Board and ChiNext

As of Feb 9, 20 companies listed on Small and Medium Enterprises Board or China's NASDAQ-style board ChiNext have released their annual reports.

The overall performance of the small and medium-sized enterprises lags behind the performance of companies listed on the main board, the CBN reported.

Only nine companies reported an over 20 percent increase in net profits and some even reported decreases. GoerTek Inc, a wireless communication devices producer, and Henan Xinye Textile Co, a cotton manufacturer, both reported an approximately 20 percent slide in net profits.

Thus some companies on ChiNext planned to make a big offer in the profit allotment. Hexin Flush Information Network Company, a financial information provider, planned to give 10 shares plus 3 yuan in cash per 10 shares to their shareholders.

More to come

After the Chinese Lunar New Year, more annual business reports are expected to be released. According to the schedules published by Shanghai Securities Exchange and Shenzhen Securities Exchange, 737 companies will release their annual reports in March and 762 will hand in the reports during April, accounting for approximately 80 percent of the total.

All the companies listed before Dec 31, 2009, should release their annual reports before the deadline set for April 30, 2010, according to the exchanges' regulation.