French bank BNP Paribas has given "underweight" ratings to 10 comapnies listed both on the mainland and in Hong Kong, expecting their performances to mirror that of Chalco, which said its first-quarter profits will likely fall by 50 percent.

Heavyweight mainland companies, including China Life, PetroChina, Sinopec, Sinopec Shanghai and Datang Power, are on the "underweight" list.

Their combined market capitalization makes up approximately 76 percent of the H-share index.

The BNP report stated that Sinopec, China Life and Sinopec Shanghai all announced over 50-percent profit declines, year-on-year, in their first-quarters.

The report said the situation might worsen in the second quarter amid rising energy prices and the falling A-share market.

"We expect PetroChina's profit decline in the first half to be worse than the 29 percent, year-on-year, it reported in the first quarter," the report said, going on to note: "Guangshen Rail and Dongfang Electric are mid caps to watch, as their first quarter profit were disappointing."

Under A-share market requirements, companies must give advanced notice if they will announce an earnings change of more than 50 percent.

Chalco released its warning on June 20, attributing the profit loss to rising costs and natural disasters.

BNP expects four of the other nine named stocks to announce earnings warnings soon, and the remaining five are expected to miss their consensus forecasts.

Ricky Cheung, an executive and vice president with Enlighten Securities and Futures, said profits from energy and resource stocks have dropped significantly from price hikes in oil and materials.

"Some companies such as Sinopec have released their quarterly results," Cheung said. "The poor performances have been widely expected by investors."

And he believes the bleak outlook will carry over into the second half of the year.

Ronald Wan, a managing director and head of investment at BoCom (International), said that the report just indicates the historical facts rather than comes up with any new projections.

"The electricity companies are suffering severely from the climbing coal prices in the first half," he said. "But investors have already digested the news, so they won't overreact to the BNP remark."

(HK Edition 06/25/2008 page2)