2011-02-18 16:26

As of Feb 17, 72 listed companies on the Shanghai and Shenzhen stock exchanges disclosed their annual reports, showing that the net operating cash flow of the 71 non-financial corporations totaled 7.74 billion yuan ($1.2 billion), down by 10.39 percent compared with the same period last year, according to calculations by the China Securities Journal.

Analysts said the decrease in listed companies' cash flow can be attributed to a distinctly slower increase in cash income compared with cash expenditure.

The total cash income of the 71 companies from products sales and providing services amounted to 136.93 billion yuan, up 25.47 percent from a year ago. As cash expenditures have increased more rapidly, the net operating cash flow has shown a decrease despite the surge in cash income, the report said.

According to statistics, the 71 companies paid 108.81 billion yuan for purchasing products and services, an increase of 32.12 percent year-on-year and about 7 percentage points higher than cash inflow under the same items. The growing inflation problem in the fourth quarter of 2010 has brought significant influence to these listed companies: on the one hand, the rise of commodity prices added to the operation costs of downstream enterprise; on the other, labor shortage has driven the labor costs to go up, which also directly affected the enterprises' cash flows, the journal said.

Market participants say net operating cash flow reflects the amount of cash that a company can allocate at the end of the year. The higher the net operating cash flow, the stronger the payment capacity a company has. And if an enterprise's net cash flow is below zero, it means the company has difficulties in payment and needs refinancing or long-term funds to meet its liquidity needs. This will restrict the enterprises' expanding capability, since those long-term funds should be used for investments.

Among the 71 companies, the lowest net operating cash flow per share was only -1.44 yuan, while the highest hit 1.62 yuan. This difference shows the unbalanced development of different sectors.

Three sectors including real estate, automobile and alcoholic drinks are the sectors with more sufficient cash flow, the report said.