A-Share Growth Valuations Face Challenges(AI Translation)
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文｜财新周刊 岳跃 全月
By Caixin Weekly's Yue Yue, Quan Yue
随着2023年年报和2024年一季报披露完毕，A股上市公司的业绩情况浮出水面。“三张表”（资产负债表、利润表和现金流量表）整体呈现出“增收不增利”的局面，背后则是盈利能力的持续下滑。
As the annual reports for 2023 and the first quarter reports for 2024 have been disclosed, the performance of A-share listed companies has come to light. The "three financial statements" (balance sheet, income statement, and cash flow statement) generally show a situation of "increased revenue but not increased profit," indicating an ongoing decline in profitability.
截至2024年5月8日，已披露年报的5355家上市公司在2023年共实现营业收入72.6万亿元，同比增0.9%，但净利润5.3万亿元，同比下降2.7%。扣除金融行业后的上市公司2023年营收为63.4万亿元，同比增2.3%，而归母净利润2.9万亿元，同比下降3.76%。进入2024年一季度，全部A股和非金融A股的归母净利润分别同比下降4.74%、5.44%。
As of May 8, 2024, the annual reports disclosed by 5,355 listed companies show that in 2023, they achieved a total operating revenue of 72.6 trillion yuan, marking a year-over-year increase of 0.9%. However, net profits amounted to 5.3 trillion yuan, reflecting a decrease of 2.7% compared to the previous year. Excluding the financial sector, listed companies recorded revenues of 63.4 trillion yuan in 2023, up by 2.3% year-over-year, while net profits attributable to the parent company were 2.9 trillion yuan, down by 3.76%. Entering the first quarter of 2024, net profits attributable to the parent company for all A-shares and non-financial A-shares decreased by 4.74% and 5.44%, respectively.
2023年业绩亏损（归母净利润为负）的A股上市公司有1126家，占比21.02%；业绩下滑（归母净利润负增长）的有2622家，占比48.96%。2024年一季报数据也未扭转，当季亏损的公司有1294家，占比24.16%；业绩下滑的有2514家，占比46.95%。
In 2023, 1,126 A-share listed companies in China reported net losses attributable to shareholders, accounting for 21.02% of the total. Companies with declining performance (negative growth in net profits attributable to shareholders) numbered 2,622, representing 48.96%. The trend did not reverse in the first quarter of 2024, with 1,294 companies reporting losses for the quarter, accounting for 24.16%, and 2,514 companies experiencing a decline in performance, representing 46.95%.
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- As of May 8, 2024, the disclosed annual reports of 5,355 listed companies in China's A-share market for 2023 show a total revenue of 72.6 trillion yuan (up by 0.9% year-on-year) but a net profit decline of 2.7% to 5.3 trillion yuan. Excluding the financial sector, revenue was up by 2.3%, while net profits fell by 3.76%.
- In Q1 2024, both overall and non-financial A-share companies experienced further declines in net profits by approximately 4.74% and 5.44%, respectively, continuing the trend from the second half of 2023 which showed weak recovery signs despite slight improvements in revenue.
- The performance across sectors varied; service sectors related to travel and export-oriented industries performed relatively better due to increased overseas demand, while financial and real estate sectors faced significant pressures with continued pessimistic revenue and profit forecasts due to limited demand recovery and high operational costs relative to income.
The annual and first quarter reports for 2023 and 2024 reveal a trend among A-share listed companies of increasing revenue but declining profits, indicating a drop in profitability despite higher sales. As of May 8, 2024, data from 5,355 companies shows a slight increase in total operating revenue to 72.6 trillion yuan in 2023, but net profits fell by 2.7% to 5.3 trillion yuan. The first quarter of 2024 continued this trend with further declines in net profits [para. 1].
In terms of sector performance, travel and tourism services along with export-dependent industries showed relatively better results compared to the struggling financial and real estate sectors which continue to face fundamental challenges impacting their revenue and profit growth [para. 1]. China Merchants Securities identifies several factors contributing to the earnings pressure on A-share companies including limited demand recovery, high cost ratios, significant drags from banking and real estate sectors, and impacts from cyclical stocks like steel and building materials [para. 1].
Market analysts predict that China's economy might remain weak in 2024 due to ongoing issues in the real estate sector. Despite this, there is optimism that the worst may be over for A-share listed companies as historical data suggests a correlation between the Producer Price Index (PPI) growth rate and corporate profits [para. 1]. Additionally, Hu Xinwei from Harvest Fund notes potential government measures aimed at promoting economic development which could stabilize growth [para. 1].
Revenue analysis indicates that while total A-shares saw an increase in revenue by 0.9% in 2023, there was a decline across various segments when entering the first quarter of 2024. Notably, non-financial petroleum and petrochemical sectors reached a decade high overseas revenue share at 17.6%, reflecting an upward movement in global value chains despite domestic demand weaknesses [para. 1].
Cash flow analysis reveals negative trends across operating, investing, and financing activities for non-financial A-shares in early 2024. This downturn has led to negative net cash flow ratios for the first time since 2019 indicating challenges in covering liabilities [para. 1]. Profitability metrics also show declines with ROE decreasing continuously across several quarters reaching historic lows particularly within non-financial petroleum and petrochemical sectors [para. 1].
Despite these challenges, some sectors like consumer services have seen recovery benefiting from increased domestic travel and improved overseas demand. However, industries such as coal, steel, basic chemicals, building materials, and real estate are expected to continue facing declines both in revenue and net profit into early 2024 [para. 1].
Dividend trends show an increase with more than ninety percent of profitable companies announcing or implementing cash dividend plans by April end of the reporting year. High-dividend strategy indices have outperformed others due to sluggish economic growth influencing investor preference towards dividend stocks over other investment types [para. 1].
Overall performance pressures remain high across A-share companies with varying impacts across different sectors influenced by both internal market dynamics and external economic conditions[para. 1].
- China Merchants Securities
招商证券 - China Merchants Securities believes that the current profit pressure on A-share listed companies is mainly influenced by four factors: limited demand recovery and low prices impacting revenue expectations, high cost ratios despite limited cost growth, significant performance drag from banking and real estate sectors, and profitability deterioration in cyclical stocks related to new energy and construction, such as steel, building materials, and electrical equipment.
- E Fund Management Co., Ltd.
汇添富基金 - The article does not provide specific information about E Fund Management Co., Ltd. It focuses on the overall performance of A-share listed companies in China, discussing their financial results and factors affecting their profitability. For details on E Fund Management Co., Ltd., you may need to refer to other sources.
- GF Securities
广发证券 - GF Securities mentioned in the article suggests that a recovery in global manufacturing PMI and an increase in China's general deficit ratio could support a stabilization and structural rise in A-share ROE in 2024, following nearly three years of decline.
- Minsheng Securities
民生证券 - Minsheng Securities reported that current consumer behavior reflects a trend where middle-class consumption is downgrading while lower-income groups are upgrading their consumption. This aligns with macroeconomic shifts such as stronger resilience among the wealthy, declining urban middle-class purchasing power due to falling house prices, and improved incomes among rural low-income groups enhancing their spending power.
- Shenwan Hongyuan Group
申万宏源 - The article does not provide specific information about Shenwan Hongyuan Group. It mainly discusses the overall performance of A-share listed companies in China, highlighting their challenges and trends in profitability, revenue, and other financial aspects across various industries.
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