In 2016, the companies listed on SZSE’s Main Board have implemented CPC Central Committee’s strategic deployment of “supply-side structural reform” and moved forward the development of “cutting overcapacity, destocking, deleveraging, reducing costs and identifying growth areas” to constantly deepen transformation and upgrade. As a result, corporate performance has been on steady growth. In the 2016 reporting period, corporate operating revenue averages at 9.341 billion yuan, a year-on-year growth of 10.56%, and the net profit averages at 552 million yuan, a year-on-year growth of 20.13%. After excluding financial companies, the average operating revenue and net profit are 9.054 billion yuan and 469 million yuan respectively, with the respective year-on-year increase of 11.81% and 37.02%. Specifically, the SZSE’s Main Board-listed companies are of the following features:
Firstly, deepening the development of “cutting overcapacity, destocking, deleveraging, reducing costs and identifying growth areas”, with initial achievements delivered.
First, “cutting overcapacity” has been implemented in place. In mining and manufacturing industries, the 2016 fixed asset investment has been cut by over 20% in ferrous and nonferrous metal smelting and rolling processing industries and metal product industry. Second, “destocking” has been steadily carried out. The inventory size of Main Board companies went through the year-on-year decrease of 7% in 2014 and 12% in 2015. On such basis, stock scale expanded slightly in 2016 but the increase kept flat with the revenue growth. Among others, in traditional industries that feature high “destocking” pressure such as ferrous metal smelting and rolling processing industries, the inventory has shown a downward trend. Third, “deleveraging” has been on a positive development trend. In 2016, the upswing in leverage level of non-financial listed units on the Main Board has been reversed, with the average asset-liability ratio down by 0.2% from that in 2015.
Secondly, bursting vitality in manufacturing industry constantly drives transformation and upgrade.
Manufacturing companies account for more than half of the total components of SZSE’s Main Board. During the 2016 reporting period, their average operating revenue goes up by 6.49% on a year-on-year basis and the average net profit jumps by 54.49%. Among them, traditional manufacturing delivers eye-catching performance, with the year-on-year net profit increase approximating or exceeding 100% in nine sub-industries including textile, furniture making, coking and nuclear fuel processing, chemical fiber manufacturing, ferrous metal smelting and rolling. In high-end manufacturing, companies in new energy industry have achieved 12% year-on-year growth in average operating revenue and the rocketing 238.61% year-on-year increase in net profit. In addition, the average operating revenue and net profit of companies engaging in energy conservation, environment protection and digital creative industries have achieved two-digit year-on-year increase.
Thirdly, market-oriented blue-chip groups emerge, with improving performance.
In 2016, the six companies of Ping An Bank, Vanke, Gree, Media Group, TCL Group and ZTE have delivered total operating revenue of more than 100 billion yuan, further consolidating their industrial positions. The 2016 top 10 profitable public companies have their realized net profit total at 120.832 billion yuan, a year-on-year increase of 24.33% and accounting for 45.99% of the total net profit of the Main Board. This indicates a sound development trend of the market-oriented blue-chip enterprises on the board. Furthermore, 116 companies including Wasu and Changan Automobile have their compound growth rate of net profit from 2013 to 2016 greater than 30%. Blue-chip groups on SZSE’s Main Board have been in initial shape.
Fourthly, steadily increasing dividend distribution ratio provides active return to investors.
While achieving corporate development, companies on SZSE’s Main Board have been actively giving back to investors through high-ratio dividend distribution to share their growth achievements with investors. In 2016, 276 Main Board companies, accounting for 57.86% of the board total and an addition of 32 companies on a year-on-year basis, have released cash dividend plans and the cash dividend distributed totals 60.239 billion yuan. Among them, 165 companies’ cash dividend ratio is greater than 20%. Gree has distributed 18 yuan per 10 shares to eligible investors, with the distributed cash dividend totaling 10.828 billion yuan. Midea Group, Shuanghui and other companies also introduce attractive cash dividend distribution plans. Based on the calculation at the closing price on May 9, 2017, 73 companies have their dividend yield greater than the one-year deposit rate of 1.5% and 24 units out of the 73 companies have their dividend yield greater than 2.75% which outruns the three-year time deposit.
Fifthly, mergers, acquisitions and restructuring deliver sound effects, which pushes industrial integration development to a greater depth.
In 2016, a total of 50 companies on SZSE’s Main Board have completed major assets restructuring, with the involved transaction amount totaling 167.68 billion yuan, newly added shares 16.308 billion shares and newly added market value 121.981 billion yuan. The industrial integration type is a highlight of restructuring in 2016. 21 companies including Beijing Shougang and Aerospace Hi-Tech have moved forward industrial integration through merger, acquisition and restructuring. Among the companies completing restructuring in 2016, their average operating revenue and average net profit have increased by 31.78% and 87.51% respectively. Through M&A and restructuring, companies have optimized business layout and acquired new driving force of development.
Sixthly, with the use of capital market platform, SOE reform is better off.
About 60% of the public companies on SZSE’s Main Board are SOEs. In recent years, the SOEs on the Main Board have earnestly made use of the capital market platform to achieve self-innovation, transformation and upgrade. In 2016, 75 SOEs on the Main Board disclosed restructuring or re-financing plans and 52 SOEs completed restructuring or re-financing. A batch of influential SOE reform samples have come forth, for example, CNPC Capital’s injection into *ST Jinan Diesel, Great Wall Computer’s absorption and merger of Great Wall Information via share swap and Sinopharm system’s internal business integration via capital market. In terms of profitability, the SOEs on SZSE’s Main Board have realized the average operating revenue of 10.444 billion yuan and the average net profit of 560 billion yuan in 2016, up by 8.89% and 36.62% from that in the same period of last year. The significantly enhanced profitability reveals that SOE reform is doing better.
2016 is the 26th year of SZSE’s Main Board inception. Through years of development, the blue-chip groups on the board is still in sound development trend and has steady performance growth, showcasing the vitality and vigor of SZSE’s Main Board.
