As of August 31, all listed companies on Shanghai Stock Exchange (SSE) have disclosed semi-annual reports for 2024. Data show that companies listed on the SSE recorded stable performance and a number of highlights and updates to improve their "quality" of development and "efficiency" of transformation. New growth drivers and industries are emerging.
I. Performance Remains Stable, with a Q2 Resurgence in Growth
In the first half of 2024, companies listed on the SSE maintained a steady performance with a total operating income of RMB 24.94 trillion, basically flat year on year; net profit of RMB 2.36 trillion, down 1.4% year on year; net profit after deducting non-recurring profits or losses of RMB 2.26 trillion, up 0.3% year on year. About 80% of the companies reported positive profit, among which more than 850 companies beat previous year’s net profit number, nearly 240 increased net profits by over 50%, more than 120 surged by over 100% in net profits, and more than 110 turned losses into gains.
Quarterly-speaking, the second quarter marked a resumed upward trend, with a total net profit of RMB 1.18 trillion and a net profit after deducting non-recurring profits and losses of RMB 1.13 trillion, up 2.4% and 2.6% year on year. In the second quarter, the operating income and net profit increased by 4.9% and 0.6% respectively from the first quarter. Net profit hit a new quarterly high among the recent four quarters, up 10.6% compared with the average net profit in the previous four quarters. Among them, the operating income, net profit, and net profit after deducting non-recurring profits and losses of enterprises running real-economy businesses in Q2 increased by 6.0%, 7.7%, and 5.1% respectively from the previous quarter, showing a notable marginal improvement.
By industry, more than 90% of the industries remained profitable. Social services, automobiles, non-ferrous metals, public utilities, light manufacturing, food and beverage, electronics, and other industries topped the chart in net profit growth, with year-on-year growth rates of 378%, 45%, 43%, 22%, 18%, 17% and 12%. Industries such as agriculture, forestry, animal husbandry and fishery, steel, non-bank finance, and basic chemical industry recovered well in the second quarter, with growth rates accelerating by 278, 200, 58, and 24 percentage points compared with those in the first quarter.
II. Innovation-driven Development: New Growth Driver Becomes New Backbone
The semi-annual report shows that companies listed on the SSE continue to increase investment in scientific and technological innovation to foster new quality productive forces. The total research and development (R&D) investment of companies contributing to the real economy was nearly RMB 430 billion, with a year-on-year increase of about 4%. 92 State Science and Technology Awards were won by these companies in 2023. The R&D investment of the STAR Market hit a new high, with a cumulative investment of more than RMB 78 billion, up about 10% year on year, and the median R&D investment intensity reached 12%. There were 10,000 new invention patents, and the total number of invention patents obtained exceeded 110,000. High R&D investment has driven investment in high-tech industries. The investment in the modern service industry represented by software and information technology services increased by 22%, while that in high-tech manufacturing industries such as rail transit equipment, aviation equipment, and semiconductors increased by 35%, 30%, and 18% respectively.
The production factors are pooled into the new quality productive forces, and the pace is picking up in the transformation between old and new growth drivers. The biomedical industry has been making technological breakthroughs at a quicker pace and sped up the commercialization process. The revenue of innovative drug companies on the STAR Market increased by 67% year on year, and more than 50 drugs have been approved for sale. A number of domestic innovative drugs are seeing an uptick in market adoption,, with the annual sales of products of Beigene, Ltd., Shanghai Allist Pharmaceuticals Co., Ltd., Sinocelltech Group Limited, and other companies exceeding RMB 1 billion. Shanghai United Imaging Healthcare Co., Ltd. independently developed the first whole-body clinical ultra-high field magnetic resonance (uMR) Jupiter 5T and has obtained an FDA 510(k) clearance, transforming itself into a world-leading company. Companies along the consumer electronics industry chain have made remarkable gains due to a recovering demand and growing technology. The total revenue and net profit of 22 consumer electronics companies increased by 26% and 20% year on year. The revenue and net profit of Will Semiconductor Co., Ltd. Shanghai, an upstream chip design leader, increased by 37% and 793% respectively. Its revenue in the second quarter reached RMB 6.4 billion, hitting a record high for a single quarter. The revenue and capacity utilization rate of wafer manufacturing companies on the STAR Market, such as Semiconductor Manufacturing International Corporation, have increased rapidly. Shipments from 12 semiconductor equipment companies, such as Advanced Micro-Fabrication Equipment Inc. China, continued to grow, with orders on hand hitting a record high. In line with the "electric, networked, intelligent and shared" trend, the automobile industry chain is growing strongly. The revenue and net profit increased by 5% and 45% respectively, and nearly 70% of auto parts companies achieved positive growth. Ikd Co., Ltd. has basically achieved full coverage of aluminum alloy high-pressure die casting products for new energy vehicles' battery, motor and electronic control systems, and intelligent systems, with revenue and net profit increasing by 23% and 14% respectively. Ningbo Joyson Electronic Corp. released an intelligent driving domain controller based on chip platforms such as Qualcomm, Horizon Robotics, and Black Sesame, with a year-on-year increase of 34% in net profit.
III. Emerging Momentum of New Industries, Technologies and Segments
Starting from scratch, a new segment is expanding at an accelerated pace. In the field of 5G, the three major operators increased their investment. In the first half of this year, the number of 5G base stations in China increased by 540,000. China Mobile Limited invested RMB 31.4 billion in its 5G network and achieved a revenue of RMB 3.9 billion from 5G private networks. It has promoted the commercial deployment of 5G-A in more than 280 cities; In the field of artificial intelligence, the multi-modal large model independently developed by Cloudwalk Technology Co., Ltd. has ranked first in China and third in the world in the evaluation by OpenCompass, an authoritative comprehensive evaluation platform, which powers the intelligent transformation by it customers; In the field of quantum communication, the dilution refrigerator launched by Quantumctek Co., Ltd. has put an end to dependency on foreign supply and its operation indicators are on par with similar mainstream products internationally; In the field of aerospace development, Geovis Technology Co., Ltd. has integrated earth big data, analysis and interpretation algorithms and supercomputers to launch star map earth brain engine to provide high-quality space-time content services.
Traditional industries are embracing high technology. Fuyao Glass Industry Group Co., Ltd. has achieved integration of 5G antenna glass, enabling a maximum network speed of 800 Mbps; Yutong Bus Co., Ltd. has made breakthroughs in the key technologies to extend buttery longevity such as low lithium consumption and slow attenuation cell, and taken the lead in promoting 10-year 1 million km long life battery system; Jiangsu Hengrui Pharmaceuticals Co., Ltd. has launched 16 Class 1 innovative drugs, with revenue and net profit after deduction of non-recurring expenses increased by 22% and 56% respectively. At the same time, digital intelligence and green technology are integrated in production procedures and techniques. Zijin Mining Group Company Limited uses cutting-edge technologies such as 5G, multi-sensor fusion navigation and automatic driving to build an automated, intelligent and unmanned mine; Baoshan Iron & Steel Co., Ltd. successfully trial-produced ultra-low carbon QP980 steel coil, reducing carbon emissions by about 60% in the whole process; Jiangsu Provincial Agricultural Reclamation and Development Co., Ltd. applied UAV low-altitude pest-control and precise fertilization on a large scale, realizing nitrogen reduction of more than 5%, which is a notable cut in cost and fertilizer needed.
IV. Technology Propels Diverse Global Trade Growth
In the first half of this year, more than 720 companies listed on the SSE disclosed their overseas business data and recorded a total overseas revenue of RMB 2.95 trillion, up 7% year on year. Export growth is more driven by technological progress and product iteration. Following the global trend of electrification, automobile enterprises listed on the SSE have increased their efforts to tackle key technology challenge and upgrade products. Great Wall Motor Company Limited, Saic Motor Corporation Limited and Guangzhou Automobile Group Co., Ltd. have achieved a total overseas sales volume of more than 800,000 vehicles, up 20% year on year. As one vehicle able to be sold overseas typically drives up the whole industry chain, 42 auto parts companies' overseas revenue increased by 8% year on year. Benefiting from the investment in key fields such as high-performance computing and the upgrading of consumer electronics products, semiconductor companies represented by Will Semiconductor Co., Ltd. Shanghai, JCET Group Co., Ltd., and Amlogic (Shanghai) Co., Ltd. underwent a stable recovery and export growth. The overseas revenue of 45 semiconductor companies increased by 22%. The demand for global fleet renewal and upgrading has increased. Relying on the breakthrough in the field of high-end ship types, China Shipbuilding Industry Company Limited won an order of super large oil tankers worth RMB 10 billion in Europe, and Jiangnan Shipyard, a subsidiary of China CSSC Holdings Limited, signed another contract for the very large ammonia carrier (VLAC) project.
Leading science and technology enterprises represented by companies on the STAR Market compete for high-level international markets and deliver outstanding performance. In terms of market position, 35 STAR Market companies such as Jinko Solar Co., Ltd. And Zhongfu Shenying Carbon Fiber Co., Ltd. ranked first in the world in subdivided industries or individual products; innovative drug companies successfully entered European and American markets with a number of products, overseas revenue up by 253% year on year. Zanubrutinib from Beigene, Ltd. has made history as the first "billion-dollar molecule" in the field of domestic innovative drugs, with global sales exceeding RMB 8 billion in the first half of the year. In terms of technological advancement, STAR Market companies benchmark themselves against international advanced level. A number of key technologies of 12 semiconductor equipment companies, such as Advanced Micro-Fabrication Equipment Inc. China, and Hwatsing Technology Co., Ltd., have broken through overseas monopolies and continuously iterated towards the higher end. In terms of international standard setting, STAR Market companies have participated in international standard-setting in many segments. Advanced rail transit companies such as Zhuzhou CRRC Times Electric Co., Ltd., and China Railway Construction Heavy Industry Corporation Limited have presided over and participated in the setting of more than 50 international standards, striving to enhance the international influence of China's standards and equipment.
The export pattern has increasingly diversified and the cooperation with developing economies has become closer. In the first half of this year, 76 companies listed on the SSE made announcements on their new overseas subsidiaries and investment projects. As many as 50 companies mentioned "Asia" or "Southeast Asia". Cmoc Group Limited has built presence in four continents, with overseas revenue reaching RMB 93.6 billion in the first half of the year. Shenzhen Transsion Holdings Co., Ltd. mainly sells products to emerging markets such as African and South Asian countries, with overseas revenue of RMB 34.5 billion in the first half of the year, hitting a record high. To answer the call for Belt and Road Initiative, companies on the SSE have engaged in the restructuring of global industrial chains and supply chains. China Railway Group Limited, China Railway Construction Corporation Limited and other centrally administrated state-owned infrastructure companies have participated in the construction of a series of landmark projects; Jinko Solar Co., Ltd. and Saudi Arabia Public Investment Fund invested USD 985 million to jointly build a 10GW high-efficiency battery module project to help clean energy transformation in the Middle East.
V. Subtle Changes in Consumption: New Business Model Generates New Potential
As cultural and intellectual experiences become more popular among the public, visiting museum exhibits and watching film or theater performances have gained steam. This has led to increased activity in the service consumption sectors such as hotels, travel, conferences, and exhibitions. The hospitality industry achieved growth in both revenue and net profit. BTG Hotels (Group) Co., Ltd. opened 567 new hotels, with a year-on-year increase of 27% in net profit. The airport sector continued to warm up. The revenue and net profit of Guangzhou Baiyun International Airport Company Limited, Shanghai International Airport Co., Ltd., and Xiamen International Airport Co., Ltd. increased by 22% and 229% year on year respectively. The revenue of the six airlines increased by 24% year on year, with a loss reduction of nearly RMB 8 billion. The tourist flow in scenic areas continued to be high. The number of tourists received by Changbai Mountain Tourism Co., Ltd. increased by 64% year on year, and its revenue and net profit both increased by more than 50% year on year. Culture, sports, business and travel are active. Dlg Exhibitions & Events Corporation Limited held the first Shanghai Sailing Open, Shanghai Half Marathon, Suzhou Creek Half Marathon, and other events with a total scale of about 28,000 participants, and the performance of exhibition subsidiaries increased by 34%; Shanghai Film Co., Ltd. created a "film +" cultural and social networking site, holding nearly 100 activities in total, with both revenue and net profit increasing.
The "Trade-In" policy is gradually taking effect, driving the replacement of old vehicles with new energy ones, the upgrade to smart home appliances, and home renovations. Guangzhou Automobile Group Co., Ltd., Saic Motor Corporation Limited, Great Wall Motor Company Limited, and other vehicle enterprises sold about 760,000 new energy vehicles in total, with a year-on-year increase of 8%; Seres Group Co., Ltd. focused on the field of new energy vehicles, and its cumulative sales volume in the first half of the year exceeded 200,000 vehicles, with a year-on-year increase of 349%. Haier Smart Home Co., Ltd. took the lead in launching the "Green Carbon Plan" and issued replacement subsidies in 141 cities. Its revenue and net profit increased by 3% and 16% year on year. Goneo Group Co., Ltd. fostered the ecosystem for intelligent factory-installed electrical products, with a year-on-year increase of 23% in net profit. Sichuan Changhong Electric Co., Ltd. seized the policy opportunity to deepen its efforts in frequency converter and commercial markets, with net profit increasing by 39%.
At the same time, online consumption has become an important engine to expand consumption. The beauty care industry is accelerating the use of emerging distribution channels. Proya Cosmetics Co., Ltd. has driven performance through new marketing strategies such as theme short films and microfilms, with net profit increasing by 38% and 40% respectively, and online channels have contributed more than 90% to revenue; Guangdong Marubi Biotechnology Co., Ltd. has planned marketing theme activities to promote brand building, with net profit increasing by 28% and 35% year on year; Runben Biotechnology Co., Ltd. has deepened its efforts in online channels and launched more than 50 new products, with a net profit growth rate exceeding 50%. The food, beverage, and jewelry industries actively explore new marketing models. Eastroc Beverage (Group) Co., Ltd. integrated multi-channel resources such as we-media and marketed itself through large sports events, with a year-on-year growth rate of 97% in online direct operating revenue; Beijing Caishikou Department Store Co., Ltd. helped increase its performance through online platforms, and the income of its e-commerce subsidiary increased by 50% year on year.
VI. Smooth Operation of Infrastructure and Improvement of People's Livelihood Through Environmental Protection and Renewable Energy
As the economic fundamentals further stabilized and improved, a number of key pillar industries reported outstanding performance. 16 construction companies such as China Railway Group Limited, and China Railway Construction Corporation Limited, 18 urban rail equipment companies such as CRRC Corporation Limited, and China Railway Signal & Communication Corporation Limited, and 22 rail transit operation companies such as Daqin Railway Co., Ltd., Beijing-Shanghai High Speed Railway Co., Ltd., and Jiangsu Expressway Company Limited have focused on their main business and played an important supporting role. Daqin Railway Co., Ltd. delivered 338 million tons of freight and 292 million tons of coal, accounting for 14% and 21% of the national railway delivery volume; Beijing-Shanghai High Speed Railway Co., Ltd. carried 24.71 million passengers on this line and completed 48.5 million train-kilometers of cross-line trains; Jiangsu Expressway Company Limited controlled an average daily traffic flow of 73,000 vehicles on the road network, up 5% year on year. Shanghai International Port (Group) Co., Ltd., Ningbo Zhoushan Port Company Limited, and Qingdao Port International Co., Ltd. have smoothed the "main artery" of maritime transportation, with a cargo throughput of 1.221 billion tons and container throughput of 64.52 million TEUs, up 5% and 8% year-on-year respectively, accounting for 14% and 40% of the national throughput.
What is more impressing is that people's livelihood is improving due to environmental protection and renewable energy. The guaranteed supply capacity of green energy such as hydropower, wind power and solar power storage has been further improved. The hydropower generation capacity of China Yangtze Power Co., Ltd. was 120.6 billion kWh, with a year-on-year increase of 17%. The domestic installed hydropower capacity was 71.7 million kW, accounting for 17% of the national total; The wind and solar power generation of China Three Gorges Renewables (Group) Co., Ltd. totaled 35.7 billion kWh, with a year-on-year increase of 28%, and the installed capacity increased by 17% and 88% respectively; The world's first set of static synchronous compensator developed by NARI Technology Co., Ltd. has completed the artificial short-circuit test, and the independent controllable UHV DC control and protection equipment is put into operation in hybrid HVDC transmission project for the first time. Rail transit companies are paying more attention to innovative research and development, promoting the construction of a modern railway infrastructure system. CRRC Corporation Limited has accelerated the new energy transformation of old diesel locomotives and made every effort to promote key projects such as CR450; Zhuzhou CRRC Times Electric Co., Ltd.'s traction converter system products cover a variety of models in the fields of locomotives, EMUs and urban rail transit, breaking international monopoly and realizing domestic substitution of train core systems.
VII. Enhancing Quality and Efficiency with Nearly RMB 300 Billion in Medium-term Dividends
Companies listed on the SSE have been fulfilling their main responsibilities to maintain the inner stability of the market. Since this year, more than 1,000 companies listed on the SSE have released the special action plan of "corporate value and return enhancement" and more than 400 companies have disclosed their semi-annual evaluation reports. Among them, nearly 200 companies saw their performance increase by more than 50%, indicating the efforts by companies listed on the SSE to enhance their investment value. With the help of "STAR Market Eight Measures" and relying on industrial mergers and acquisitions, STAR Market companies have launched 14 M&A and restructuring cases with an amount of more than RMB 3 billion, twice that of the same period last year. Among them, the valuation appreciation rate of Rigol Technologies Co., Ltd.'s acquisition of Naishu Electronic Technology Co., Ltd. exceeded 900%. It took 45 days from the submission of the trading plan to its registration with China Securities Regulatory Commission, making it the first registered share-offering transaction after the issuance of "STAR Market Eight Measures".
In terms of returns on investors, the amount of medium-term dividends has grown exponentially. There were 337 companies that paid dividends, up 343% year on year, with a total dividend amount of nearly RMB 500 billion, up 156% year on year, including nearly RMB 300 billion to domestic investors, up 193% year on year. More than 10 companies, such as China Mobile Limited, Petrochina Company Limited, and Ping An Insurance (Group) Company Of China, Ltd., paid dividends exceeding RMB 10 billion. While repaying investors with real money, the companies listed on the SSE also boosted market confidence through buy-backs. Since 2024, more than 560 new repurchase plans have been added, with an upper limit of the proposed repurchase amount of nearly RMB 80 billion. More than 350 additional holding plans for entities such as major shareholders, directors, supervisors and senior management members have been added, with an upper limit of holdings about RMB 33 billion.
VIII. ETF Becomes A Major Attraction to Incremental Capital, Making Index Investment a New Trend
The net inflow of ETFs on the SSE has increased year by year, with a cumulative net inflow exceeding RMB 1.2 trillion since 2021, which has become a major investment target for incremental capital. In the first half of 2024, more than RMB 450 billion was poured into ETFs on the SSE, accounting for 80% of the annual net inflow in 2023. Among them, the net inflow of stock ETFs reached RMB 388.6 billion, accounting for 84% of the total net inflow. The total scale of broad-based ETFs increased by 47% to reach RMB 950.9 billion. Mainstream broad-based ETFs such as CSI 300 ETF and SSE 50 ETF have become important long-term allocation tools for institutional investors.
Index investment has become a new growth pole driving long-term investment. In the first half of this year, index products such as ETF held a market value of RMB 1.2 trillion in companies listed on the SSE, accounting for about 2.3% of the overall market value of the SSE, an increase of more than 1 percentage point compared with the same period last year. Among them, index products such as CSI 300, CSI 500 and CSI A50 held more than RMB 700 billion of the market value of companies listed on the SSE; index products such as SSE 50, SSE 180, STAR 50, and STAR 100 held more than RMB 350 billion of the market value of companies listed on the SSE, up about 16% from the end of last year. At the same time, securities with high dividend payouts and low valuations performed well. The SSE Dividend Index and the SSE Dividend Value Index rose by 12% and 11% respectively.
With the help of "STAR Market Eight Measures", STAR Market Index products have achieved step-by-step growth. In the past two months, eight indexes such as STAR 200 and STAR Artificial Intelligence have been launched. The total number of STAR Market indexes has reached 24, with an increase of 50%. The richness of the index has driven the benign evolution of the investment ecology in the STAR Market, and the STAR Market indexes have become important tools for investors to seize investment opportunities in the whole STAR Market and core technology segments. At present, the total scale of sci-tech innovation index products has reached RMB 153.8 billion, including RMB 128.9 billion and RMB 16 billion for STAR 50 and STAR 100 respectively. Index products and index investment have become the ballast of the STAR Market.
