China's Central SOEs Beat 2019's Profit Growth Target Amid Mergers
Zhang Yushuo
DATE:  Jan 17 2020
/ SOURCE:  yicai
China's Central SOEs Beat 2019's Profit Growth Target Amid Mergers China's Central SOEs Beat 2019's Profit Growth Target Amid Mergers

(Yicai Global) Jan. 16 -- China's central enterprises, the 96 giant companies that are directly owned by the government, logged profit growth of 10.8 percent last year, exceeding a targeted 7 percent to 9 percent, amid mergers of state-owned steelmakers, shipbuilders and port operators.

Total net profit at the companies run by the State Council, or cabinet, was CNY1.3 trillion (USD188.7 billion), the State-Owned Assets Supervision and Administration Commission said yesterday. Revenue gained 5.6 percent to CNY30.8 trillion, with the average operating profit margin at 6.1 percent.

The surprisingly solid earnings performance came at a time of ongoing consolidation among state businesses, with several central SOEs successfully combined in 2019.

This year's goals, as set out in the 13th Five-Year Plan, are to continue the strategic reorganization of these firms and focus on mergers in industries such as equipment manufacturing, chemicals and offshore equipment, as well as combinations in overseas oil and gas assets and other sectors.

The government will continue to make efforts to improve the management of loss-making, so-called zombie SOEs, cut their coal overcapacity, relieve them of some social obligations as well as resolve other longstanding issues, SASAC Secretary-General Peng Huagang said at a press briefing yesterday.

Last year's mergers included China State Shipbuilding with China Shipbuilding Industry, China Silk with China Poly Group, Ma Steel Group with China Baowu Steel Group and Liaoning Port Group with China Merchants Group. China National Oil and Gas Pipeline was also set up to manage most of the country's gas and oil pipeline infrastructure, while Sinochem Group and China National Chemical agreed this month to consolidate their agricultural assets.

Central SOEs paid taxes and fees of CNY2.2 trillion in 2019, up 3.6 percent from the year before. Their investment in fixed assets came to CNY2.8 trillion, a gain of 7.6 percent, Peng said.

Their average asset-liability ratio was 65.1 percent at the end of the year, down 0.6 point from its beginning. The asset-liability ratio in the metallurgical, electricity, mining and construction sectors dropped over 1 point during the same period.

Telecoms companies cut their data plan charges by more than 30 percent, saving consumers CNY460 billion (USD66.8 billion). Power grid firms trimmed their industrial and commercial prices 10 percent and shaved CNY53 billion off the public's bills.

Editor: Kim Taylor

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Keywords:   SOE