(Yicai Global) April 29 -- The number of loss-making China-listed firms has risen to a record high even before the earnings season has ended.
The number of mainland-listed companies that made losses rose 78 percent from a year ago to over 400 firms, Securities Times reported yesterday. The figure makes up nearly 12 percent of all Chinese listed firms, up over 5 percentage points. Both the quantity and the portion of these companies are new records.
Nearly 80 percent of these firms lost over CNY100 million (USD14.9 million) each and 2 percent lost more than CNY10 billion (USD1.5 billion).
One major reason behind the reduced ability to generate cash flows is goodwill impairment, a deterioration in the capabilities of acquired assets. The number of Chinese firms that logged goodwill impairments in their annual reports doubled to nearly 730 in 2018, totaling a value of CNY112.2 billion (USD16.7 billion). The figure was nearly double that in the decade ended in November 2017, during which Chinese firms amassed CNY67.6 billion in goodwill impairments.
At nearly 3,500 units, almost 96 percent of all listed Chinese firms have already released their earnings. These companies posted CNY3.37 trillion (USD500.8 billion) in net profit. In comparison, they earned CNY3.43 trillion in 2017.
Mainland-listed firms publish their annual financial reports between January 1 and April 30.
Editor: Emmi Laine