(Yicai Global) April 30 -- Companies listed on China’s Star Market reported a 14.1 percent jump in profit in the first quarter.
Net profit stood at a collective CNY2.8 billion (USD396.5 million), the Shanghai Securities Exchange said today. But total operating income fell 9 percent to CNY26.1 billion amid the Covid-19 epidemic.
Half of the companies reported lower income, while another half saw it rise. A fifth of firms posted over 50 percent gain in net profit though nearly half posted declines. Twenty-one businesses were in the red.
The Nasdaq-style board opened for trading in Shanghai last July, with the aim of making it easier for China’s high-tech startups -- the Alibaba’s and ByteDance’s of tomorrow -- to secure funding at home rather than listing in New York or Hong Kong.
The Star Market’s pharmaceutical sector performed well in the first quarter, achieving growth in both operating income and net profit. The new generation of information technology firms showed solid risk resistance, with performance stable overall. Operating income and net profit slumped 30 percent and 24 percent, respectively, at high-end equipment manufacturing firms as the epidemic delayed production restarts and downstream orders dried up.
For the year ended Dec. 31, combined net profit at Star Market companies soared 25 percent to CNY17.8 billion on a 14 percent gain in operating income to CNY147.1 billion. The figures were in line with market expectation.
Seventy percent of the companies notched up double-digit growth in both income and net profit. They averaged a gross margin of 54 percent and a net profit rate of 22 percent, showing stronger market competitiveness.
Players in new infrastructure industries, represented by a new generation of IT, artificial intelligence, cloud computing and other firms, showed relatively strong growth momentum, with a 15 percent gain in operating income and 42 percent increase in net profit.
Benefitting from sustained increase in medical needs, bio-pharmaceutical firms recorded a 28 percent jump in operating income and a 14 percent hike in net profit. The energy conservation and environmental protection sector, the new material sector and the high-end equipment manufacturing sector also maintained fast growth.
The energy conservation and environmental protection sector saw operating income and net profit rise 30 percent and 25 percent, respectively. The operating income of the new energy sector and the high-end equipment manufacturing sector was up 17 percent and 6 percent, respectively, while their net profit increased 23 percent and 10 percent, respectively.
Annual earnings reports showed that research and development spending by Star Market-listed firms continues to increase.
Their R&D expenditure totaled CNY11.7 billion last year, up 23 percent from 2018, and equivalent to 12 percent of their operating income on average. Outlays have brought more scientific and technical innovations. Star Market businesses added more than 2,500 patents last year, including over 1,100 invention patents.
Eighty-eight firms listed on the board have proposed plans for annual cash dividends, averaging a payout ratio of 36 percent, with 84 percent of them expected to pay over 30 percent of annual net income to shareholders. These dividends will total CNY7 billion, with 12 firms making returns of CNY100 million (USD14.2 million) each.
Editor: Peter Thomas