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QINGDAO TODAY
在线翻译:
szdaily -> Markets -> 
Slowing economy hits listed firms’ profits
    2019-10-21  08:53    Shenzhen Daily

AFTER a bleak first half for corporate earnings in China, the current reporting season is bringing more grim news.

About 44 percent of more than 1,200 firms that have given profit guidance for the third quarter predicted worse earnings than from a year earlier, in terms of smaller profits, deeper losses or swings into loss.

It shows earnings are still deteriorating after a wave of profit warnings in the first half. The ratio is on par with the level in same period last year, which was the highest for a third quarter since 2015.

NavInfo Co., a navigation software maker, lost 14 percent over two days through Wednesday last week after it estimated a plunge of 91 percent in nine-month profits on weaker auto sales.

Huayi Brothers Media Corp. also sees a loss for the period, triggering a 3 percent drop over two days through Wednesday. FAW Car Co. saw a three-day decline of 2.1 percent through Thursday, after flagging a loss of 306 million yuan (US$43 million) for the third quarter.

The earnings guidance pool is dominated by Shenzhen-listed firms. Companies listed on the ChiNext board are required to give guidance on their quarterly results, while the rest of the market must flag significant changes such as a rise or drop of more than 50 percent from a year earlier. Shanghai-listed firms can warn investors of any big change in their quarterly earnings voluntarily.

More than half of companies said earnings probably improved or remained unchanged. Still, China International Capital Corp. estimates profits grew 9.8 percent in the nine months through September, indicating a slowdown from the 10.4 percent growth reported for the first half. It sees automakers, developers and liquor producers among sectors under pressure, analysts led by Wang Hanfeng wrote.

Firms favored by investors also face risks if they don’t meet lofty expectations. Kweichow Moutai Co. dropped as much as 4.2 percent Wednesday, after its third quarter earnings growth left analysts unimpressed.

Investors may need to lower their expectations, given that any trade talk progress will take time to filter through to the economy, said Gerry Alfonso, executive director of the international business department at Shenwan Hongyuan Group Co.

“Positive developments, such as a partial trade deal, will help the real economy but you will need to wait a few months to see it actually reflected on the hard data.” (SD-Agencies)

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