Profits of industrial enterprises maintained double-digit growth in the third quarter—

More than 70% of the industry's profit scale exceeds that before the epidemic

  Our reporter Xiong Li

  According to data released by the National Bureau of Statistics a few days ago, from January to September, industrial enterprises above designated size achieved a total profit of 63,344.08 billion yuan, a year-on-year increase of 44.7%, an increase of 41.2% over the same period in 2019, and an average increase of 18.8% over the two years.

  "In the third quarter of this year, industrial production continued to recover, profits maintained a good growth momentum, corporate profitability continued to improve, and profitability, asset-liability ratios and capital turnover continued to improve year-on-year." said Zhu Hong, a senior statistician at the Department of Industry, National Bureau of Statistics .

The leading role of high-tech manufacturing is significant

  Liu Xingguo, a researcher at the Research Department of the China Enterprise Confederation, believes that in addition to price increases, the good performance of the high-tech industry and equipment manufacturing industry have all contributed positively to the rapid growth of industrial corporate profits in the first three quarters.

In addition, the government’s tax cuts and fee reductions, as well as companies’ own revenue and expenditure reduction, and strengthened management, have also contributed to profit growth.

  From the perspective of the third quarter, the profit of industrial enterprises increased by 14.3% year-on-year, continuing to maintain double-digit growth; the two-year average growth rate was 15.1%, and the growth rate was slightly lower than that in the second quarter, and overall maintained a good growth trend.

Among them, the profit in September increased by 16.3% year-on-year, and the growth rate was 6.2 percentage points higher than the previous month.

More than 70% of the industry's profitability exceeded the level before the epidemic.

In the third quarter, among 41 major industrial sectors, 29 industries increased their profits compared to the same period in 2019, accounting for 70.7%. The overall performance of most industries was better than before the epidemic.

Among them, there are 18 industries with an average growth rate of 10% or more in the two-year profit.

  The profit of high-tech manufacturing industry has grown rapidly.

In the third quarter, the profit of high-tech manufacturing industry increased by 33.6% year-on-year, and the growth rate was 19.3 percentage points higher than the average level of industrial enterprises above designated size, which played a significant leading role.

Among them, the pharmaceutical manufacturing industry was driven by the large domestic and foreign vaccine demand and the booming production and sales of enterprises. The profit in the third quarter increased by 66.8% year-on-year, continuing the rapid growth since the beginning of the year; the electronic and communication equipment manufacturing industry was affected by the steady growth of corporate income Investment income was driven by factors such as decline to increase. Profits increased by 33.4% year-on-year, and the growth rate was 14.6% faster than the second quarter; the profit of the aerospace vehicle and equipment manufacturing industry increased by 25.4% year-on-year, maintaining rapid growth.

  "In the third quarter, the profit of the mining industry increased by 2.04 times year-on-year, and the raw material manufacturing industry increased by 42.5%. It continued to maintain a rapid growth trend and provided an important support for the improvement of the profitability of industrial enterprises." Zhu Hong said that the profitability of the mining industry and the raw material manufacturing industry has expanded significantly.

Among them, driven by the continuous increase in product prices and other factors, the profit of the coal industry in the third quarter increased by 2.72 times year-on-year, and the growth rate was significantly faster than in the second quarter; the profits of the oil and gas extraction, non-ferrous metals, petroleum processing, chemical, and steel industries increased by 2.97 times, 77.6%, and 70.8%, 69.3%, 42.6%, all achieved rapid growth.

  The profit of the consumer goods manufacturing industry recovered steadily.

In the third quarter, as market demand continued to recover, the profit of the consumer goods manufacturing industry increased by 9.7% year-on-year, with an average growth rate of 12.0% in two years, showing a steady recovery trend.

Among them, the profit of the chemical fiber industry increased by 2.15 times year-on-year, showing rapid growth; the profit of the furniture manufacturing, culture, education, and arts industries increased by 10.6% and 8.3%, respectively, and the growth was relatively stable.

Business operations have improved significantly

  Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, believes that the profit of industrial enterprises maintained rapid growth in September, which was mainly driven by several factors.

One is the continuous expansion of demand.

From the upstream energy, industrial basic raw materials, to medicine, electromechanical and other demand is still relatively strong; the second is the price increase factor.

The prices of energy and industrial raw materials are operating at a high level, and the rapid growth of profits in the upstream sector has obviously driven industrial profits; third, the overall cost of the industrial sector has declined.

  In the third quarter, business operations improved significantly.

As policy measures such as reducing taxes and fees and supporting the development of the real economy have continued to take effect, the cost per hundred yuan of operating income of industrial enterprises above designated size has decreased by 0.39 yuan year-on-year, a significant drop.

The profit margin of corporate operating income was 6.70%, a year-on-year increase of 0.13 percentage points.

The improvement in profitability drove the company's debt-to-asset ratio to continue to fall. At the end of September, the company's debt-to-asset ratio was 56.3%, a year-on-year decrease of 0.5 percentage points and a decrease of 0.1 percentage points from the end of the previous month.

  Accelerated capital turnover and improved operational efficiency.

At the end of September, the accounts receivable and finished product inventories of industrial enterprises above designated size increased by 11.5% and 13.7% year-on-year, respectively, and the growth rate dropped by 0.6 and 0.5 percentage points respectively from the end of the previous month. The occupation of working capital improved.

The average payback period of corporate accounts receivable was shortened by 3.8 days year-on-year, and 0.4 days shorter than the end of the previous month.

Finished goods inventory turnover days decreased by 1.5 days year-on-year, and 0.3 days shorter than the end of the previous month.

The efficiency of the use of corporate funds has improved, and the operating conditions have been further improved.

  Liu Xingguo believes that the operating data of the first three quarters shows that the operating conditions of industrial enterprises have improved significantly under the overall recovery of the market. Assets and capital turnover have both accelerated, the level of costs and expenses has decreased, and the debt-to-asset ratio has fallen slightly. .

These positive changes are undoubtedly an important driving force for the rapid growth of profits in the first three quarters. They will help stabilize corporate development confidence, and will also help drive the steady growth of new investment, thereby consolidating the foundation for subsequent growth.

Industrial profit differentiation is expected to improve

  Liu Xingguo believes that in the first three quarters, the profits of industrial enterprises increased rapidly, and the main contribution came from the continuous rise in commodity prices driven by the market recovery.

From the perspective of industry profit growth, this effect is very obvious.

For example, the total profit of the petroleum, coal and other fuel processing industries increased by 9.30 times year-on-year, the oil and natural gas extraction industry increased by 2.67 times, and the coal mining and washing industry increased by 1.72 times.

  "In other words, the rapid growth of profits of industrial enterprises is actually mainly derived from the upstream links of the industrial chain, and the profit performance of the downstream links is not good." Liu Xingguo believes that this phenomenon of obvious polarization between upstream and downstream profit performance is definitely not. Reasonable and unsustainable, it is not conducive to the smooth flow of the domestic economic cycle.

To ensure the smooth flow of the domestic economic cycle, companies in different industries and in different upstream and downstream links should be able to obtain reasonable profit returns under normal circumstances.

There can be certain differences in profitability between industries and between upstream and downstream links, but they should never be too disparate.

From the perspective of industrial ecology, in order to achieve sustainable and healthy development of the industry, companies in all links of the entire industry chain, as well as other companies outside the industry that provide services for industrial development, should see the hope of sustainable development and reasonable profitability.

  Is the momentum of rapid profit growth of industrial enterprises sustainable?

Zhou Maohua believes that the profit of industrial enterprises in the third quarter has slowed down year-on-year, and it is still expected to continue to maintain a relatively high growth rate.

Affected by the increase in the base number last year, the year-on-year growth rate of industrial enterprise profits has experienced a technical decline, but the continued recovery of global demand and the increase in commodity prices will continue to support industrial enterprise profits to maintain a relatively rapid growth rate.

At the same time, as the effects of comprehensive domestic measures to maintain supply and stabilize prices gradually become apparent, the differentiation of industrial profits is expected to improve, which will help ease the cost and operating pressure of some mid- and downstream companies.

  From a long-term perspective, Liu Xingguo believes that the trend of rising prices of bulk commodities cannot be continued indefinitely, so the huge profits and lay-ups in the upstream links are not sustainable.

Excluding the impact of rising commodity prices, the relatively rapid increase in the profits of industrial enterprises in the early stage is actually a recovery growth based on the sharp decline in profits affected by the epidemic in 2020. Once the overall profitability of industrial enterprises returns to normalized levels, Earnings growth rate will gradually return to the normal level.

  "After returning to normalization, if we want to continue to maintain rapid profit growth, we must rely on innovative breakthroughs to achieve it and create more new value through innovation. Of course, management can also play an important role in profit growth, but if there is no innovation Support, the profit growth potential that management can tap is limited." Liu Xingguo said.

  Zhu Hong said that in the third quarter, the profits of industrial enterprises above designated size maintained a good growth trend, but factors such as high commodity prices and insufficient supply chain industry chains affected the continued recovery of corporate profits. At the same time, the problem of profit imbalance between upstream and downstream industries was more prominent. The foundation for the restoration of corporate benefits still needs to be further consolidated.

In the next step, in accordance with the decisions and deployments of the Party Central Committee and the State Council, we must do a good job in normalizing epidemic prevention and control, maintain the continuity and stability of macroeconomic policies, do a good job in economic cross-cycle adjustment, stabilize commodity prices, continue to expand domestic demand, promote transformation and upgrading, and stimulate the market The vitality of the main body ensures that the industrial economy operates within a reasonable range.

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