China Merchants Securities has released a research report forecasting the performance of A-share companies in 2023 and 2024. The report indicates that the growth rate of all A-share net profits attributable to the parent company in 2023 is expected to be -3.2% and to improve by 18.4% in 2024. The valuation is estimated at 15.4X and 11.7X for 2023 and 2024, respectively.
The report further reveals that around 51.1% of A-share companies have disclosed their 2023 annual performance forecasts, with the majority existing in the form of performance forecasts. The main board, GEM, and Science and Technology Innovation Board have all seen significant performance forecast rates. Based on the current disclosed samples using consistent comparable calculations, the estimated cumulative year-on-year growth rate of net profit for all A shares/non-financial A shares in the 2023 annual report is -1.6%/-5.0%.
China Merchants Securities expects the A-share annual report profits to continue to improve in 2023, with a full-year profit growth rate of all A-shares expected to return to around 0. The fiction industries with stronger performance resilience and rising prosperity are concentrated in consumer services, midstream manufacturing, and utilities.
It is noted that the profit forecast growth rate of most A-share industries in 2023 has been lowered recently. Real estate, agriculture, forestry, animal husbandry and fishery, environmental protection, media, and transportation have seen larger reductions. Evaluating the industry’s matching valuation and earnings for 2024, the report suggests that most industries face a PEG risk warning, with the possibility of industrial support being less than expected and macroeconomic fluctuations occurring.