Title: Huatai Securities: Year-End Effect Boosts Profit Growth of Industrial Enterprises
Huatai Securities, a leading financial company, has released a report predicting a boost in profit growth for industrial enterprises due to the year-end effect. The report indicates that the profit margins of midstream and downstream enterprises are expected to see marginal improvements as well.
According to the report, the year-on-year decline in profits of industrial enterprises above designated size in 2023 is expected to narrow from 4% in 2022 to 2.3%. In December 2023, the year-on-year growth rate of industrial enterprise profits slowed slightly to 16.8%, but remained significantly higher than the cumulative growth rate from January to November, which was at a negative 4.4%.
The report highlights that overall, the profits of industrial companies are projected to improve in 2023 compared to 2022. It also notes that the decline in upstream raw material prices may support the improvement of profits in the mid- and downstream manufacturing industries.
Furthermore, the report suggests that the improvement in exports since December may provide a boost to industries with greater exposure to external demand, such as electrical machinery and automobiles. Looking ahead, the profit growth rate of industrial companies in January and February may be boosted by the low base during the “epidemic period” in the same period last year.
Despite a slight month-on-month increase in Brent oil prices, the year-on-year decline is still wider. As a result, the report anticipates that the profit margins of midstream and downstream companies are expected to marginally improve.
In conclusion, Huatai Securities’ report offers a positive outlook for the profit growth of industrial enterprises, with expectations for improvements in profit margins for midstream and downstream companies. This projected growth is attributed to various factors, including the year-end effect, decline in raw material prices, and improvements in exports. It will be interesting to observe how these predictions unfold in the coming months.