Chinese Listed Companies Forecast Sharp Decline in Q1 Earnings

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Chinese listed companies are forecasting a sharp decline in their Q1 earnings due to COVID-19.

According to the Hong Kong South China Morning Post (SCMP) on the 16th, a total of 3,897 companies listed on the Shanghai and Shenzhen stock exchanges are scheduled to announce their Q1 earnings within this month. Large listed companies are warning of a steep drop in Q1 profits, heightening market anxiety.

China's top air conditioner manufacturer, Gree Electric, is expected to report its worst quarterly performance in 10 years. Gree Electric announced that its Q1 net profit is projected to fall by 70-77% year-on-year to approximately 1.33 billion to 1.71 billion yuan. The COVID-19 outbreak impacted sales, and factory shutdowns across the industrial chain caused production disruptions. Dong Mingzhu, Chairwoman of Gree Electric, previously told local Chinese media that sales in February and March were nearly zero due to the COVID-19 impact, signaling the possibility of poor Q1 results.

Chinese electric vehicle company BYD forecasted that its Q1 net profit will drop by about 80-90% year-on-year to between 50 million and 150 million yuan. This is due to sluggish car sales amid the COVID-19 outbreak. Similarly, CATL, China’s largest electric vehicle battery manufacturer, also predicted a 20-30% decline in Q1 net profit due to weak electric vehicle sales caused by COVID-19.

Wanda Film, which owns China’s largest cinema chain, expects a Q1 loss of 550 million to 650 million yuan. The impact of COVID-19 led to theater closures and postponed releases of new films. This is expected to be the worst quarterly performance since Wanda Film’s listing in 2015. Competitors Guangzhou Jinmi Media and Beijing Guangxian Media also forecast Q1 losses.

Bloomberg analyzed that the Q1 net profits of large listed companies comprising the CSI300 index will decline by 18% year-on-year. The 'China Nasdaq' ChiNext index, composed of startups and venture companies, is estimated to see a 25% decrease.

China Sinolink Securities believes that even if the government employs aggressive fiscal policies and eased monetary policies to overcome the COVID-19 crisis, there will be limits to a full recovery of corporate earnings for the entire year. Li Lifeng, an investment strategist at Sinolink, said, "The halted economic activities in Q1 will reduce corporate earnings," adding, "Even if recovery gradually begins in Q2, the net profits of Chinese listed companies for the whole year are expected to decline by about 2.1% year-on-year, showing a significant difference from last year’s growth rate of 7.8%."

This content was produced with the assistance of AI translation services.