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Majority of companies expecting to see profits as economy moves out of slump

By Song Shengxia (Global Times)

08:18, May 23, 2012

The majority of listed companies that have released their financial performance forecasts are expected to witness gains in the first half of the year as China's economy moves out of a rut.

Of 848 listed companies on the Shenzhen and Shanghai stock exchanges that have announced their first-half financial forecast by yesterday, 488, or 57 percent, expect to see gains, with 75 predicting substantial gains and 17 expecting to turn to profit from loss, statistics provided by Wind Information Co, a Shanghai-based financial data provider, showed yesterday.

A total of 349 companies, or 41 percent, predicted a slump in net profits or even losses, with 67 expected to suffer a loss for the first time, the data showed.

The figures are different from that reported by the Xinhua News Agency earlier.

Among the 844 listed companies that had disclosed their interim forecasts as of Sunday, 305 predicted losses or profit slump and 176 were likely to see a drop in business, and only 43 percent expected to see gains or decrease in losses, Xinhua reported Monday, without giving the source of the data.

However, both sets of data showed that manufacturing, property and construction sectors accounted for most of the companies expecting a decline in business or losses.

"There is no doubt that the profits of listed companies, especially those in property and related sectors such as steel, cement and building materials, are shrinking amid a slowing economy and continuing property curbs," Yang Li, a partner with Adfaith Management Consulting, told the Global Times.

"But overall, the economy has been recovering in the second quarter, although the pace of recovery is not as fast as that after the last downturn in 2009," he said.

Li Huiyong, chief analyst at Shanghai-based Shenyin Wanguo Research & Consulting, agreed with the view.

"Profits of listed companies bottomed out in the first quarter and the second-quarter performance would generally improve, making the interim results look better," Li told the Global Times.

"The overall profitability of listed companies will gradually pick up as the economy rebounds in the third quarter. They will see 2 percent profit growth in the first half of the year and 6 percent for the whole year," Li predicted.

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