Chinese firms 'face slower growth' (2)

This forecast is below the consensus opinion. Quite a number of economists believe the country's GDP growth could still reach 8 percent this year.

"We think export growth will face some headwinds from the subdued global growth outlook for 2013, especially for the European Union, China's largest export market," said Louis Kuijs, China economist with the Royal Bank of Scotland plc.

China's industrial profits fell by 1.8 percent year-on-year over January to September 2012, underlining the possibility of negative growth for the full-year 2012. This contrasts with strong profit growth of 40 percent in 2011 and 50 percent in 2010.

Revenue growth for Fitch's portfolio is set to slow in 2012 and to continue downward in 2013, the report showed.

In the specific case of the 15 SOEs, the median revenue growth rate is forecast to fall to 8 percent in 2012, and 6 percent in 2013, down from the 40 percent of 2011.

Notably, revenue and profit growth for Chinese city gas distributors remains robust because they benefit from low penetration rates and supportive state policies despite the general economic slowdown.

For the 25 non-governmental companies, median revenue growth is forecast to slow to below 20 percent a year during 2012 and 2013, from 41 percent in 2011 and 53 percent in 2010.

Profitability growth is significantly lower than that achieved in 2011 and 2010 but clearly remains in positive territory, the report showed.

In the case of the 15 SOEs, Fitch expects the median company to record growth of 10 percent in 2013 and 36 percent in 2013, after just 1 percent in 2011.

The financial performance of different industries will further diverge.

J.P. Morgan Research Analyst Sentiment Index (JSI) for China in November is 49.2, compared with the October reading of 61.2.

A notable change in the November reading is weakening in sentiment for property, telecom, oil and gas, which are the heavyweight sectors in the MSCI China basket, according to the research.

On the other hand, sectors tilted toward domestic demand, including gas, registered improving sentiment.

While the November JSI eased rather notably from the October level, the November reading remains above the September and August levels.

Meanwhile, sentiment on inventories and earnings per share revision continue to improve, J.P. Morgan said in a report.

"The recovery in industrial activity appears to be gaining traction, supported by policy easing and stabilization in the housing market. External demand has also improved in the near term," said Zhu Haibin, chief China economist and head of Greater China Economic Research at J.P. Morgan.

"This likely suggests that, at the micro level, the operating environment for corporates is improving along with the macro indicators in recent months, but probably at a more gradual pace," Zhu added.

huyuanyuan@chinadaily.com.cn

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