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|Monday, October 29, 2001, updated at 14:27(GMT+8)|
Software to Boost MarketWith their high growth rates and returns, listed software businesses will be a boost to Chinese stock markets in the coming years, officials and experts said.
"The Chinese software industry has been troubled by lack of capital, but with the encouraging policies of the government, public software companies have been well received by the markets, which shows the potential and prospects of the industry," said Shi Fenghai, deputy director-general of the High-tech Industrial Department with the State Development Planning Commission.
Shi spoke at a seminar on the growth potential of listed Chinese software companies held on Sunday by the China Computer and Microelectronic Industry Development Centre (CCID).
"We believe software businesses have great potential of growth on the Chinese stock markets in the next few years," said Liu Baohua, a senior IT investment analyst with CCID.
According to statistics from CCID, the seven listed software companies' average revenues from their main operations amounted to 645 million yuan (US$78 million) in 2000, and their average growth rate was 38.73 per cent, significantly higher than the average growth rate of 18.15 per cent of all listed firms on the Shanghai and Shenzhen stock markets.
The average profits of these seven companies reached 73 million yuan (US$9.4 million), rising more than 26 per cent from the previous year. The average growth rate of profits of all listed companies was 5.7 per cent.
UF Soft Co Ltd, the biggest accounting and management software business in China, was listed on May 18 on the Shanghai Stock Exchange with a price to earnings rate of 64.35, the highest on the Chinese stock markets. The prominent performance of software businesses has also attracted attention from securities companies and investment bankers.
"The fast growth of the software industry has made the sector one of the most attractive businesses for capital market," said Jiang Bolong, a senior analyst with China Communications Securities Co Ltd (CCS), one of the largest brokers in China. He predicted that software businesses which target the government, finance, telecommunications, social security and taxation sectors and produce enterprise management, e-commerce and network security products would enjoy high growth in the next few years.
Jiang said that with the delay of the launch of China's high-tech second board market, more and more software companies have set their eyes on the main board or overseas markets, which would bring considerable commissions for investment banks like CCS.
Beijing-based Federal Software Co Ltd revealed at the seminar that it would list on the Growth Enterprise Market in Hong Kong, and other major software businesses like Kingsoft also said they were warming up for their initial public offerings. According to statistics from the China Software Industry Association, in the past five years,China's software industry has grown at an average annual rate of 27.7 per cent. Revenues last year hit 23 billion yuan (US$2.78 billion) and are expected to reach 30 billion yuan (US$3.6 billion) this year.
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