Nearly 70% of the profits of industrial enterprises increased in the first April

On May 27, the financial data of industrial enterprises released by the National Bureau of Statistics showed that from January to April 2019, the total profits of Industrial Enterprises above the national scale dropped by 3.4% year on year, which was roughly the same as that from January to March. Zhu Hong, Senior Statistician of the Industrial Department of the National Bureau of Statistics, said that from January to April, the benefits of industrial enterprises showed the following characteristics: first, profits of major industries such as iron and steel, petroleum processing, petroleum exploitation and chemical industry improved; second, profits of nearly 70% industries increased year on year; third, profits of state-owned holding enterprises decreased; fourth, profits of private enterprises maintained growth; and fifth, assets. Debt ratio declined.

Specifically, from January to April, the profit of the petroleum industry increased by 19.7% year-on-year, 9.4 percentage points faster than that from January to March; the profit of the steel, petroleum processing and chemical industries decreased by 28.1%, 50.2% and 16.0% year-on-year, respectively, and the decline was 16.4%, 4.3 and 1.8 percentage points narrower than that from January to March, respectively. From January to April, profits in 27 of 41 industries increased year-on-year, accounting for 66%. The major industries with the most new profits are: tobacco products industry, with a 29.4% increase over the same period last year; wine, beverage and refined tea industry, with an increase of 18.1%; electrical machinery and equipment manufacturing industry, with an increase of 14.5%; non-metallic mineral products industry, with an increase of 12.6%; electricity, thermal production and supply industry, with an increase of 12.3%. At the same time, from January to April, the profit of state-owned holding enterprises decreased by 9.7% year-on-year, a decrease of 3.7 percentage points from January to March. From January to April, private sector profits increased by 4.1% year-on-year. At the end of April, the ratio of assets to liabilities of Industrial Enterprises above scale was 56.8%, which was 0.5 percentage points lower than that of the previous year. Among them, the asset-liability ratio of state-owned holding enterprises is 58.4%, which is reduced by 1.1 percentage points.

Zhu Hong said that due to the implementation of the VAT tax rate reduction on April 1, some industrial product demand was released ahead of time in March. In addition to the higher base in the same period, the profits of Industrial Enterprises above the scale fell by 3.7% in April compared with the same period last year, which was more volatile than in March. But in terms of average growth rate, profits in March and April increased by an average of 5.0%. On May 27, Mingming, Chief Analyst of Fixed Income of CITIC Securities, told Securities Daily that, in terms of ownership, the profit growth rate of state-owned holding enterprises decreased by 9.7% and 3.7% year-on-year from January to April, while the profit of foreign investors, Hong Kong, Macao and Taiwan businessmen increased year-on-year, the shareholding system was flat, and the profit of private industry was 4.1% year-on-year. The growth rate was 2.9% lower than the previous value. In terms of asset-liability ratio, in April, all ownership enterprises declined annually. Compared with the same period last year, state-owned holding enterprises declined the most, private enterprises increased significantly, and industrial enterprises'leverage level slowed down in the first quarter. This may be the joint effect of spontaneous adjustment of enterprises' production expansion behavior and marginal tightening of policies.

Mingming indicated that the growth rate of industrial profits from January to April had little change compared with the previous value, indicating that industrial profits were still in the bottoming stage. The fall of economic data in April is a compensatory decline. The current fundamentals show a "good start + overall stability". The unexpected growth in the first quarter weakens the margin of counter-cyclical control policies. It can be seen that the policy mix still tends to be stable. It is expected that the negative impact of hedging the external environment will increase in the future, but the possibility of excessive is not high and the real estate and other local adjustments will be made. Control may continue to tighten. Fundamentals and policy mix as a whole have a neutral impact on interest rates.