Profit growth of industrial enterprises in November changed to positive

According to the data released by the National Bureau of statistics on December 27, in November this year, industrial enterprises above Designated Size achieved a total profit of 593.91 billion yuan, an increase of 5.4% year-on-year, and a decrease of 9.9% year-on-year in October. The cumulative profit from January to November decreased by 2.1% year on year, 0.8 percentage points lower than that from January to October. "Volume and price factors all support the recovery of profit growth, with volume as the main factor and price as the auxiliary factor." Mingming, deputy director of the Research Institute of CITIC Securities (25.660, 2.33, 9.99%), analyzed the reporter of the financial times. In terms of volume, the industrial added value in November was 6.2%, most of which was less than 5% in the previous months; on the contrary, it was 5.4% in the same period of last year, while in the previous months, it was about 6%. The recovery of production led to a sharp recovery of profits in the same month on a year-on-year basis. In terms of price, the marginal narrowing of the year-on-year decline in PPI also boosted industrial profits. According to the calculation of the National Bureau of statistics, of the 15.3 percentage points that the growth rate of profits recovered from last month, about 4 percentage points can be explained by the price factor, and the remaining part is mainly the contribution of the expansion of production scale. Among the three industries, the growth of mining industry slowed down, the decline of manufacturing industry narrowed, and the field of electrothermal water combustion continued to expand.

According to Zhu Hong, Senior Statistician of the industry department of the National Bureau of statistics, there are two main reasons for the profit growth of industrial enterprises to change from negative to positive in November. First, the growth of industrial production and sales has accelerated significantly. In November, the added value of industries above designated size increased by 6.2% on a year-on-year basis, 1.5% faster than that in October; the operating revenue of industrial enterprises increased by 5.3% on a year-on-year basis, 3.8% faster than that in October. The expansion of production scale of the enterprise has brought about an increase in profits. Second, the factory price of industrial products decreased. In November, the ex factory price of industrial producers decreased by 1.4% year on year, 0.2% lower than that in October; the purchase price of industrial producers decreased by 2.2% year on year, 0.1% higher than that in October. According to preliminary calculation, in November, the profit growth rate of Industrial Enterprises above the full scale affected by the price change of industrial products was 4.0 percentage points higher than that in October. At the same time, from the perspective of industry category and enterprise type, Zhu Hong thinks the relevant data also reflects four highlights. First of all, the profit growth of consumer goods manufacturing industry has accelerated. In November, the profit of consumer goods manufacturing increased by 8.2% year on year, 3.1 percentage points faster than that in October. Among them, the profit of food manufacturing industry increased by 32.5%, down 10.9% in October; the profit of papermaking and paper products industry increased by 66.1%, up 54.3 percentage points faster than that in October; the profit of textile industry decreased by 11.4%, down 20.5 percentage points. Secondly, the profits of key industries such as petrochemicals and iron and steel have recovered significantly.

In November, the sales growth of the chemical industry, petroleum processing industry and iron and steel industry accelerated, and the profit growth picked up, mainly due to factors such as the recovery of market demand and the rise of product prices. Third, the profit growth of private enterprises and small enterprises accelerated. In November, the profits of private enterprises and small enterprises increased by 14.7% and 8.6% year-on-year respectively, 9.9 and 5.6 percentage points higher than that in October. Finally, the profit growth of state-owned holding enterprises and enterprises invested by foreign investors, Hong Kong, Macao and Taiwan has changed from negative to positive. In November, profits of state-owned holding enterprises increased by 0.6% year-on-year, reversing the trend of continuous decline since the second half of this year; profits of enterprises invested by foreign investors, Hong Kong, Macao and Taiwan increased by 3.5% year-on-year, and fell by 2.0% in October. According to statistics, from January to November, the operating revenue of Industrial Enterprises above Designated Size reached 95 trillion yuan, a year-on-year increase of 4.4%; the operating cost was 79.99 trillion yuan, a year-on-year increase of 4.6%; the profit margin of operating revenue was 5.91%, a year-on-year decrease of 0.39 percentage points. By the end of November, the total assets of Industrial Enterprises above designated size were 118.89 trillion yuan, up 6.0% year-on-year; the total liabilities were 67.61 trillion yuan, up 5.3%; the total owner's equity was 51.28 trillion yuan, up 6.9%; the asset liability ratio was 56.9%, down 0.3% year-on-year.

At the end of November, notes receivable and accounts receivable of Industrial Enterprises above Designated Size reached 17.92 trillion yuan, a year-on-year increase of 4.6%; finished goods inventory reached 4358.19 billion yuan, an increase of 0.3%. From January to November, the cost per hundred yuan of operating revenue of Industrial Enterprises above designated size was 84.20 yuan, an increase of 0.15 yuan on a year-on-year basis; the cost per hundred yuan of operating revenue was 8.73 yuan, an increase of 0.23 yuan on a year-on-year basis. At the end of November, the operating revenue of Industrial Enterprises above designated size per hundred yuan of assets was 90.7 yuan, a year-on-year decrease of 1.5 yuan; the per capita operating revenue was 1.388 million yuan, a year-on-year increase of 106000 yuan; the turnover days of finished product inventory was 17.3 days, a year-on-year decrease of 0.2 days; the average recovery period of notes receivable and accounts receivable was 55.7 days, a year-on-year increase of 1.8 days. In Mingming's view, in November, industrial data production and sales rose, inventory fell, and the inventory cycle is in the transitional period of active de inventory to passive de inventory.

However, the continuous lengthening of accounts receivable period indicates that the downstream is not confident in the recovery of demand, which will suppress the subsequent enterprises' willingness to replenish inventory. Although the growth rate of industrial enterprises' profits changed from negative to positive in November, Zhu Hong said that the current downward pressure on the economy is still large, and the volatility and uncertainty of industrial enterprises' profits still exist due to market demand, industrial prices and other multiple factors. Xie Yunliang, chief Macro Analyst of Minsheng securities, told the financial times that the profits of industrial enterprises picked up periodically, but the trend remains to be observed. "Don't worry about the performance of the fourth quarter, the pressure or recurrence in the first quarter of next year. In the near future, the demand for heavy chemical industry has improved, mainly from real estate and infrastructure. " He said that this year's strong resilience in real estate investment and sales is due to developers' behavior of robbing construction and sales. However, the general inventory has been accumulating for nearly two years, and it can not be sustained to rob construction and sales. Since the first quarter of 2020, real estate investment may face rapid downward pressure. It should be emphasized that the vitality of the manufacturing industry that does not rely on real estate is the future support strength.