China's biggest state-owned enterprises (SOEs) reported solid
profit growth in the first half, after making adjustments to
production and investment in accordance with central government
macroeconomic management policies.
The 191 flagships of their industries recorded a combined profit
of 225.4 billion yuan (US$27.2 billion) during the January-June
period, up 38.6 percent year-on-year.
The biggest advances were recorded in the petrochemicals,
metallurgy, transportation, mining, telecommunications and power
industries, contributing about 81.7 percent of the profit growth,
according to a Sunday press release by the State-owned Assets
Supervision and Administration Commission (SASAC).
Transportation businesses recorded greatest gains, soaring some
344 percent in the first half on a year-on-year basis as orders
increased rapidly with surging demand for coal, oil and other raw
materials.
Growing demand for various commodities also gave strong impetus
to the energy and power industries.
The State
Grid Corporation logged 28.3 billion kilowatt-hours of
cross-regional electricity transmission from January to June, up
212 percent compared with the same period a year ago.
The central SOEs have tried their best to increase coal, power
and oil production and transportation capacity to supply the
market, a SASAC spokesman said. The coal enterprises, for example,
managed to meet the demand for coal in major power plants when
supply was tight.
Listed transportation and coal companies are also performing
well.
Chen Huiqin, an analyst with Huatai
Securities, said that coal companies with excellent
performances and sufficient funds, as well as port, road and
transport companies, are the preferred stock picks in the second
half of the year.
As economic growth stays on the fast track and the rise in
demand for resources continues to outstrip that in supply,
resource-oriented enterprises such as coal and electricity are
expected to maintain momentum and benefit from further price
rallies.
According to SASAC, overall fixed assets investment made by the
191 central SOEs in the first six months of this year totaled 313.7
billion yuan (US$37.9 billion), an increase of 34.4 percent
year-on-year. However, the growth rate was down 7.4 percentage
points from that of the first quarter as a result of macroeconomic
controls imposed to cool the overheating economy.
Instead of blind expansion, most of the fixed assets investment
was made in upgrading product structure, technology and product
quality.
The slowdown in investment growth is more obvious in the central
automobile enterprises, whose investment in new projects in the
first half accounted for just 0.7 percent of all completed
investment.
Central iron and steel enterprises recorded declines in
investment in new projects. They are now concentrating on
restructuring their product lines to enhance competitiveness. Shanghai
Baosteel Group, for example, developed world-class stainless
steel oil pipe. Output of new products by the Anshan Iron and Steel
Group jumped 20 percent in the first half compared with the
same period last year.
Agriculture-related enterprises have enhanced research and
development to produce new crop seed and worked to ensure stability
in foodstuffs markets and fertilizer supply, according to
SASAC.
Meanwhile, eight central SOEs were ranked in the 2003 Fortune
Global 500, released last week, accounting for half of all Chinese
enterprises that made the list.
They include the State Grid Corp, Sinochem, China Mobile and
Shanghai Baosteel.
(China Daily July 19, 2004)