As at August 31, all the 2,492 SZSE-listed companies disclosed their 2021 interim reports. As China’s economy continued to recover and steadily improved, SZSE-listed companies saw a significant improvement in their performance in the first half of 2021, with both operating income and net profit posting a two-digit growth, demonstrating great vitality and strong resilience.

80% of SZSE-listed companies record growth in income and make a profit despite the impact of COVID-19

Affected by the COVID-19, SZSE-listed companies recorded a slight decline in operating income and net profit in the first half of 2020. In 2021, the critical year to cope with the impact of the pandemic and promote economic recovery, SZSE-listed companies rose to the challenges posed by the pandemic and achieved robust growth in performance. In the first half of 2021, SZSE-listed companies registered average operating income of CNY 3.378 billion and average net profit of CNY 254 million, up 33.09% and 41.52% year on year respectively, returning to the levels before the pandemic. That indicated they effectively played the role as the “stabilizers” of economic development.

Overall, more than 80% of SZSE-listed companies realized profit in the first half of the year, over 80% reported an increase in operating income, and over 60% achieved a growth in net profit. Specifically, 1,178 companies saw their net profits grow by over 30% year on year, accounting for 47.27%; and 954 companies had a year-on-year growth in net profit of over 50%, accounting for 38.28%.

SZSE actively serves innovation-driven development and achieves results in the registration-based IPO system reform

The ChiNext Board continues to focus on the innovative, productive and creative enterprises, and the conventional industries integrated with new technology, new industry, new business formats, and new model. Having become an important player in supporting innovation, entrepreneurship and economic transformation and upgrading, the board developed vigorously, with profit growth exceeding the average level of the market. In the first half of 2020, ChiNext companies improved in performance despite the impact of the pandemic. Their net profit rose by 13.97% year on year. In the first half of 2021, ChiNext companies maintained the high-growth momentum, realizing average operating income of CNY 1.156 billion and average net profit of CNY 111 million, up 33.57% and 33.56% year on year respectively.

The ChiNext Board had a clear innovation attribute. It has 132 specialized, sophisticated, featured and novel SMEs. Over 60% of the companies are from strategic emerging industries. Among them, those from the new-generation information technology, bio-pharmaceuticals, new materials and high-end manufacturing industries accounted for nearly 50%. Their operating income totaled CNY 669.511 billion and net profit CNY 69.726 billion in the first half of the year, up 37.29% and 38.63% year on year respectively, demonstrating remarkable industry cluster effect.

As at August 24, 2021, the first anniversary of the launch of the ChiNext Board reform and the pilot project of the registration-based IPO system, the board had over 1,000 companies listed. Currently, there are 186 companies newly listed under the registration-based system. Their average operating income was CNY 1.299 billion and average net profit CNY 108 million in the first half of 2021, up 30.98% and 29.84% year on year respectively. Nearly 70% of those newly listed companies recorded a growth in net profit, showing excellent growth potential and profitability.

SZSE merges the Main Board and the SME Board to optimize the market pattern and gives full play to the functions as the main front of blue chips

On April 6, 2021, SZSE’s Main Board and SME Board was officially merged. After the merger, the Main Board company cluster becomes denser, industries more diversified, and the industrial chain ecosystem more integrated. The board has also sustained strong resilience, with stable improvement in profitability. In the first half of 2021, the SZSE Main Board companies recorded an average operating income of CNY 4.904 billion, up 33.04% year on year, and an average net profit of CNY 351 million, up 43.32% year on year. Over 80% of the companies witnessed a year-on-year increase in operating income, over 80% realized profit, over 60% achieved a growth in net profit, and nearly 50% posted a growth in net profit of over 30%.

Among the SZSE Main Board companies, those from consumer and technology industries such as finance, bio-pharmaceuticals, electronics, food & beverage, chemical and computer had the highest total market capitalization. Large-capitalization companies PAB (000001) and HIKVISION (002415) registered net profits of CNY 17.583 billion and CNY 6.481 billion respectively in the first half of 2021, up 28.55% and 40.17% year on year respectively. They had not only excellent performance, but also sustained performance growth.

Major industries post remarkable growths and structural divergence needs to be balanced

In terms of industry performance, 18 out of the 19 industries in which SZSE-listed companies are distributed saw a year-on-year growth in operating income, and 15 in net profit. Major industries registered a significant growth, and some industries had impressive performance. The manufacturing industry which accommodates nearly 70% of SZSE-listed companies achieved growth of 37.29% and 64.11% in average operating income and average net profit respectively.

With the goals of achieving peak carbon emissions and carbon neutrality and in the context of energy transformation, the new energy vehicle industry represented by electric vehicles saw rapid development. The upstream are resource industries featured by the lithium ore industry, the midstream cell manufacturing industry and the downstream automobile manufacturing industry, all maintaining a boom trend. The non-ferrous metal ore mining and processing industry and the chemical materials and chemical product manufacturing industry registered CNY 2.142 billion and CNY 40.148 billion in net profit respectively, up 117.21% and 165.81% respectively. The electronics manufacturing sector had impressive performance. Computer, telecommunications and other electronics manufacturing industry achieved CNY 71.221 billion in net profit, up 72.35% year on year. Affected by factors like rise in commodity prices and strong demand from downstream industries, pro-cyclical industries represented by steel, mining and chemical saw significant improvements in performance. The ferrous metal smelting and pressing industry and the chemical fiber manufacturing industry took in CNY 31.68 billion and CNY 15.484 billion in net profit respectively, up 194.77% and 151.28% year on year respectively.

In the meantime, with the development of the pandemic around the globe, industries that are more susceptible to the pandemic such as consumption, tourism and air transportation recovered slowly. Even though the accommodation industry and the air transportation industry recovered to some extent over 2020, the industries still recorded a deficit on the whole and faced a grim recovery situation.

Leading enterprises make outstanding contributions and the SOE reform produces remarkable effect

Among the SZSE-listed companies, 129 achieved net profit of over CNY 1 billion. They realized operating income of CNY 3,579.528 billion and net profit of CNY 393.915 billion in total, up 39.73% and 55.01% year on year respectively. Quality companies accounted for 42.52% and 62.33% of the total operating income and net profit of SZSE-listed companies, up 2.02 percentage points and 5.42 percentage points from 2020 respectively, further underscoring their role as leaders. For example, 27 companies including MIDEA GROUP (000333) and WEICHAI POWER (000338) posted income of over CNY 50 billion in the first half of the year, and 19 companies including BOE (000725) and GREE (000651) recorded profit of over CNY 5 billion.

The “three-year action” of the reform of SOEs has been implemented for more than a year and a half, during which SOEs actively employed capital market instruments such as major assets restructuring, refinancing and equity incentive. Those instruments produced remarkable results in assisting in the transformation and upgrading of the industrial structure and in energizing SOEs, which contributed to the further improvement in the performance of SZSE-listed SOEs. In the first half of 2021, SZSE-listed SOEs registered total operating income of CNY 3,436.87 billion, up 38.34% year on year, and net profit of CNY 240.168 billion, up 70.27% year on year, reflecting a solid scale foundation and profitability.

Policies contribute to the increase in R&D input, to guide high-quality development with technological innovation

Since the beginning of 2021, the tax and fee cut policy has continued to produce effect, playing a significant role in creating a sound business environment, lowering companies’ operating cost and promoting innovation and entrepreneurship. In the first half of the year, the tax expenditures of SZSE-listed entity enterprises totaled CNY 83.847 billion, accounting for 1.04% of the operating income, down 0.17 percentage point year on year. Industries like software and integrated circuit, pharmaceutical manufacturing and scientific research technology service recorded a significant decrease in tax expenditures. Benefiting from policy support such as the tax and fee cut policy, listed companies can inject more funds into R&D and technological innovation, thus promoting enterprise transformation and upgrading and facilitating high-quality economic development.

To realize the adjustment of the industrial structure and improve China’s intelligent manufacturing level, SZSE-listed companies continuously increased input in R&D. In the first half of 2021, SZSE-listed entity enterprises invested a total of CNY 217.702 billion in R&D, up about 22.36% year on year, with average R&D intensity of 2.68%, and 65 or 2.65% of those companies invested more than CNY 500 million. ChiNext Board-listed companies adhered to their nature of innovation and continuously increased R&D input. Their average R&D input grew by 28.66% year on year. Four companies including CATL (300750) and Mindray (300760) invested over CNY 1 billion in R&D. The 132 specialized, sophisticated, featured and novel enterprises listed on the ChiNext Board had average R&D intensity of 7.07%, and their net profit in the first half of 2021 increased by 45.71% year on year, showing remarkable results of innovation-driven development.

Currently, at the critical stage of actively coping with the complex and severe internal and external economic environments and implementing the tasks of deepening the reforms of the capital market in all respects, SZSE-listed companies delivered satisfactory results in the first half of 2021. They gave full pay to their roles as innovation “pacemakers” and industry “leaders” and further consolidated the current economic state which is developing with good momentum. Next, SZSE will continue to follow the overall plan of China Securities Regulatory Commission and adhere to the market- and law-based reform direction. We will apply the new development philosophy completely, accurately and comprehensively, actively serve and foster the new development pattern, and continuously optimize regulation and services. we will refine the services and functions for innovation-oriented enterprises and startups with growth potential, energize market entities, and improve the quality of listed companies, thus assisting in the high-quality development of the capital market and making a good start of the 14th Five-year Plan period.