Tuesday, July 11, 2017

Shanghai Stock Exchange 15 Largest China Companies Have Seen Huge Total Net Profit Percentage Growth Deceleration, Particularly in the Most Recent Three Years

From a review of the fine Google Finance Website, I broke out below the 15 Companies headquartered in China which had the largest stock market capitalizations now totaling a huge Chinese Yuan 12.634 Trillion on the Shanghai Stock Exchange. The Chinese Yuan (RMB) is worth 14.7 cents US.

Of these 15 largest Chinese Companies, an amazingly high 10 of them are Financial Companies ..... 8 Banks and 2 Insurance Companies.

The 8 China Banks had Total Net Profits in 2016 which comprised a massive 81% of the Total Net Profits in 2016 of all 15 of these China Companies. 

All 8 China Banks are State Majority-Owned, all 8 had their financial statements audited by one of the very prestigious Big 4 CPA firms, and 7 of them followed gold standard IFRS GAAP with the other 1 following Chinese GAAP.

The Annual Percentage Growth of the Total Net Profit of each of these 8 China Banks has been consistently very strong until recently.  Below here is the Year-Over-Year Percentage Growth of the Total Net Profits of these 8 China Banks in each of the Most Recent 7 years:
  • 2010 Above 2009 .... +32%
  • 2011 Above 2010 ..... +27%
  • 2012 Above 2011 ..... +16%
  • 2013 Above 2012 ..... +12%
  • 2014 Above 2013 ....... +7%
  • 2015 Above 2014 ....... +1%
  • 2016 Above 2015 ....... +2%
Since the China Banks are Majority Owned effectively by the State Government, China can take steps to control the reported Net Profits of these 8 Banks.

Thus, a much better barometer of how China's businesses are doing is to analyze the Audited by Big 4 CPA Firm Net Profits of the China Companies filing their financial statements with the US Securities and Exchange Commission.  I did just that in my most recent post which showed that These Total Profits dropped markedly in each of the most recent 3 years.

Below here are the reported predominantly Audited Net Profits of the 15 Largest China Companies on the Shanghai Stock Exchange for all years reported from 2007 through 2016:

 2016
Most 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Largest China Companies Recent Net Net Net Net Net Net Net Net Net Net
On the Shanghai Stock Exchange FYE Profit Profit Profit Profit Profit Profit Profit Profit Profit Profit


 mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs   mil RMBs 
Banks










Industrial and Commercial Bank of China  Dec       279,106      277,720     276,286     262,965      238,691     208,445      166,025      129,396        111,226        82,254
China Construction Bank  Dec      232,389     228,886     228,247       215,122      193,602      169,439       135,031      106,836       92,642        69,142
Agricultural Bank of China Ltd  Dec       184,060       180,774        179,510        166,211        145,131       121,956        94,907        65,002         51,453        43,787
Bank of China Limited  Dec        184,051        179,417        177,198       163,741       145,746      130,848       110,111        85,349         65,573         62,017
Bank of Communications Co Ltd  Dec          67,210        66,528        65,850        62,295        58,369         50,735       39,042         30,118        28,524       20,323
China Merchants Bank Co Ltd  Dec         62,081        57,696          55,911         51,743        45,268        36,129        25,769         18,235         21,077         15,243
Industrial Bank Co Ltd  Dec         53,850        50,207         47,138          41,211         34,718         25,505          18,521        13,282          11,385          8,586
Shanghai Pudong Development Bank Co Ltd  Dec         53,039        50,604        47,026       40,922        34,186        27,286          19,177          13,217          12,516          5,499












Total all 8 Banks
    1,115,786   1,091,832    1,077,166   1,004,210        895,711      770,343     608,583      461,435     394,396      306,851












8 Banks Total Earnings % Increase:










….. 2008 Above 2007
29%








….. 2009 Above 2008
17%








….. 2010 Above 2009
32%








….. 2011 Above 2010
27%








….. 2012 Above 2011
16%








….. 2013 Above 2012
12%








….. 2014 Above 2013
7%








….. 2015 Above 2014
1%








….. 2016 Above 2015
2%




















Insurance Companies










Ping An Insurance Group of China  Dec         72,368         65,178        47,930        36,014        26,750        22,582         17,938        14,482           1,635         19,219
China Life Insurance Co Ltd  Dec          19,585         35,187         32,514        25,008          11,272         18,491         33,811       33,036         19,274       39,060












Oil & Gas Companies










PetroChina Co Ltd  Dec         29,372       42,089       119,028      142,274      130,620       145,959       150,792       106,559      126,802       155,337
China Petroleum & Chemical Corp  Dec         46,672         32,512       46,639       66,348       64,082        73,225         71,782        63,129         31,180         56,150












Auto Company










SAIC Motor Corp Ltd  Dec        43,962        40,074         38,251        35,584        33,528       34,990        28,532  NA   NA   NA 












Coal Company










China Shenhua Energy Co Ltd  Dec          31,970        24,959       49,063        55,932        58,482         53,617        44,619          37,110       29,899        24,037












Liquor Making Company










Kweichow Moutai Co Ltd  Dec          16,720         15,500         15,350          15,140         13,310  NA   NA   NA   NA   NA 












Total all 15
  1,376,435    1,347,331    1,425,941    1,380,510    1,233,755     1,119,207      956,057      715,751      603,186     600,654












All 15 Total Earnings % Change:










….. 2009 Above 2008
19%








….. 2010 Above 2009
34%








….. 2011 Above 2010
17%








….. 2012 Above 2011
10%








….. 2013 Above 2012
12%








….. 2014 Above 2013
3%








….. 2015 Below 2014
-6%








….. 2016 Above 2015
2%













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