The number of Chinese companies that have issued warnings on earnings is turning into a flood.
On Wednesday, 440 firms said that last year’s financial results had deteriorated. In total, about 373 have said that they would post a loss out of the more than 2,400 listed firms that have announced preliminary numbers or issued guidance this season, data compiled by Bloomberg show. About 86 percent of those incurring losses were profitable in 2017.
Damage has been widespread: airlines faced soaring fuel costs and a weak yuan, the equity-market slump hurt brokerages, while China’s economic slowdown and surge in impairment costs slashed earnings for a bus manufacturer, a maker of refrigerators and an ID card supplier. Another glut of forecast cuts was likely before the end of yesterday, as many firms opt to take a hit from more stringent accounting rules rather than report years of losses.
“We’re only just seeing the beginning of deterioration in corporate earnings as the economy slows further,” said Yu Dingheng (餘定恆), a fund manager at Shenzhen Flying Tiger Investment & Management Ltd (深圳市翼虎投?管理). “Things will continue to go downhill for firms seeing business slowing and even as the macro-economy recovers, these individual firms will never be what they were.”
Joining the growing list of firms on Wednesday expecting numbers for last year to decline from a year earlier were Lens Technology Co (藍思科技), developer Oceanwide Holdings Co (泛海控股), chemicals producer CEFC Anhui International Holding Co (安徽華信) and China Southern Airlines Co (中國南方航空). Shares of all four companies fell onshore yesterday.
Some Chinese firms said that last year’s results would be far better than expected, including Jiangxi Copper Co (江西銅業), WuXi AppTec Co (藥明康德) and Guangzhou Baiyunshan Pharmaceutical Holdings Co (廣州白雲山醫藥). However, only miner Jiangxi Copper rose yesterday.
China’s equity traders fled stocks in Shenzhen again yesterday, sending the city’s benchmark down for a fifth day. They have sought refuge in shares of state-controlled giants instead, betting that they are better-placed to benefit from the Chinese government’s efforts to support the economy. Shenzhen’s stock exchange is home to most of China’s start-ups and private companies.
For those looking for shelter from the flurry of profit cuts, analysts at Citigroup Inc recommended a handful of Chinese property stocks. Even if the nation’s economy strengthens, the outlook for some of the companies that have flagged a slump in earnings is unlikely to improve, Yu said.
Zhang Yazhou was sitting in the passenger seat of her Tesla Model 3 when she said she heard her father’s panicked voice: The brakes do not work. Approaching a red light, her father swerved around two cars before plowing into a sport utility vehicle and a sedan, and crashing into a large concrete barrier. Stunned, Zhang gazed at the deflating airbag in front of her. She could never have imagined what was to come: Tesla Inc sued her for defamation for complaining publicly about the vehicles brakes — and won. A Chinese court ordered Zhang to pay more than US$23,000 in
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held its first board of directors meeting in the US, at which it did not unveil any new US investments despite mounting tariff threats from US President Donald Trump. Trump has threatened to impose 100 percent tariffs on Taiwan-made chips, prompting market speculation that TSMC might consider boosting its chip capacity in the US or ramping up production of advanced chips such as those using a 2-nanometer technology process at its Arizona fabs ahead of schedule. Speculation also swirled that the chipmaker might consider building its own advanced packaging capacity in the US as part
‘NO DISRUPTION’: A US trade association said that it was ready to work with the US administration to streamline the program’s requirements and achieve shared goals The White House is seeking to renegotiate US CHIPS and Science Act awards and has signaled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told reporters. The people, along with a third source, said that the new US administration is reviewing the projects awarded under the 2022 law, meant to boost US domestic semiconductor output with US$39 billion in subsidies. Washington plans to renegotiate some of the deals after assessing and changing current requirements, the sources said. The extent of the possible changes and how they would affect agreements already finalized was not immediately clear. It was not known
US President Donald Trump has threatened to impose up to 100 percent tariffs on Taiwan’s semiconductor exports to the US to encourage chip manufacturers to move their production facilities to the US, but experts are questioning his strategy, warning it could harm industries on both sides. “I’m very confused and surprised that the Trump administration would try and do this,” Bob O’Donnell, chief analyst and founder of TECHnalysis Research in California, said in an interview with the Central News Agency on Wednesday. “It seems to reflect the fact that they don’t understand how the semiconductor industry really works,” O’Donnell said. Economic sanctions would