Since this year, the sharp rise in raw material prices has driven the PPI growth rate to continue to rise, which has brought great pressure on the cost side of many enterprises. However, the overall profit growth rate of industrial enterprises has remained at a high level driven by prices, especially when the PPI year-on-year growth rate has reached 13.5% in October, the profit growth rate of industrial enterprises has rebounded significantly. So, which industries bear the pressure of rising costs? With the fall of commodity prices, PPI growth also shows signs of peaking. Will these pressures be relieved simultaneously? This report analyzes this.
Which industries increase income but not profit? Since the second quarter of this year, the profit growth rate of industrial enterprises has fluctuated downward from a high level. However, in October, when the revenue growth rate of industrial enterprises increased slightly, the profit growth rate increased significantly. The reason is that the sharp upward growth of profit mainly comes from the contribution of upstream industries. In October, driven by the high price of means of production, the profit growth of mining industry and raw material manufacturing industry increased by 2.81 times and 56.1% respectively year-on-year, significantly faster than the average level of industrial enterprises, which also further increased the proportion of profits of upstream industries. The differentiation of revenue profit margin also points to the imbalance of profit recovery of industrial enterprises. Even if the profit growth rate of industrial enterprises rises as a whole, the profitability of many industries may not be optimistic. We compared the changes of profit and revenue growth of various industries in October compared with September. On the one hand, among the more than 30 industrial industries, nearly 40% of the industries still had a decline in profit growth in October compared with September; On the other hand, there are also nearly 40% of industries whose profit growth improvement (decline) is smaller (larger) than the improvement (decline) of revenue growth, that is, "increasing revenue without increasing profit", which not only means that the momentum of enterprise profit recovery is not strong, but also reduces the willingness of enterprises to expand production and investment, which will drag down the growth of manufacturing investment.
When will the cost pressure be reduced? In October, the cost per hundred yuan of operating revenue of industrial enterprises increased to 92.09 yuan, of which the cost decreased by 0.03 yuan compared with the previous month, which is the first decline since this year. However, from the year-on-year change, the upward trend of the cost side is gradually stopped, and the upward pressure of the cost may not be over. In October, the year-on-year growth rate of PPI has rushed to an all-time high and may peak and fall soon. But in fact, the change of PPI year-on-year growth rate will not be quickly reflected on the enterprise cost side, and its transmission will take a certain time. On the one hand, the orders signed in the early stage have a locking effect on the purchase price of raw materials, so that the rise of upstream prices will not be quickly reflected in the enterprise cost; On the other hand, the digestion of overstocked inventory also makes the rise of raw material prices out of sync with the rise of enterprise costs. Therefore, even if the growth rate of PPI may peak and fall, it may take some time to reduce the pressure on enterprise costs. From the experience of the last round of rapid rise in PPI, the rise of enterprise costs lags behind, and the growth rate of PPI has peaked for about half a year. It can be seen that enterprise profits will still be under pressure from the cost side in the first half of next year.
Growth depends on the start of downstream replenishment. At the end of October, the growth rate of finished product inventory of industrial enterprises rose to 16.3%, the highest since April 2012. Historical experience shows that the year-on-year growth rate of PPI can be used as a leading indicator to judge the inflection point of inventory. When the growth rate of PPI is about to peak and fall, the inventory of subsequent industrial enterprises may also be transferred by replenishment. In terms of the turnover days of finished products, October slightly rebounded to 17.4 days compared with September. In October, the recovery period of accounts receivable of industrial enterprises increased month on month. The extension of the recovery period and the passive replenishment of inventory mean that the operating pressure of enterprises may increase. In terms of industries, during this replenishment cycle, the inventory of upstream raw material industries increased significantly, while the downstream consumer goods manufacturing industry had obvious differentiation, especially in some industries, such as food, medicine and automobile inventory. Pay attention to the economic pull of downstream replenishment. For this part of the consumer goods industry, not only the manufacturer's inventory has decreased, but also the dealer channel inventory level is obviously low. Therefore, replenishment of inventory in downstream industries is likely to become an important force driving subsequent economic growth.
Risk tip: policy changes, economic recovery is less than expected.
