Key investment points
In November, the year-on-year growth rate of industrial enterprise profits decreased significantly in the current month, and the average annual growth rate of the two years decreased simultaneously. By industry, driven by the decline of commodity prices and the stable recovery of production, the prices of some middle and downstream industries have rebounded, and the profit growth rate has also improved. In terms of the two-year average annual growth rate, the profit growth of the midstream processing and assembly and downstream consumer goods manufacturing industries rebounded by 10.4 and 2.4 percentage points respectively compared with the previous month, but the growth rate of the upstream raw material industry fell by 44.1 percentage points, much higher than the improvement of the profit growth rate of the midstream and downstream industries. From the perspective of revenue structure, the growth rate of industrial added value increased slightly in November, but the year-on-year growth rate of PPI and revenue profit margin decreased, and the supporting role of price gradually weakened. Due to the lagging impact of the upstream price rise on the profit squeeze of the middle and downstream industries, although the year-on-year growth rate of PPI has begun to peak and fall, the pressure on the rising cost side of enterprises caused by it may not be eliminated soon. The recovery momentum of the middle and downstream profits is not strong, and the enterprise profits will still be affected by the cost erosion in the first half of next year, We need to take further measures to stabilize growth. Looking forward to next year, with the support of policies, the growth rate of enterprise profits is expected to be improved, which will reverse the current weak business expectations of enterprises, or drive the continuous repair of the growth rate of manufacturing investment and become an important starting point for steady growth.
Profit growth dropped significantly. From January to November, the year-on-year growth rate of total profits of Industrial Enterprises above Designated Size slowed to 38%, and the average annual growth rate in the two years decreased to 18.9%. In the case of a lower base in the same period last year, the year-on-year growth rate of industrial enterprise profits in September fell to 9%, and the average growth rate in two years also decreased significantly. PPI growth peaked and fell, which reduced the profit growth of upstream industries and dragged down the profit growth.
Structural differentiation was alleviated. In November, the prices of some bulk commodities fell, the pulling effect of the upstream mining and raw material industries on profit growth was weakened, the profit growth of the equipment manufacturing and consumer goods manufacturing industries in the middle and lower reaches was improved, and the profit differentiation between the upstream and downstream was alleviated. In terms of industries, among the 41 industrial categories, the total profits of 26 industries increased year-on-year, and the profits of 22 industries improved compared with the previous month, of which the middle and downstream industries accounted for more than 80%. The profit growth rate of mining industry and raw material manufacturing industry decreased significantly in the current month, and the driving effect on the profit growth of industrial enterprises decreased. The profits of equipment manufacturing industry changed from decline to increase, and the decline in profit growth of automobile and general equipment industries was significantly narrowed. Driven by factors such as the stable recovery of production and the recovery of prices, the profit growth of consumer goods manufacturing in the lower reaches has accelerated significantly.
Revenue growth rebounded. From January to November, the year-on-year growth rate of operating revenue of Industrial Enterprises above Designated Size continued to slow down to 20.3%, falling for nine consecutive months. Among them, the year-on-year growth rate of operating revenue in November rose to 13.9%, but the average annual growth rate in the two years fell slightly. In November, the cost per 100 yuan of operating revenue continued to rise to 92.12 yuan, with a narrower year-on-year decline, which means that the pressure continues to rise, including 0.02 yuan of cost and 0.01 yuan of expense. In terms of revenue profit margin, the operating revenue profit margin of industrial enterprises fell slightly to 7% in the first 11 months, still a new high in the same period since 18 years.
Inventory renewal and replenishment. At the end of November, the growth rate of finished product inventory of industrial enterprises rose to 17.9%, a new high since April 2012. In November, the inventory sales ratio of industrial enterprises fell to 45.3%, but it was higher than the level in the same period of 20 and 19 years. The relative level of inventory was also high, while the inventory turnover days in November were the same as that in the previous month, at 17.4 days. The decline in revenue growth and the rise in inventory mean that industrial enterprises as a whole are still in the passive replenishment stage.
Risk tip: the policy changes and the economic recovery is less than expected
