Industrial benefits were differentiated, the year-on-year growth rate of profits fell sharply, and the revenue maintained a year-on-year high growth rate. In November, the profits of Industrial Enterprises above designated size increased by 9.0% year-on-year, down 15.6 percentage points from the previous period. While the profit growth rate fell sharply, the revenue did not decline significantly. In November, the revenue of above designated industrial enterprises increased by 15.7% year-on-year, The growth rate was basically the same as that in the previous period (15.8%). The rising cost depressed the revenue profit margin, which slowed down the profit growth in the case of good revenue. In November, the cost per 100 yuan of revenue of above designated industrial enterprises was 83.92 yuan, an increase of 0.49 yuan over the previous period, higher than that in the same period in 2020 (83.08 yuan), the operating cost of Industrial Enterprises above Designated Size in November was 10.14 trillion yuan, which was not only the highest value since March this year, but also higher than the same period level in the past two years. Affected by this, the revenue profit margin of Industrial Enterprises above Designated Size in November decreased by 0.7 percentage points to 6.7% month on month, lower than the same period in 2020 (7.0%).
The upstream profit growth slows down, the downstream profit growth turns positive, and the profit structure will gradually improve. In November, the year-on-year growth rate of profits of upstream industrial enterprises above designated size was 249.0%, It is significantly higher than the profit growth rate of the midstream (3.5%) and downstream (10.4%) in the same period. Although the profit growth rate of upstream industrial enterprises above Designated Size in November decreased by 57.6 percentage points compared with that in the previous period, it is still in the high growth range. We expect that in “ensuring supply and stabilizing price” Under the policy guidance of, the superimposed low base effect is gradually weakened, and its growth rate will gradually decline in 2022. The total profits of downstream industrial enterprises above Designated Size ended the negative growth in four months, increased by 13.3 percentage points to 10.4% in November, and the profits recovered well. Considering the gradual narrowing of the scissors difference between PPI and CPI, we expect the profit margins of downstream industrial enterprises above Designated Size will be further repaired.
The profit growth of major industries is highly differentiated, the profit growth of the midstream raw material industry is fast, and the profit of power and heat production and supply industry is under serious pressure. In November, the market price in the circulation field of relevant raw materials fell from a high level, driving the profit growth of nonferrous and ferrous metal smelting and rolling processing industries. The average annual growth rate in the two years reached 63.7% and 32.9% respectively, the growth rate being at the head of major industries. As for the chemical raw materials and chemical products manufacturing and metal products industry in the middle reaches of the raw materials industry, the profit growth rate is also fast, with an average annual growth rate of 49.8% and 20.6% respectively in November. In November, in the downstream industry, The profits of pharmaceutical manufacturing industry (37.9%) and computer, communication and other electronic equipment manufacturing industry (23.8%) grew rapidly in two years. Under the guidance of the policy of “ensuring supply and stabilizing price”, coal prices remained high, putting pressure on the profits of power, heat production and supply industry, and the two-year average growth rate fell to the negative growth range (- 18.4%).
The trend of increasing inventory has not yet peaked. In November, the inventory of finished products of above designated industrial enterprises was 5.48 trillion yuan, a record high, with a year-on-year growth rate of 17.9%, an increase of 1.6 percentage points over the previous period, and the growth rate was the highest since March 2012. Although the absolute value and growth rate of inventory are at a high level, under the condition of good sales and weekly turn, we believe that the trend of increasing inventory is not worth worrying. Moreover, the current trend of increasing inventory is mainly driven by the middle and upper reaches rather than the lower reaches. In November, the inventory sales ratio was 0.45, lower than that of the same period in 2019 (0.47); the turnover days of finished product inventory was 17.4 days, basically the same as that of the same period in 2019 (17.3 days). Considering that the inventory sales ratio still has room to rise, superimposed with the factors of revenue growth and good weekly turn of finished product inventory, we believe that the trend of increasing inventory is not over.
