Event:
On March 27, the National Bureau of Statistics announced that from January to February 2022, the profits of Industrial Enterprises above designated size increased by 5.0% year-on-year, with a growth rate of 0.8 percentage points higher than that in December last year.
Key investment points:
Core view: 1) from January to February 2022, the profit growth rate of Industrial Enterprises above designated size was slightly improved compared with that in December last year, but it was significantly lower than the annual level in 2021. The release of production at the beginning of the year was a boost, but the decline of profit margin was a significant drag on the overall profit growth. 2) The profit structure of industrial enterprises deteriorated again, the profit differentiation between upstream and downstream intensified, the profit proportion of mining industry reached a new high, and the profit of midstream manufacturing industry was obviously under pressure. 3) From January to February 2022, the profit growth industry is mainly concentrated in the upstream and downstream ends. The profits of the upstream energy and nonferrous industry chain maintain high growth. The profit growth of the downstream consumer goods manufacturing sector, such as wine and beverage manufacturing, food manufacturing and other essential consumer goods industries, has also improved. 4) From January to February 2022, industrial enterprises showed the characteristics of "passive inventory replenishment". Affected by price factors, the downward slope of this round of inventory is slow.
From January to February 2022, the profit growth rate of industrial enterprises improved slightly, but it was significantly lower than that of the whole year of 2021. From January to February, the profits of Industrial Enterprises above designated size increased by 5% year-on-year, an increase of 0.8 percentage points compared with December 2021, but significantly lower than 34.3% in 2021 and 18.3% after excluding the base effect (Two-year compound growth rate). On the whole, the month on month recovery of profit growth of industrial enterprises from January to February is mainly due to the liberalization of production since the beginning of the year, but the high growth of upstream cost prices still has a significant inhibitory effect on the profits of middle and downstream enterprises.
Revenue growth picked up, cost pressure increased, and the profit margin of industrial enterprises fell. In terms of revenue, the year-on-year growth rate of operating revenue of above designated industrial enterprises from January to February 2022 was 13.90%, 1.6 percentage points higher than that in December last year. Compared with the annual growth rate of 2021 excluding the base effect, it increased by 4.2 percentage points, and the revenue growth rate of industrial enterprises rebounded. On the one hand, since the beginning of the year, global energy prices have risen, China's PPI remains high, and price factors support the growth of overall revenue; On the other hand, the energy consumption index was abundant at the beginning of the year, the infrastructure chain was repaired, and the industrial added value rebounded significantly from January to February. In terms of cost, from January to February 2022, the expenses and costs of above designated industrial enterprises per 100 yuan of operating income were 8.27 yuan and 83.91 yuan. Under the influence of the policy of reducing fees and taxes, the expenses fell month on month, but the costs rose again. From the perspective of the three major categories of industry, the cost rate in the 100 yuan revenue of the mining industry decreased significantly in December, and the cost rate of the revenue of manufacturing industry and public utilities increased. With the month on month rise of the price of means of production in February, the cost side of middle and downstream enterprises was under pressure again. In terms of profit margin, the overall revenue profit of Industrial Enterprises above Designated Size from January to February 2022 was 5.97%, significantly lower than that in December last year. From the perspective of subdivided industries, the profit margin level of upstream and downstream industries shows obvious differentiation. The profit margin of upstream industries represented by mining industry rebounds as a whole. In the middle and downstream manufacturing industry, except tobacco manufacturing, food manufacturing, wine and beverage manufacturing and other industries, the profit margin of other industries generally declines.
From the perspective of industry profit distribution, the profit proportion of upstream industry increased again, and the profit proportion of midstream manufacturing industry decreased significantly. From January to February 2022, the cumulative profit of upstream industries (including mining industry and raw material processing industry) accounted for 29.03%, up 5.55 percentage points from December last year, and the profit differentiation of upstream and downstream industries intensified again. From the perspective of specific industries, the profit of mining industry accounted for 20.23% from January to February 2022, a record high. Among them, the profit of coal mining, oil and gas mining industry increased significantly, with a month on month increase of 4.76 and 3.11 percentage points respectively. Dragged down by ferrous metal processing industry, the profit of raw material processing sector continued to decline. At the midstream level, most of the profits of the midstream manufacturing industry represented by industrial products manufacturing and equipment manufacturing fell, of which electronic equipment, electrical equipment and non-metallic mineral manufacturing led the decline, while the profits of automobile manufacturing and chemical raw materials and chemical products manufacturing increased against the trend. At the downstream level, most of the profits of the consumer goods manufacturing industry decreased from January to February, but driven by factors such as the consumption boost of the Spring Festival, the profits of some basic consumer goods industries increased, among which the profits of food manufacturing, tobacco products, wine and beverage manufacturing increased by 0.60, 3.67 and 1.39 percentage points respectively month on month.
From the perspective of profit growth of various industries, the profit growth industries are mainly concentrated at the upstream and downstream ends, and the profits of the midstream departments are obviously under pressure. From the perspective of the three major categories of industry, the profit growth rates of mining, manufacturing and public utilities from January to February were 132.00%, - 4.20% and - 45.30% respectively. Among them, the profits of the upstream sector maintained a high growth, which was the main force driving the profit growth of the overall industrial enterprises. The profit growth rate of manufacturing industry turned negative for the first time since the epidemic, and the decline in the profit growth rate of public utilities further expanded. From the perspective of subdivided industries, from January to February, among the 41 major industrial industries, the total profits of 22 industries increased or decreased year-on-year, and 19 industries decreased. Among them, the profit growth industry is mainly concentrated at the upstream and downstream ends. On the one hand, under the environment of continuous rise in global energy prices since the beginning of the year, the profits of oil and gas mining, coal mining and non-ferrous smelting industries have achieved rapid growth, with the profit growth rate of more than 50% from January to February. On the other hand, the profit growth of industries such as wine, beverage manufacturing, textile and food manufacturing in the consumer goods manufacturing sector also improved, with year-on-year growth of 32.50%, 13.10% and 12.30% respectively. At the same time, the profit growth rate of the middle and lower reaches manufacturing industry represented by electronic equipment manufacturing, transportation equipment manufacturing and instrument manufacturing fell sharply, and the profit was obviously under pressure.
The profit structure of industrial enterprises deteriorated again. Affected by the epidemic, the profit growth rate of enterprises may further decline from March to April. In the fourth quarter of 2021, the ppi-cpi scissors gap continued to converge, the profit distribution of industrial enterprises gradually tilted to the middle and downstream industries, and the profit structure gradually improved. However, this year, affected by the situation in Russia and Ukraine, the crude oil price has remained high, the profits of industrial enterprises have concentrated in the upstream again, and the profitability of the manufacturing departments in the middle and downstream has deteriorated again. Looking forward to the future, the continuous disturbance of China's epidemic situation and the high price of upstream raw materials are still the two main reasons to inhibit the overall profitability of industrial enterprises, and the profitability of upstream industries will have comparative advantages. From March to April, under the impact of the epidemic, both ends of supply and demand may be limited, and the profit growth of industrial enterprises may further decline.
Industrial enterprises are characterized by passive destocking, and the current nominal inventory level is still high. From January to February 2022, the finished product inventory of Industrial Enterprises above designated size increased by 16.8% year-on-year, down 0.3 percentage points from December last year. Combined with the recovery of revenue growth of industrial enterprises, industrial enterprises showed the characteristics of "passive destocking" from January to February. Since November 2021, China's industrial enterprises have entered the stage of destocking, but under the influence of price factors, the current round of inventory destocking slope is slow, and the current nominal inventory level of industrial enterprises is still high.
Risk tips: liquidity tightening is higher than expected, economic stall is down, and the epidemic situation is worse than expected
